Home mortgage loans are one of the most common sources of financing. Lots of home buyers will put some serious thought into what loan term they should go with. How do you pick the loan term that is best for your financial circumstances? Hopefully, by the time you’re done reading, you’ll have a better sense of direction on that. You can also visit the resource at Maximum Real Estate Exposure for additional guidance.
Numerous lenders offer mortgages for nearly any loan term you desire. Most people, however, assume conventional fixed-rate mortgages are for either fifteen or thirty years. You can use these loans to buy a new home or refinance your current home.
The decision to pick one loan term over another is usually a function of qualifying and income. Many people who have the financial means to qualify for a shorter loan term will go that route. For the average Joe, that is not always possible. In fact, the fifteen-year mortgage term is far from the most used.
As of 2012, the Mortgage Bankers Association reported that eighty-five percent of purchase loans were thirty-year fixed mortgages. The thirty-year fixed mortgage has been popular for a very long time. You could call this kind of loan the mortgage standard.
There are, however, other loan terms that could be just as appealing, if not more so. Most people think of loan terms in either five or ten-year increments such as ten, fifteen, twenty, or thirty-year mortgages. Many lenders, however, are now doing odd loan terms.
For example, you may want a loan term amortized over twelve years. Could it be that you know you’ll be retiring at that point and want your mortgage paid off? This is just one example of why someone might want a more unusual loan term expiration.
Final Thoughts on Loan Terms
When picking a loan term, it is essential you think about your complete financial picture. For this reason, many folks opt to speak with qualified professionals before making such a significant financial decision.
Your financial goals should play a large part in what loan term you decide on. Do you have student loan debt? Have you overextended yourself with credit card debt? Do you need to save for the kid’s college? Will retirement be sneaking up on you soon?
These are the type of questions you should be asking yourself when trying to decide which way to turn. What you can qualify for is another consideration. Some people might not even be able to go with a shorter loan term that they desire.
Sometimes you can put yourself in the best of both worlds position. For example, one might put money each month towards paying down their principal balance. They would be paying off the loan quicker which in turn lowers the amount of interest paid throughout the loan.
One loan term may be good for the goose but not for the gander. Do your due diligence to figure out the best option for your financial goals and position.