What rule should I follow to decide how long to finance my mortgage?

The length of a mortgage is referred to as its term.  The term of the mortgage you choose can be an important factor in deciding what loan product is best suited for your needs.  The primary consideration on picking the loan term is the monthly payment.  Short term loans like the 15 year mortgage, have a larger monthly payment but build equity in a property faster.  A shorter term loan will also usually have a slightly lower interest rate.  With a longer term loan such as the 30 year mortgage, you will have a lower payment because of the extra time that the loan is amortized for but it will build equity slower and incur greater interest charges over the life of the loan.  When all is said and done, the term of your loan depends on how comfortable you are with a higher payment.  Use the mortgage calculator to compare mortgage terms and be sure to input current mortgage rates for the 30 year and 15 year terms to see which payment and amortization schedule fits your goals better.

Tags: amortization schedule, mortgage, mortgage calculator, mortgage rates, mortgage term

This entry was posted on Monday, December 8th, 2008 at 9:31 pm and is filed under Mortgage FAQs. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.