Before you finalize your mortgage application, you must decide which loan term you want to apply for. The term is the length of your mortgage payment. For a home mortgage, term lengths generally range between 10 and 30 years. This means that you can choose to pay off your mortgage with between 120 and 360 months. Which term length is right for you?
The 30-year mortgage term is most common because it establishes the lowest monthly payments. In addition to helping, you manage your budget over the next 30 years, this term length may help you to qualify for a larger loan amount. While there are notable benefits associated with a 30-year mortgage, there are also drawbacks. For example, interest will accumulate over a much longer period of time, so you will pay far more in interest charges with a 30-year loan than you would if you choose a shorter term. In addition, equity will accumulate more slowly.
As you decide which mortgage term is suitable for you, it is important to first consider if you can qualify for a shorter-term length. Then, you should look forward to see how paying off your mortgage will affect your financial plans down the road. For example, if you plan to retire in 15 years, a 30-year mortgage may not be practical. Keep in mind, however, that you can refinance your mortgage in a few years to adjust the term length as desired.
Our MortgageDepot loan origination team is happy to help you analyze your options in detail. Through a prequalification, we can tell you which loan amount you qualify for with each term length and what your loan payments may be. Contact our lending team today for additional assistance.
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