The original loan offered by most lenders was a loan with a 30 year term. This loan was usually also fixed for 30 years.
Mortgage loan options now include:
These are two very different mortgage factors that you will need to understand.
The term of a mortgage is the length of the loan. The longer a loan's term is the lower the monthly payment will be. Obviously it takes longer to pay off a loan with a longer term so you end up paying more interest over time than you would with a shorter term mortgage.
Loan terms can be for many years, including:
- 15 years
- 30 years
- 40 years
- 45 years
- 50 years
So far the longest available mortgage loan term is for 50 years.
The loan type is the actual terms of the loan. These terms include:
- how long the interest rate on the loan is fixed
- whether it is interest only or not
- if the loan allows for a minimum payment option
- interest rate cap
- interest rate index
- interest rate adjustments
If you are looking for a new way to lower your monthly payment then a 50 year loan is something you should consider.
If you want to pay off your property sooner than a 30 year loan may be better for you.
Another option to get a lower payment is an interest only payment option.
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