When you’re buying a home, is it your goal to pay off your mortgage loan as quickly as possible? It is, but there’s one thing you need to always keep in mind, you can’t predict the future. Mortgages usually last a long time and everyone’s financial situation changes over time. We all go through periods of prosperity and we all hit rough patches. Whatever your circumstances are at a given time, you’re going to have to make your payment. So you need to decide between a short-term or long-term mortgage. Cliffco Mortgage Bankers can help you with that decision.
Cliffco Mortgage Bankers Helps Customers Become Homeowners
At Cliffco, it’s our business to help our customers achieve the dream of home ownership. We help them find a loan that’s right for them and we also look to help customers find loan programs that might assist them in being able to buy a property that might have seemed out of reach. Cliffco can also help you to explore ways you can use the equity you have in your home to your advantage. We know you want to pay off your loan without financial harm, so we want to tell you about some of the pros and cons of having a short-term mortgage.
What is a Short Term Mortgage?
When talking about short-term mortgages>, more often than not, you’ll be referring to a 15-year mortgage, but the term of the mortgage can drop as low as 10 years or even 5 years, but these will be very difficult payments to make. Even the 15-year mortgage isn’t a standard mortgage. The most popular mortgage on the market is the long-term 30-year mortgage.
Benefits of a Short Term Loan
The key benefit of having a short-term mortgage loan is being able to pay off the loan faster. According to the financial blog, Money Crashers, the shorter term option is perfect if you’re planning to stay in the home, but you want to get your payments over with sooner so you can focus on things like saving and preparing for retirement. But short term mortgages will mean your payments will be higher because you have to pay for the home in a shorter amount of time. A longer term loan has lower monthly payments but you’re better able to absorb the shock of unexpected circumstances like job loss.
A cost related benefit you will receive from a short term loan is that you won’t have to pay the amount of interest that you’ll pay on a longer term loan. If you’re able to make the payments on a shorter term mortgage, this represents a significant savings. Another big advantage is that you’ll build equity in your home. According to Nerdwallet, this is because you pay down the principal on your loan quicker. But you should also note that your equity is going to remain tied up, unless you sell your home or get a home equity loan.
Cliffco Can Help You Find All Types of Mortgages
There’s a lot to think about when you’re looking for a mortgage loan and the term of the loan is a big consideration. If you’re unsure of how long your loan should be or if you’re looking for information about what types of loans might be available to you, we can help. Contact Cliffco today.
