Choosing a Mortgage Term

One of the biggest factors in the total cost of your mortgage is the term. The term simply refers to the number of years you have to pay back the loan. The longer the term, the lower the monthly payment. On the other hand, the longer the term, the more you will pay in total interest. If you wish to pay off your mortgage quickly, it is far better to go with a shorter term, say 15 years instead of 20. The savings in total interest payments will be tens, if not hundreds, of thousands of dollars. You will also build up equity in your home much faster. Why? It is an appreciating asset. This can make a huge difference if you ever get into a situation where you suddenly need money, such as a child going to college. Have you seen the cost of tuition? Every parents nightmare!

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