Mortgage Borrowing Tip - Length of Loan
Written by: Dan Lewis
When borrowing money for a mortgage, homebuyers are primarily concerned with simply qualifying. Still, paying attention to the length of the loan is a borrowing tip that can save you a ton of money.
In the mortgage industry, the length of your loan used to be the only major issue you had to deal with. How times have changed! In the current market, the variety of loans that exist are simply stunning. Of course, the massive increase in loan options has inevitably led to massive confusion.
Regardless of the type of loan you go with, you should always try to keep your loan term as short as possible. The shorter the loan period, the less you will pay in interest. Here an example using 15 and 30 year loans.
Assume our first homebuyer gets a $100,000 loan at 8 percent interest. He length of the loan is 30 years with a monthly payment of $733.76. For this mortgage, our homebuyer is going to pay $164,155.25 in interest over the life of the loan.
Now, take the same scenario, but reduce the term of the loan to 15 years. Our homebuyer is going to see the monthly payment bumped to $955.65 per month. Over the length of the loan, our homebuyer is going to pay $90,000 less in interest payments over the life of the loan. On top of this, the house will be paid off in half the time.
When borrowing money for a home purchase, you have to carefully budget your finances. If you can afford increased monthly payments, however, a shorter loan length is going to save you a lot of money over time.
About the Author
Dan Lewis is a mortgage broker with http://www.gwhomeloans.com - San Diego mortgage brokers providing home loans and refinances. Visit http://gwhomeloans.com/services.html to learn more about options for San Diego mortgages.
Benefits of a Home Owner Loan
There are many benefits for choosing a Home Owner Loan, some of which are listed below: If you are a homeowner, you have a better chance of borrowing a homeowner loan and securing the amount against your home .A secured loan is so called because...read more
Reasons Why a UK Personal Loan Might Be a Good Idea For You
When people look at their financial portfolio many do not consider loans as a wise option. This is because people see the principal plus the interest and automatically assume that alone is a bad decision. That is not always the case. When...read more
How to Qualify for a Home Mortgage Loan
Are you considering applying for a mortgage loan to purchase
your first home? If so, you should read the following tips below
that will make the process easier!
If You Have a Good Credit History It Is Easier To Qualify For
Return to Home