Shorter Loan Terms help you build equity faster!
Are you tired of the never-ending cycle of making mortgage payments without the satisfaction of seeing your home’s equity increase? Consider refinancing to a shorter loan term for a faster route to building equity.
What are shorter loan terms?
Shorter loan terms refer to mortgages with a repayment period of 15 years or less. Most traditional mortgages have a repayment period of 30 years, but opting for a shorter loan term can have significant benefits in the long run.
Why opt for a shorter mortgage term?
Lower interest rates: Shorter loan terms carry lower interest rates than longer loan terms. This means you’ll end up paying less in interest over the life of the loan.
Build equity faster: With a shorter loan term, you’ll build equity at a faster pace. This is because you’ll be paying more towards the principal balance with each payment, rather than more towards interest.
Save money: Although your monthly payment will be higher with a shorter loan term, you’ll ultimately save money in the long run due to the lower interest rates and quicker equity building. Plus, you’ll pay off your mortgage sooner, freeing up funds for other expenses or saving for retirement.
Peace of mind: With a shorter loan term, you’ll have the peace of mind that comes with knowing you’ll be debt-free sooner rather than later. This can be especially beneficial for those nearing retirement or hoping to retire early.
How to refinance to a shorter loan term
Refinancing to a shorter loan term is possible if you have a good credit score and sufficient equity in your home. Follow these steps to refinance:
Determine your current loan balance and interest rate.
Shop around for lenders and compare their interest rates and fees.
Apply for a refinancing loan and be ready to provide documentation such as pay stubs, tax returns, and bank statements.
If approved, close on the new loan and start making higher monthly payments towards the new loan.
Is a shorter loan term right for you?
While a shorter loan term can be a smart financial decision for many, it’s important to evaluate your unique financial situation before making any decisions. Consider factors such as your income, savings, retirement plans, and future financial goals before deciding if a shorter loan term is right for you.
Ultimately, opting for a shorter loan term can be a wise choice for those looking to build equity faster, save money in the long run, and have the peace of mind that comes with paying off a mortgage sooner rather than later.