Shorter Loan Terms - The ultimate guide!
Shorter Loan Terms - The Ultimate Guide!
Are you tired of paying off your mortgage for what seems like an eternity? Do you wish you could pay off your home faster and save money in the process? If so, then a shorter loan term may be just what you need.
What is a Shorter Loan Term?
A shorter loan term means that you have less time to pay off your mortgage. Typically, mortgages come in 15-year and 30-year terms, although some lenders offer shorter or longer terms. With a shorter loan term, you'll have higher monthly payments but you'll pay less interest over the life of the loan.
The Benefits of a Shorter Loan Term
Save money on interest - Since you're paying off your loan faster, you'll pay less interest over the life of the loan. This can add up to tens of thousands of dollars in savings.
Build equity faster - Paying off your mortgage faster means that you'll build equity in your home faster. This can be helpful if you plan on selling your home in the future or if you need to borrow against your home equity for a home renovation or other expense.
Lower interest rate - Shorter loan terms typically come with lower interest rates than longer loan terms. This is because lenders are taking on less risk by loaning you money for a shorter period of time.
How to Get a Shorter Loan Term
If you're interested in getting a shorter loan term, there are a few steps you can take:
Refinance your mortgage - Refinancing your mortgage is the most common way to get a shorter loan term. By refinancing, you can often lower your interest rate and shorten your loan term at the same time, which can save you money in the long run.
Make extra payments - If you can't refinance your mortgage, you can still pay it off faster by making extra payments. This can help you pay off your mortgage faster and save money on interest.
Choose a shorter loan term from the start - If you're buying a new home, you can choose a shorter loan term from the start. This can save you money on interest and help you pay off your mortgage faster.
Is a Shorter Loan Term Right for You?
Before you decide to pursue a shorter loan term, it's important to consider your financial situation. A shorter loan term may not be right for everyone. Here are a few questions to ask yourself:
Can I afford higher monthly payments?
Do I have enough savings to cover unexpected expenses?
Do I plan on staying in my home long-term?
The Bottom Line
A shorter loan term can be a smart financial move if you want to save money on interest and pay off your mortgage faster. However, it's important to carefully consider your financial situation and make sure that you can afford higher monthly payments before pursuing a shorter loan term. Talk to a mortgage lender to learn more about your options and determine whether a shorter loan term is right for you.