Mortgage Borrowing Tip - Length of Loan
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
Mortgage Borrowing Tip: Loan Length
When securing a mortgage, most homebuyers focus primarily on qualifying. However, considering the length of the loan is a crucial tip that can save you significant money.
Understanding Home Loans
Previously, the length of a mortgage was a simple decision. Now, the variety of loan options available can be overwhelming, leading to confusion.
Key Borrowing Tip
No matter which type of loan you choose, aim for the shortest loan term you can manage. Shorter loans mean you pay less interest over time. Here's an example comparing 15- and 30-year loans:
Imagine a homebuyer has a $100,000 loan with an 8% interest rate. For a 30-year loan, the monthly payment is $733.76, resulting in a total interest payment of $164,155.25.
If the loan term is reduced to 15 years, the monthly payment rises to $955.65. However, the interest paid over the loan drops by $90,000. Additionally, the home is paid off in half the time.
When planning to buy a home, it's essential to budget wisely. If you can handle higher monthly payments, opting for a shorter loan can save significant money in the long run.
You can find the original non-AI version of this article here: Mortgage Borrowing Tip - Length of Loan.
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