Is Short-Term Mortgage Better Than Long-Term Mortgage?March 09, 2023 by X2 Mortgage
Getting a mortgage is a viable option to get a house faster. It can be an excellent option for those who have saved up enough for a down payment but don’t have enough funds to purchase the home outright. However, there are a few things to consider when getting a mortgage.
Some considerations include the interest rate, the loan length, and the type of mortgage you qualify for. However, the loan length identifies how much the monthly amortization becomes. But is a short-term mortgage better than a long-term mortgage? Here are some ideas.
What is a Short-Term Mortgage?
A short-term mortgage is a loan with a shorter repayment period than a traditional one. Generally, these loans are offered for one to five years and can be an either adjustable or fixed rate. It is better for people who can afford more significant monthly fees, finishing quickly on the loaned amount.
What is a Long-Term Mortgage?
A long-term mortgage is a loan with a more extended repayment period than a traditional one. Generally, these loans are offered for five to thirty years and can be either adjustable or fixed rate. It is better for people who need more time to repay their loans and can afford smaller monthly payments. However, the longer the loan term, the higher the interest rate.
Which Mortgage Duration is Better?
The best mortgage length depends on a few factors. For some, paying off a loan in a short amount of time is better than extending it long enough. It is cheaper to afford a property, making it less expensive. However, it can also depend on the goals.
Some people would like to build their credit while investing, choosing a shorter loan duration to move on to the next investment they have as planned. Meanwhile, others will need more time to afford the things they like while taking care of their credit score.
It is all about knowing your priorities in choosing the best mortgage duration. If long-term mortgage works for some, it might only work for some. However, it is now easier to find the best option by speaking with a loan officer.
Why Should I Apply For a Mortgage?
Applying for a mortgage is a great way to invest in your future. When you own a home, you invest in something that will appreciate over time. It means that you can sell your home for more than you purchased it for, which can be a great way to make money in the future.
Owning a home gives you more freedom and control over your living situation. You can make changes to the house that you can’t do when you rent, such as painting, remodeling, and more. Additionally, mortgage payments can be tax deductible.
It means that you can save money on your taxes each year. Finally, a mortgage can help you build your credit score, opening up other future financial opportunities. By then, it becomes easier to apply for other loans, unlike the first time.
Choosing between short-term and long-term mortgages depends on needs and preferences. Both have advantages and disadvantages, and it’s essential to consider your options before deciding.
A long-term mortgage may be the best choice if you’re looking for lower monthly payments and stability. However, a short-term mortgage may be better if you plan on selling your home shortly and want to build equity faster.
X2 Mortgage helps clients find the best deals in home buying, getting the most value out of their money. As local home loan experts in Chandler, Arizona, we aim to assist people in finding the perfect home based on their needs and preferences. Call us at (480) 992-4200 to learn more about applying for a mortgage by speaking with a loan officer today.