How Long Should Your Mortgage Term Be?


Buying a home, or refinancing a home, is an important financial decision and there are many different factors to take into consideration. When you are looking into the various Florida mortgages, you may find yourself overwhelmed with the different costs, fees, terms, conditions, interest rates, and more. One of the key factors you also have to consider is how long you want to take the mortgage out for. This could be 15 years, 20 or 25 years, or 30 years. Deciding between these options is a very personal decision, and there are no rights and wrongs in it that apply to everybody. Each length has its own advantages and disadvantages, and you have to decide in which case the pros outweigh the cons for you. So what are these pros and cons?

The 15 Year Mortgage

A lot of people like the idea of a 15 year mortgage because they want to have it paid off as soon as possible. The longer a mortgage lasts, the longer you are burdened with mortgage payments as well. Additionally, you will usually find that this type of mortgage has a lower interest rate. That being said, remember that interest rates are fully tax deductible. Plus, while you don’t have to make as many monthly installments, those installments do tend to be much higher. As such, you have far less flexibility overall. Plus, because the payments are higher, lender acceptance criteria tend to be very different as well.

The 20 or 25 Year Mortgage

This is the “compromise” type of mortgage. It is a bit longer than the 15 years one, but not as long as the 30 year one. This means that you have lower total charges than in the 30 year option, and lower monthly repayments than in the 15 year option. That being said, your interest rate will be somewhat higher than in the 15 year mortgage.

The 30 Year Mortgage

This is the most popular type of mortgage, mainly because people tend to live from paycheck to paycheck, and this offers them the lowest monthly payment. However, the interest rate is higher, and you will be tied to your mortgage for much longer as well. That said, it is much more flexible due to the lower monthly amounts, which leaves you with more financial breathing room. Additionally, you can usually make extra payments, so that the term does reduce overall, making the length a bit shorter – presuming, of course, that you can afford to make extra repayments.

If you want to take out a mortgage, then the length of the mortgage is just one of the many things you need to think about. It is vital that you speak with a professional financial advisor and a real estate agent, who will work alongside you to find the best possible options for you. Make sure you ask any questions you may have so that you can properly evaluate the options that are available to you. Do also think about the tax ramifications associated with each of the options.