If your financial goals include building equity in your home, choosing a mortgage with a 15 year term length will help you build equity at a faster rate. Mortgage loans with shorter term lengths come with higher monthly payments; however, you will pay less money to the lender in finance charges. Here are the advantages of choosing a mortgage with a short term length. If you want to pay off your mortgage as quickly as possible you need to maximize the amount of principle you pay each month and minimize the interest. Mortgage loans are front-loaded with interest so this is not an easy task. You can accomplish this by choosing a mortgage with the shortest term and the lowest interest rate you can qualify for. Another option for building equity at a faster rate is to make bi-weekly mortgage payments. By splitting your monthly payment in half and paying that amount every two weeks you will make one extra payment each year entirely to equity. Making bi-weekly payments on a 15 year mortgage will allow you to pay off your entire mortgage in just over ten years. To learn more about your mortgage options, including common mistakes to avoid, register for a free mortgage guidebook. |
