(SpringhillCareGroup) 28March 2012 - People are relying on mortgage in order to buy their own house. Investing in a house is considered to be the biggest financial commitment one can ever make. Therefore, it will be beneficial for the consumer if you could choose your own mortgage term. Before you apply for a mortgage loan make sure that you take help of a loan mortgage calculator to calculate your monthly payment. This will help you determine the mortgage loan that you can afford to take out.
When a borrower chooses his own term mortgage then it will be easier for him to pay off the owed amount without a single default.
Quicken loan offers “YOURmortgage” where the consumers will determine the length of the mortgage where you can choose the term between 8 to 30 years.
Therefore, if you are not keen to apply for a standard 30 or 15-year term then refinancing your mortgage into an 18-year fixed or a 24-year fixed loan can be beneficial for you. If your loan term is short then interest rate will be comparatively lower, thereby you can save considerable amount of money.
If you take out 15 years fixed term mortgage then the interest rate will be lower than 30 years fixed term mortgage. So you can save considerable amount of money with a shorter term as less interest will be paid over a shorter amount of time. In shorter term mortgage you pay less as the loan amortizes faster. But remember that the monthly mortgage will be higher if your loan term is shorter. So this is considered to be a drawback of this mortgage program.
Reason behind choosing your own mortgage term:
You can choose your own mortgage term in accordance with your budget. This will help you avoid burning a hole in your pocket while paying back the owed amount.
You can set your mortgage term according to age you plan to retire. Therefore, before your retirement you’ll be able to pay back the mortgage loan and avoid default.
You can choose a mortgage term and then plan your budget accordingly so that you can pay off the mortgage within a stipulated time.
If you are not interested to reset your mortgage then choose to refinance it by choosing a term that keeps the collective term at the standard 30 years. Therefore, if your present mortgage is for seven years then refinancing can extend the term to a 23-year fixed.
Therefore, choosing your own term mortgage can help you determine your own payment schedule. You can make larger payment if you want to pay off your mortgage loan quickly.