When getting a mortgage, the main thing homebuyers care about is whether or not they qualify. Still, a loan tip that can save you a lot of money is to pay attention to how long the loan is.
Home Loans
Before, the length of your loan was the only big problem you had to deal with in the mortgage business. How different things are now! There are so many different kinds of loans on the market right now that it's amazing. The huge increase in loan options has, of course, caused a lot of confusion.
Tip on Borrowing
No matter what kind of loan you get, you should always try to keep the length of the loan as short as you can. The less time you borrow for, the less interest you will pay. Here's an example with loans for 15 and 30 years.
Let's say our first homebuyer gets a loan for $100,000 with an interest rate of 8%. The loan is for 30 years, and the payment is $733.76 per month. Over the life of this mortgage loan, our buyer will pay $164,155.25 in interest.
Now, let's look at the same situation, but with the loan term cut down to 15 years. The monthly payment for our homebuyer will go up to $955.65 per month. Over the life of the loan, our homebuyer will pay $90,000 less in interest payments. On top of that, it will take half as long to pay off the house.
When you borrow money to buy a home, you need to carefully plan your budget. If you can afford to pay more each month, a shorter loan term will save you a lot of money in the long run.
