While the 30 year fixed rate mortgage is the most common loan option on the market, a shorter term loan will get you mortgage free faster. For some a shorter term mortgage could mean a lifestyle change in order to afford the higher monthly payments, but for many it proves to be worth it. In the end shortening the term of your mortgage will save you thousands of dollars in interest.
Short term loans whether it be a 15 year fixed rate loan or a 10/1 or 7/1 adjustable rate mortgage, will save you a substantial amount in interest over the life of the loan. Short term loans typically have lower interest rates compared to 20 or 30 year loans.
While the monthly payments are higher with short term loans, there are many things you can do to fit a little extra spending into your budget. You may have to make a conscious effort to live more frugally. Some of the ways you can cut down your monthly expenses include: only buying necessities, shopping at thrift stores, using coupons, and possibly renegotiating cable, cell phone, or insurance bills. Another thing you can do is use a programmable thermostat to help lower your electric bills by increasing the temperature in the warmer months and decreasing the temperature in cooler months. Every little bit counts when trying to save money.
If you are considering a short term mortgage please don’t hesitate to contact me for your financing needs.