The 20 Year Mortgage: A Lender’s Little-Known Secret (Blog)

 

WHY DIDN’T I KNOW ABOUT THIS?!

Many people are unfamiliar with the 20 year mortgage.  While coming up with the topic for this episode, I reviewed 3 major online mortgage portals and 2 major bank sites.  Not one of them mentioned the 20 year mortgage option, and I’m not exactly sure why.  So, let’s talk a little about each of the options.

15 YEAR MORTGAGE…

When you’re buying a house or already own a home and looking to refinance, the lender will typically offer you a 15 or 30 year mortgage.  The 15 year mortgage will save you interest as you’re cutting the term in half.  So, instead of having 360 payments over 30 years, you would have 180 payments over 15 years.  This would also typically provide a lower interest rate. If you can afford the higher monthly payment, this may be a good option for you.

30 YEAR MORTGAGE…

The 30 year mortgage is more traditionally known and the most common choice among home owners.  The monthly payments are the least expensive, however your total payments over the entire course of the loan will be significantly more expensive than the 15 or 20 year loan options. You do have an option to send extra principal payments as well.  However, I advise that before you look to send additional principal payments, be sure you have adequate emergency savings and cash flow on hand.

20 YEAR MORTGAGE…

The 20 year mortgage can be viewed as a happy medium.  You will likely have to specifically ask your loan officer about this option, as he/she will likely not automatically present it to you.  This option will involve 240 monthly payments over the course of 20 years.

WHERE TO GO FROM HERE…

Tune into the podcast where I give detailed examples of the payment scenarios for each of these options, which will provide further insight to help you decide the best option for you.

THANK YOU!

As always, thank you for checking out my podcast and blog post!  If there are any topics you would like to learn more about, or if you would like to schedule a free financial consultation with me, please email me at Luis@onmywaytowealth.com!  I look forward to speaking with you soon!