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about the types of loans, the benefits of each, and which may be right for
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| Refinance |
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| Shorten
the Term of Your Mortgage |
| The
“term” of your mortgage refers to the number of years
the loan is financed over. For example a 30-year mortgage has a 30-year
term, 360 payments.
The shorter
the term of your mortgage is, the higher the monthly payment will
be. By shortening your term you may be accomplishing several things:
| 1 |
Paying
off your property in a shorter length of time. |
| 2 |
Decreasing
the interest accumulated over the length of the loan. |
| 3 |
Lowering
your interest rate. (Typically a shorter term, comes with a
lower interest rate). |
For example
let’s say you are currently holding a 30-yr mortgage with
a monthly payment of $1000, and you shorten your term to 15 years
with a monthly payment of $1200. The difference is $200 a month,
but since you are paying off the loan 15 years earlier, you are
saving 15 years of monthly payments, less the increase in payment
from the shorter term. This yields a savings of $144,000.
Shortening your
term is a great idea if you can afford the payments which are typically
higher than a longer term.
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