One of the most common mortgages big in the housing market is the 30-year fixed mortgage. This is especially true for first time Sacramento home buyers who like to extend the loan payments over a longer-term.
The next more commonly chosen loan is a fixed-rate loan term of 15 years. However, you can find some lenders that offer this loan with a loan of 10 or 20 years as well. You may even be able to find a more personalized term offered by specific lenders.
How can a 20-year home mortgage term be beneficial to you? Below, we have a few reasons why you should choose 20 years over the 10 or 15-year terms.
Save Money on Interest
This is one of the more obvious reasons for choosing a 20-year home mortgage. You will find that the interest rate on this kind of loan is usually one-fourth of on point to three-eighths of a point lower than the other fixed-rate mortgage offers.
So, if you are purchasing or refinancing your home, you can save a significant amount of money compared to a 30-year loan term. You will also have a much shorter loan term.
Pay the Loan Faster
Refinancing your 30-year mortgage into a 20-year mortgage allows you to pay your loan much faster. You won't have to start all over with another 30-year mortgage loan when refinancing.
No one wants to push their mortgage payoff into their retirement because it can significantly affect your retirement plans. When you choose a 20-year mortgage, you can stay on track financially and work toward having your home paid off before you reach retirement age.
More Affordable Payments
It is also a good alternative to a 15-year mortgage and allows for much more affordable payments. Some buyers aren't able to stretch their budget to successfully complete the higher payments, so choosing a 20-year mortgage can help lower the payments.
20-Year Fixed Mortgages
You will find that this mortgage is very similar to the more common 30-year mortgage, but it is ten years shorter. The interest rate won't change during the loan term, and less interest is paid over the course of the loan. Plus, you will be paying your home off ten years sooner. It is a simple loan program that can definitely benefit you and save you money in the long run.
Upon closer inspection, you may find that it isn't as economical to pay your mortgage back over thirty years − especially considering how much interest you will be paying over that extra time as well.
Whether you are a new home buyer or you are looking to refinance your current Sacramento home, you will definitely want to explore all the ways you can save money by switching to a 20-year fixed mortgage. If you are refinancing, you can avoid restarting the clock on your mortgage and save money in interest as well.
If you want more information on 20-year fixed mortgages, then contact Professional Mortgage Associates in Sacramento, CA today to review your options.