15-Year or -30-Year Mortgage.

One of the decisions you need to make when taking out a mortgage is the term (the length) of your mortgage. Although the most common mortgages are the 15-year and the 30-year mortgage, other mortgages are generally available to you. In addition to the 15-year and the 30-year loan, you can commonly get a 10-year, a 20-year or a 25-year loan. In some areas you can now find a 40-year loan and 40-year loans will probably be universal within a year or two.

It is also possible to get much shorter-term loans, such as 5-year and 7-year, but those loans are designed for people who know ahead of time that they will only be living in a house for a specific length of time.

For the most part, the choice is between a 15-year and a 30-year loan term. However, it is wise to note there are good points and bad points about each.

The 15-year loan generally has a slightly lower interest rate, but because the loan must be paid off in fifteen years – 180 months – the monthly payments tend to be fairly high. For those who can afford the high payments the benefits include a shorter time before the home is paid for, plus there is, overall, much less interest paid on a 15-year loan as compared to a 30-year loan.

The 30-year (360 month) loan is the most common and popular loan in the United States. The reason is because the monthly payments are much more affordable for a much larger percentage of the population.

The downside to the 30-year mortgage is the length of time it takes before the home is actually paid for and the total amount of interest paid over a 30-year period.

Hence, which loan you choose is contingent, in large part, on your monthly cash-flow and on just how much of a priority you place upon having your home paid for free and clear of debt.