Term is usually referred to as the time period it takes to pay off the mortgage. It is also used to calculate your mortgage payment and is usually expressed in months. On your application for example, you would see 360 months for a 30 year mortgage.

Term Defined

On some mortgages, the term is not the same as the maturity. A 7 year balloon mortgage would have a payment calculated over 30 years but the remainder of the mortgage balance would be due and payable at the end of 7 years.

The shorter your term the more you save on interest payments. The 30 year term is not the only one available. There are 20, 15, and 10 year terms.

The rate decreases the lower your term but your payment will increase because you have less time to pay back the amount borrower.

However, you more than make up for the higher payment in interest savings. If at all possible look into a shorter term or make sure you pay extra principal. Either one can help save money on interest payments.

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