Loan Term

The loan term is the technical legal name given to the amount of time that a person has to pay off his or her mortgage. This is the total amount of time that the mortgage will last if the borrower makes all scheduled payments. For instance, a person with a 15-year mortgage would have a 15-year term. The most common loan terms for mortgages are 15 and 30 years. In some cases, though, people can opt for 10-year mortgage terms. A person with a longer term will have to pay more money in interest. Less of his monthly payment will go toward paying down the principal of the loan. A person with a shorter loan term will pay more money each month; however, he will be paying down more money on the balance of the loan. People must choose the right loan term to fit their financial situation.