If you are in the process of refinancing your mortgage an important aspect of the new mortgage is the term length. This mortgage length along with the interest rate determines your new payment amount and the rate you will pay down the loan. The term length you choose depends on your financial objectives for the mortgage; here are tips to help you structure your new mortgage to meet your financial goals.

Mortgage term length is the number of years your lender grants you to repay the loan. Typical mortgage term lengths range from 15 to 40 years. Traditional mortgages last for 30 years. Before deciding on a mortgage term length it is important to evaluate your financial goals. Do you need a mortgage with the lowest possible payment amount? Are you trying to pay off your mortgage as quickly as possible? The answer to these questions will help you determine which term length is right for you.

Short Term Mortgage Loans

Mortgages with short terms typically range from 10 to 20 years. The main advantage of a short term mortgage is that you will qualify for a lower interest rate than a 30 or 40 year loan. Short term mortgages come with higher monthly payment amounts so you will build equity at a faster rate and pay less in finance charges over the life of the mortgage.

Long Term Mortgages Loans

If your financial objectives require the lowest payment amount possible, there are mortgage terms that will help you. Traditional mortgages last for 30 years; however, there are now 40 and 50 year mortgages. The downside of this type of mortgage is that you will pay a higher interest rate and significantly more in finance charges for those extra years. You will realize a greater tax deduction from paying this additional interest in the early years of the loan; however, you may want to refinance once your financial situation improves.

You can learn more about finding the right mortgage for your situation without overpaying for it by registering for a free mortgage guidebook: Five Things You Need to Know About Your Mortgage.