How Term Length Affects Pittsburgh Mortgage Rates

If you’re planning to buy a home soon, you’re top priority should be finding a mortgage with favorable terms and interest rate. However, there are several things that can affect Pittsburgh mortgage rates that you should know before committing to a loan–one of the biggest is the loan’s term length.

Types of Mortgage Terms

Mortgages can be paid off in any number of ways, but the length of time you agree to make your payments over is the mortgage term. The term length can have a significant impact on the cost of your mortgage, including the interest rate you pay, as well as the size of monthly payments.

Short-Term Loans & Mortgage Rates

There are a couple of advantages to choosing a shorter term for your mortgage. The biggest one is that you pay off your loan much faster, thus eliminating your debt and paying less interest over the life of your loan. Additionally, the interest rate is lower–in the case of a fixed rate mortgage, a 15-year term is about 1 percent less than a 30-year.

The major drawback is since you have less time to pay off the loan, monthly payments increase. It’s for this reason that short-term mortgage loans are best if you can afford a large payment and are most concerned with saving as much money as possible overall.

Long-Term Loans & Mortgage Rates

Extending the length of your loan can also help you save money in a number of ways. Lengthening your loan will help decrease monthly payments, even though you end up paying more interest in all.

Long-term loans also have slightly higher interest rates. They’re best for borrowers who are most concerned with fitting a home loan into a tight monthly budget.

Choosing the Best Mortgage Term and Rate

Getting an affordable mortgage is about more than just finding the best Pittsburgh mortgage rates. You also have to consider your financial obligations and how much you can afford to spend each month. This will help you determine the right mortgage term for you, and then you can shop for competitive rates for the particular term length.