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Commercial Real Estate Loan Types: Long Term Loans Vs. Short Term Loans
Author David Schneider | Dec 27,2007
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The decision to purchase a home is one of the biggest you may ever make. It is important to avoid jumping into the process without research. Find out which loan, rates and term are best for you and your finances.
Some things in the lending process may be out of your control, like interest rates, which are largely determined by your credit history and the current market rate. There are several other things you do have control over, including the length of time for your mortgage.
Pros and Cons of Long Term and Short Term Mortgage Loans
The length of the mortgage loan greatly affects your monthly payment. There are two kinds of loan terms: short term and long term. Short term loans are typically mortgages paid for 15 years, while long term mortgages are 30-year loans.
The interest rate also affects your monthly payment. Short term loans usually have a higher monthly mortgage payment because it takes less time to pay the loan. The interest rate on a short term loan is lower because lenders see a long term loan is as more of a risk.
Short term loans allow you to build equity in your home more quickly because of the loan’s shorter payments. You will be paying a short term loan in half the time of a long term loan. You will usually have a lower interest rate for short term loans, since they are less of a risk for lenders. You must repay the loan in full within 15 years and are more likely to avoid default.
Shop Around for the Best Deal on Commercial Real Estate Loans
Whether you choose a long term loan or short term loan, make sure to compare several lenders. Compare interest rates, loan requirements and make sure there are no hidden fees or points.
Ask about the different loan programs that may be available. Some mortgage programs may be a better fit for your financial situation. Make sure that you are happy with the level of customer service your lender provides. Your lender should have no problem clearly explaining the application process in a way that is easy to understand. A lender should not mind answering any questions you have about the loan process, as well as the pros and cons of long term versus short term loans.
Always compare rates, loan requirements and terms before committing to anything. This step can save you money in the end. Don’t forget to request everything in writing.
The decision to purchase a home is one of the biggest you may ever make. It is important to avoid jumping into the process without research. Find out which loan, rates and term are best for you and your finances.
Some things in the lending process may be out of your control, like interest rates, which are largely determined by your credit history and the current market rate. There are several other things you do have control over, including the length of time for your mortgage.
Pros and Cons of Long Term and Short Term Mortgage Loans
The length of the mortgage loan greatly affects your monthly payment. There are two kinds of loan terms: short term and long term. Short term loans are typically mortgages paid for 15 years, while long term mortgages are 30-year loans.
The interest rate also affects your monthly payment. Short term loans usually have a higher monthly mortgage payment because it takes less time to pay the loan. The interest rate on a short term loan is lower because lenders see a long term loan is as more of a risk.
Short term loans allow you to build equity in your home more quickly because of the loan’s shorter payments. You will be paying a short term loan in half the time of a long term loan. You will usually have a lower interest rate for short term loans, since they are less of a risk for lenders. You must repay the loan in full within 15 years and are more likely to avoid default.
Shop Around for the Best Deal on Commercial Real Estate Loans
Whether you choose a long term loan or short term loan, make sure to compare several lenders. Compare interest rates, loan requirements and make sure there are no hidden fees or points.
Ask about the different loan programs that may be available. Some mortgage programs may be a better fit for your financial situation. Make sure that you are happy with the level of customer service your lender provides. Your lender should have no problem clearly explaining the application process in a way that is easy to understand. A lender should not mind answering any questions you have about the loan process, as well as the pros and cons of long term versus short term loans.
Always compare rates, loan requirements and terms before committing to anything. This step can save you money in the end. Don’t forget to request everything in writing. |
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