A new year and the purchase of a new home rarely provide the vision of where you will be in 30 years. Very few of my buyers contemplate how old they will be when making the decision of the term for their new mortgage. The common practice for home purchase is to provide the buyer with the amount of the mortgage payment for the present time.
The type of mortgage chosen will determine the mortgage payment amount. A savvy buyer will have a plan of action for their financial expectations. If you are 40 years old today and committing to a 30 year term mortgage, you will be 70 years old when it is paid in full. A 15 year term mortgage will result in a mortgage payoff date when you are 55 years old.
A mortgage payment calculator can be utilized for planning your financial future. It allows you to change the terms or determine a new payoff date with remittance of additional monthly or semi-weekly payments. The mortgage payment calculator can also be applied to estimation of equity with the use of an amortization table. This tool is useful if your plans include upsizing, downsizing or transferring locations before the current mortgage is paid in full.
Consider the current mortgage payment when you are a prospective home buyer, as well as the term. Do you want to be making a house payment past retirement age? Will your future income support increases in taxes and insurance? Consider a shorter term mortgage payment which will reap benefits expediting the amount of equity to support forthcoming changes in your life plan.
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