Twenty-year mortgages are making a comeback. As the economic recovery has progressed, more consumers are looking at ways to improve their long-term financial situation. The real estate boom of a decade ago was all about putting as little money down as possible and staying highly leveraged.
Today, Americans recognize the benefits of a home loan being a forced savings plan that builds up equity each month. That is why home loans with a 15-year schedule have been so popular in the past five years. However, many cannot afford the higher payment of a 15-year loan. The 20-year mortgage provides a great alternative for those who can’t qualify or afford a 15-year payment schedule.
The 20-year pays off the loan 10 years early, which is only five years less than a 15-year, but does not have as high a payment. Plus, some 20-year loans are priced less than 30-year alternatives and mortgage insurance costs may be reduced as well. It is no wonder this option is becoming more popular.
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