Skip to content

How Long is Too Long For Your Mortgage?

Have you ever wondered how long your mortgage should be? Is 30 years the right length? Or do you need to pay it off in 15 or 30 years? After all, the mortgage process can be complicated and confusing, and the last thing you want to do is end up with more debt than you can handle.

When getting your mortgage, the length of your loan will be one of the significant factors in determining how much you pay and how low you'll get your interest rate. The longer your mortgage, the more interest you'll pay over time and the higher your monthly payments will be. On the other hand, the lower your charges are, the faster you'll reach that milestone moment when you can finally pay off all of your debts and own your home free and clear.

With so many variables at play, determining the right length of your mortgage can seem like an impossible task. However, understanding how long is too long for your mortgage will be easy and painless with the following basic guidelines. So, read on to find out more!

How Do Rising Interest Rates Affect Your Finances?

There are many things to consider when deciding how long you should be locked into a particular mortgage. One critical factor, however, is the mortgage interest rates. While rising interest rates are a good sign that an economy is growing and getting stronger, they can negatively impact homeowners holding mortgages with variable interest rates. If you're interested in buying or refinancing your home, keep reading to learn more about how rising interest rates could affect you.

Purchasing a home with an adjustable-rate mortgage (ARM) will give you an initial interest rate that could be lower than a fixed-rate loan, but these rates can fluctuate over time. If you take out an ARM and interest rates increase, it could affect your monthly payment. When you're getting ready to close on a new home, you typically want to know when your adjustable-rate mortgage will adjust up or down. You don't want it to change while you're still building up equity, but you don't want it to stay at one level if interest rates continue dropping.

Typical Southwest Florida concrete block and stucco home in the countryside with palm trees tropical plants and flowers

When to Consider Hybrid Loans

If you plan to stay in your home for over ten years, a hybrid loan (intermediate ARMs) could save you on monthly payments. Hybrid loans are a cross between fixed-rate and adjustable-rate mortgages. A hybrid has two interest rates: a fixed rate for an initial period, then an adjustable rate after that. The initial period can range between 5 and 10 years, depending on how much risk you're willing to take with your mortgage payment.

If you want to get a shorter loan term but would like more flexibility than a traditional 15- or 30-year fixed rate can offer, consider hybrid loans. Most homebuyers who go with a hybrid loan are aware of how their payment will change, so they're willing to accept those increases in exchange for getting a lower rate initially.

How Long Should You Expect to Hold the Mortgage?

A common misconception in mortgage length is you'll keep it until you sell your house. The truth, however, is that you should decide ahead of time how long you expect to stay in your home or hold your mortgage and plan accordingly.

If you’re considering staying put in your house for more than seven years and don't want to encounter the risk of rising interest rates, then a 30-year fixed-rate mortgage might be your best bet. A fixed-rate mortgage has just one interest rate, which remains unchanged for the life of your loan.

A 30-year fixed-rate loan does exactly what it says: You'll make monthly payments at that same rate over 30 years before you own your home free and clear. On average, a 30-year loan will end up costing you less than the ARM option in terms of total interest paid in the long run.

On the other hand, adjustable-rate mortgages can keep monthly payments low and allow you to pay off your loan quickly. This makes them best suited for people who don't expect to live in their home for more than five years. However, your monthly payments will rise as well when interest rates rise. If you think you'll be selling or refinancing soon, then an ARM may not be a good choice for you because of its fluctuating rate feature. Learn more about fixed-rate mortgages here.

Deciding on Your Mortgage’s Life: 15 or 30 Years?

Mortgage terms can be confusing, but choosing whether to get a 15-year or 30-year loan has implications beyond monthly payments. Before signing any contracts, consider how long you plan to stay in your home. If you're planning on moving within two decades, choosing a shorter-term loan with higher monthly payments may make sense. If you want to stay put—or aren't sure—a longer term may be best.

Bottom Line

Buying a home is the most significant investment you'll ever make in your lifetime, so it's natural to maximize the amount of time you spend making payments on it. The length of time it takes to pay off your mortgage can be an essential factor in determining how much equity you can accumulate in your home. The quicker you pay down your mortgage, the less interest you'll have to pay and the more money you can put towards other investments or consumer goods to increase your overall living standard. Interested in reading about why buying is better than renting? Read this article.

Find The Right Mortgage

For more than 20 years, Phil have been helping customers achieve their home purchase and refinance goals by providing them with invaluable resources and support.

Schedule a FREE Consultation
Phil Ganz

Subscribe to Get Your First Time Homebuyer Checklist

Sign up for the weekly newsletter to stay up to date on the latest real estate market trends, loan news, and so much more!