Mortgage Term

Mortgage-Term-optimized-749x396

Mortgage Term

The mortgage term is the length of time, usually in years, in which the parameters of a mortgage have legal effect. At the expiration of the mortgage term, the remaining balance of the mortgage will be paid back to the lender. The owner can either renew (if the lender is willing), refinance, or pay the loan in full. Commercial real estate mortgages generally carry a 10-year term with a 25-year amortization (aka 10/25). So the remaining balance can be significantly large. In comparison, residential loans are usually a 30/30, so there is no balance at the end of the term.

Be sure not to confuse the mortgage term with the mortgage amortization period. The amortization period is the length of time, based on the monthly payment set in the mortgage, that it will take an owner to completely pay off the mortgage. The mortgage term will always be shorter (that is unless you are getting a terrible loan).

This entry was posted in . Bookmark the permalink.