The response varies based on your location and the person you ask. Although they are less common than 15- or 30-year mortgages in the US, 25-year mortgages do exist.
However, you’ll likely need to shop around to find a lender who offers them Some online lenders, like Rocket Mortgage, offer 25-year terms, but many traditional brick-and-mortar banks do not
What is a 25-year mortgage?
A 25-year mortgage is a home loan with a term of 25 years This means that you will have 25 years to repay the loan, with fixed monthly payments
Generally speaking, the interest rate on a 25-year mortgage is lower than that of a 30-year mortgage but higher than that of a 15-year mortgage. This is because the lender bears less risk because you are borrowing the money for a shorter time.
Benefits of a 25-year mortgage
There are several benefits to getting a 25-year mortgage, including:
- Lower monthly payments: Compared to a 15-year mortgage, your monthly payments will be lower with a 25-year mortgage. This can free up more money in your budget for other expenses.
- Lower interest rate: Compared to a 30-year mortgage, the interest rate on a 25-year mortgage will be lower. This means you will pay less interest over the life of the loan.
- Faster payoff: Compared to a 30-year mortgage, you will pay off your loan faster with a 25-year mortgage. This means you will build equity in your home more quickly.
Drawbacks of a 25-year mortgage
There are also some drawbacks to getting a 25-year mortgage, including:
- Higher total interest paid: Even though the interest rate on a 25-year mortgage is lower than the interest rate on a 30-year mortgage, you will still pay more interest over the life of the loan because you are borrowing the money for a longer period of time.
- Less flexibility: Compared to a 30-year mortgage, you have less flexibility with a 25-year mortgage. If you need to make a large payment on something else, you may not be able to afford to make your mortgage payment.
- Limited availability: As mentioned earlier, 25-year mortgages are not as common as 15- or 30-year mortgages. This means you may have to shop around to find a lender who offers them.
Is a 25-year mortgage right for you?
Whether or not a 25-year mortgage is right for you depends on your individual financial situation and goals. If you are looking for a lower monthly payment and are willing to pay a bit more interest over the life of the loan, then a 25-year mortgage may be a good option for you. However, if you are looking to pay off your loan as quickly as possible, then a 15-year mortgage may be a better choice.
Here are some factors to consider when deciding whether or not a 25-year mortgage is right for you:
- Your income: Can you afford the higher monthly payments of a 25-year mortgage?
- Your debt: Do you have a lot of other debt that you need to pay off?
- Your credit score: Do you have a good credit score that will qualify you for a lower interest rate?
- Your goals: What are your financial goals? Do you want to pay off your mortgage as quickly as possible, or are you more interested in having lower monthly payments?
Once you have considered these factors, you can talk to a mortgage lender to get more information about 25-year mortgages and see if they are a good fit for you.
For buyers who wish to balance lower monthly payments with lower total interest paid, 25-year mortgages are a good choice. But since they are less common than 15- or 30-year mortgages, you might have to look around for a lender that will offer them.
Before deciding on a 25-year mortgage, it is important to consider your individual financial situation and goals. You should also talk to a mortgage lender to get more information about 25-year mortgages and see if they are a good fit for you.
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Should you get a 25-year mortgage?
If you can find a bank that offers one, a 25-year mortgage can be a solid option. Like a 30-year term, the lower monthly payments can free up more money to put towards bills or help you save for the future. And, compared to a 30-year term, you could save more on interest in the long run.
What is a 25-year mortgage?
The above calculator is for fixed-rate mortgages. In many countries 25-year mortgages are structured as adjustable or variable rate loans which reset annually after a 2, 3, 5 or 10 year introductory period with a teaser rate. The most common home loan term in the US is the 30-year fixed rate mortgage.
What is a 25 year fixed mortgage?
A 25-year mortgage is a term you might not typically see. With a 25-year fixed, you’ll pay off your home loan over 25 years instead of the standard 15 or 30 years. Since it’s a fixed mortgage, you can count on the same principal and interest rate for the life of the loan. How Do I Qualify For A 25-Year Fixed Mortgage?
How much interest does a 25-year mortgage pay?
In this example, with monthly payments of $1,112 on a 25-year mortgage of $200,000 at 4.5% APR, your total interest paid by the end of the loan amounts to $133,499. In comparison, a 30-year mortgage results in lower monthly payments of $1,013 with a higher total interest paid of $164,813.