About once a semester at school, someone learns something that blows their mind. It’s always exciting when you learn something that changes your perspective, no matter what subject it is. The world of home loans is not immune to these lessons, as you may not be aware of how flexible loan options can be. The world of home loans is full of these enlightening educational moments, so that’s why we’re taking a closer look at custom-term mortgages in this week’s Know Your Mortgage.
What Is a Custom-Term Mortgage?
In order to answer that, let’s take a look at the “traditional mortgage” options. Typically, people get a 30- or 15-year fixed-rate mortgage if they’re looking for a long-term living situation, or they’ll get an adjustable rate mortgage if they plan to stay in the home for a shorter period of time. These are all fine options for home loans, but it’s unclear whether people choose these because they’re good, round numbers or because they actually fit their financial needs.
As previously discussed by Bob Walters, chief economist of Quicken Loans, a custom-term mortgage makes it possible for borrowers to lower their interest rates, set new loan limits or possibly shape the terms of their mortgage based upon a targeted monthly amount.
What Are the Conditions of a Custom-Term Mortgage?
First off, a custom-term mortgage has to have a fixed rate, and it can range from 8 to 30 years—you decide how long you want it to be. This is extremely helpful for people looking to refinance, because if they’re 10 years into a 30-year fixed-rate mortgage when they refinance, they could get a 20-year custom-term mortgage instead of a refinanced 30-year fixed rate.
Perhaps you’re pinching pennies to meet your current mortgage payments; a custom-term loan allows you to change the payment structure to make paying off your mortgage easier. It’s hard to go into specific benefits with custom-term mortgages, because there are many variables (mainly the length of the loan and the interest rate you could get from it), there are many variables that allow you to adjust your custom-term mortgage to suit your particular needs (such as the length and interest rate tied to the mortgage). It’s worth checking out to see if you can benefit financially.
Quicken Loans offers a custom-term loan, known as the YOURgage, to best suit a client’s needs. If you have any questions about custom-term mortgages, or the Quicken Loans YOURgage, please comment below or visit QuickenLoans.com.