LOS ANGELES, March 4, 2013 /PRNewswire-iReach/ -- When you think of a mortgage, you probably think of committing to either 15 or 30 years' worth of payments. So, when you start doing some searching on Realtypin.com's Mortgage Center, you'll probably be surprised to see some lenders offering another option – a 20-year mortgage. While they may not be as widely-advertised as their 30 and 15-year counterparts, 20-year mortgages are making a serious gain in popularity. By the end of 2012, the number of 20-year mortgage applications (for both brand new mortgages and refinances) had grown by more than 20%. So, why are these mortgages so trendy?
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1. They offer lower rates than 30-year mortgages
Because you have to pay them back faster than their 30-year counterparts, you won't have to pay as much interest as you would with a 30-year mortgage. In today's world – where mortgage rates are sitting at record lows – that may not seem like a big benefit. However, even a difference of a fraction of a percent can save you thousands of dollars in a year's time!
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2. They offer lower payments than 15-year mortgages
Most people think that if they want to have lower mortgage rates, they have to go with a 15-year mortgage – and a much higher monthly payment. But 20-year mortgages offer the best of both worlds! You'll get the lower rate, but since you'll be taking 5 years longer to pay it back than you would on a 15-year plan, you'll get to take advantage of lower monthly payments. For some people, lowering the payments just a little bit makes all the difference!
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3. They're easier to qualify for than a 15-year mortgage
Because the monthly payments on these mortgages are lower than they are on a 15-year mortgage, your monthly income won't have to be as high to qualify for a 20-year mortgage. So, if you were looking for a shorter commitment – but were afraid of being turned down for a 15-year mortgage – you may have just found the perfect solution!
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4. They'll be paid off in time to pay for college
If you're buying a home with the thought of having a couple of kids running around in a few years, a 20-year mortgage will give you the perfect time frame, money-wise. After all, once you're finished paying off your mortgage, it will be time to help your kids pay for college – without the burden of a mortgage hanging over your head. Talk about planning ahead!