Mortgage Loans- How Much Risk Can You Tolerate

There are many options for your mortgage today that were not available ten years ago. The type of mortgage you choose depends largely on your financial objectives and your tolerance for risk; if you are a financially conservative person you need to do your homework and explore your options before signing for a mortgage. Here is what you need to consider when choosing a mortgage loan to purchase your home.

What are Your Financial Objectives?

Consider you financial goals for the mortgage loan. Do you need a mortgage with the lowest monthly payment? Do you want to build equity and pay off the mortgage as soon as possible? If you are looking for the lowest monthly payment and have a high tolerance for risk, a mortgage with a long term length and an adjustable interest rate could be right for you. If you have no tolerance for financial risk consider a loan with a fixed interest rate. If building equity in your home is your goal mortgages with short term lengths are your answer.

What is Term Length?

Term length is the amount of time the lender grants you to repay the loan. Traditional mortgages come with 30 year term lengths; however 40 year mortgages are becoming increasingly popular. The longer your term length is the lower your monthly payment will be; however, you will pay more in finance charges to the lender over the longer duration. Longer term lengths are considered more of a risk for lenders; mortgage lenders pass this risk on to you the borrower in the form of higher interest rates.

Mortgages with short term lengths have higher monthly payment amounts but build equity at a much faster rate. Mortgage loans with a 15 year term are a popular choice for individuals refinancing their mortgages for this very reason. Interest rates are typically lower for mortgages with shorter terms so you will pay less to the lender over the life of the mortgage. To learn more about your mortgage options and how to avoid common mortgage mistakes, register for a free mortgage guidebook using the links below.

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Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing: What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit

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