Todayâ€™s record-low mortgage rates have a lot of homeowners debating whether to refinance into 15- or 30-year mortgages, but few realize lenders offer products with all sorts of repayment periods, from five-year â€œballoon mortgagesâ€ to 29-year loans.
Fifteen- and 30-year mortgages do make up the bulk of the market, but the Mortgage Bankers Association says some 15 percent of consumers who refinanced in May chose nonstandard products â€“ generally 10- or 20-year loans.Â About 2 percent of home buyers also choose such loans for purchase mortgages.
Quicken Loans offers one of the best-known home loans with nonstandard repayment terms, a product called â€œYourgage.â€
Yourgage lets consumers choose anything from eight-year loans to 29-year loans.Â According to an executive with Quicken Loans, the most popular choice among Yourgage customers are eight-year mortgages, with 29-year loans coming in second.
Another alternative is taking out a 30-year loan and adding a little extra principal to the bill whenever possible.Â That doesnâ€™t lock the borrower into a higher monthly bill, but does allow him to pay down the principal balance of the loan.