Talking Points
- Today’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 “balloon mortgages” 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 – generally 10- or 20-year loans. 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 “Yourgage.”
- Yourgage lets consumers choose anything from eight-year loans to 29-year loans. 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. That doesn’t lock the borrower into a higher monthly bill, but does allow him to pay down the principal balance of the loan.