Loan Basics

Loan Term

Your loan term is how long you have to pay back the mortgage, written in years. Thirty years and fifteen years are the most common. A longer term means a lower monthly payment but more interest paid over time. A shorter term costs more each month but builds equity faster and saves on total interest.

The loan term sets the whole rhythm of your mortgage. Stretch the payments over thirty years and each one is smaller, which helps your monthly budget but means you pay interest for longer. Compress them into fifteen years and the payment is bigger, but you own the home free and clear much sooner and pay far less interest along the way.

There’s no single right answer. It depends on your monthly comfort, your other goals, and how long you plan to stay. I can show you both side by side so the tradeoff is clear before you choose.

Related terms

Fixed-Rate Mortgage

A fixed-rate mortgage keeps the same interest rate for the entire loan term, so your principal and interest payment never changes. Your taxes and insurance can still move, but the loan part stays put. It's the most popular choice because it's predictable: the payment you start with is the payment you'll have years from now.

Amortization

Amortization is how your loan gets paid off over time through regular payments. Early on, more of each payment goes to interest and less to principal. As the years pass, that flips, and more goes toward the balance. By the end of the term, the loan is fully paid off.

Principal

Principal is the amount you actually borrow, before any interest. Each mortgage payment splits between principal and interest, and early on, most of it goes to interest. As the years pass, more of each payment chips away at the principal, which is how you slowly build equity in your home.

Last updated: June 13, 2026

This definition is educational and isn't an offer to lend or financial advice. Rates, programs, and guidelines may change without notice. All loans are subject to credit and property approval.

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