Today there are many types of mortgages on the market trying to cater to all different types of borrowers. Along with the different types of loans, there are different terms for those loans. In other words, they payback period can vary greatly to suit the needs of the borrower.
The most common term is a 30 year term. This is where the loan payment is calculated based upon repayment of the principal and the calculated interest over 360 equal payments. The interest rate that you will typically pay is a bit higher than a shorter term loan by approximately one-quarter to one-half of a percentage point.
The next most popular term is a 15 year term. This is where the loan is paid back in 15 years rather than 30 years. It is beneficial to shorten the term of the loan for the simple reason is that you will pay much less interest over the life of the loan, even if the interest rate is exactly the same as a 30-year loan. The problem with this is that many people cannot afford the increased payment associated with this short of a term, even though it is not two times the amount of the 30 year loan.
A compromise that has been used in some cases is the 20 year term. This captures interest savings without getting much more expensive than the 30 year mortgage. You will find the interest rate to be somewhere between the 15 and the 30-year mortgages, but these loans are not offered by all banks and mortgage companies. You will have to search a bit to find a 20 year loan. This is where a mortgage lender can be beneficial.
One more term that has been created in recent years is the 40 year term. This mortgage term has been created for the sole purpose of keeping the monthly payment low. This can be beneficial to young borrowers just starting out, but the total interest paid over the life of the loan is substantially more than even the 30-year loan. The borrower can always refinance the loan if their credit score remains high, but there is a risk that the mortgage rates will increase, keeping payments of shorter term mortgages too high.
In any case, you can shorten your mortgage term by paying additional principal each month.