May 9, 20263 min read
Homebuyers often hear a rule of thumb, but prime mortgage underwriting is more detailed than that. A 3-year term gives you an earlier opportunity to reset your mortgage, while a 5-year term provides longer rate certainty. Neither is automatically better.
Where borrowers get tripped up
Here is what matters most:
- A shorter term can be attractive if you expect your financial situation or housing plans to change within a few years.
- A longer fixed term can simplify budgeting and reduce the risk of renewing during a short period of higher rates.
- Compare the actual rate difference, not just your view of where rates might go.
- Consider potential break penalties if you may sell, refinance or move before the term ends.
Run payment and penalty scenarios for both terms so the choice reflects your plans rather than a rate forecast.
Want this applied to your own numbers?
Call Phil Cragg at 866-349-4915 or request a written comparison.
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