When it comes to buying homes, there are few decisions as important as choosing proper mortgage term lengths. The length of a mortgage term directly affects the final cost of the home, and in a market battered by recession and low home values, term lengths have become particularly important. Many home buyers have seen the consequences of high-interest, long term mortgages, and have opted for more responsible loans. Forty year mortgages are becoming less popular and 15 and 30 year mortgages have won significant attention from the newest class of home buyers and homeowners looking to refinance.

Thirty year mortgages have been the most popular option for home buyers over the last decade for several reasons. They’re a fairly flexible way to pay off a mortgage, because they offer a low minimum payment while still allowing the homeowner to pay for a mortgage ahead of time. In other words, a homeowner could make the same payments on a 30 year mortgage as he or she might on a 15 year mortgage, paying it off in about the same amount of time, yet still having the flexibility of low monthly minimum payments if he needs them. While a 40 year mortgage can have a relatively high interest rate, the difference in interest rates between a 15 and 30 year mortgage are usually small enough to make the 30 year mortgage a better investment.

This has become particularly true as banks have slashed interest rates to attract more home buyers. With historically low interest rates and home values nationwide, a 30 year mortgage is a much safer bet for many homeowners; it offers superior financial flexibility and can be a very affordable option, particularly for first-time homeowners who might be hesitant to buy a home with a shorter-term mortgage.

New mortgage options have also been introduced in the last few years as part of a government response to the collapse of the housing market. It’s easier than ever to refinance thanks to these new mortgage options, with low closing costs and cash incentives for banks that help homeowners refinance with lower rates and fees. Many homeowners have taken advantage of these options to switch to a fixed-rate mortgage, and as low rates have become widespread, some shorter mortgage term lengths have become much more attractive to the homeowners who can afford larger monthly payments. Overall, the new options present more flexibility for homeowners who are thinking of selling, buying, renting or simply refinancing a home and have given owners a lot more breathing room. In a troubled economy, seriously evaluating mortgage term lengths makes a lot of sense and can save a homeowner thousands of dollars.