The term length refers to the amount of time borrowers will be given to repay a loan. For example, borrowers seeking a mortgage loan can choose between a 15-year and a 30-year term length. During this amount of time, they will make monthly payments to their lenders that include repayment of the principal and the interest. With a fixed rate, the monthly payments will be the same amount every month until the term length ends. If it is an adjustable rate mortgage, borrowers will pay a lower interest rate for a set number of years. At the end of this term, the rate will adjust higher and the borrowers will pay this new amount for the rest of the term. Those who can afford it choose the 15-year term length to pay less interest over the length of the loan. A 30-year term length will be advantageous to those who wish to have a lower payment every month.
