What is a mortgage term?

A mortgage term refers specifically to the length of time for which the mortgage contract remains in effect. This period can vary, typically ranging from a few months up to several years, and it defines how long the borrower commits to the mortgage agreement with their lender under specific conditions, such as interest rates and monthly payment amounts.

During this term, the borrower is usually paying off the loan at the agreed-upon interest rate, and at the end of this term, the borrower may have options such as renewing the mortgage, paying it off entirely, or refinancing it. It is essential for borrowers to understand the concept of the mortgage term since it affects their financial planning, including budget management and potential changes to their payment amounts upon renewal.

The other choices reference related but distinctly different concepts. For instance, the period before interest rates can change gives insight into adjustable-rate mortgages but does not define the mortgage term itself. Similarly, the total time the borrower has to repay the loan includes the amortization period, which could be longer than the mortgage term. Finally, the amount of time before the property can be sold is unrelated to the mortgage term and concerns property ownership and market conditions.