Final answer:
In the realm of mortgage terms, the typical range for the duration of residential mortgages is 15 to 30 years. Most people opt for a 30-year mortgage because it allows for lower monthly payments, even though it means paying more interest over time.
Step-by-step explanation:
In the realm of mortgage terms, the typical range for the duration of residential mortgages is 15 to 30 years. These are commonly known as 15-year and 30-year fixed-rate mortgages, respectively. A 15-year mortgage is paid off in 15 years, while a 30-year mortgage is paid off in 30 years.
Most people opt for a 30-year mortgage because it allows for lower monthly payments. However, it's important to consider that a longer mortgage term means paying more interest over time.
For example, if you borrow $200,000 at a fixed interest rate of 4%, your monthly payment for a 15-year mortgage would be approximately $1,479, and your total interest paid over the life of the loan would be around $66,287. On the other hand, with a 30-year mortgage, your monthly payment would be around $954, but your total interest paid over the life of the loan would be significantly higher at about $143,739.