What Is a 15-Year Fixed-Rate Mortgage?

Consumers may choose between a 60-day, 75-day or 90-day lock period. Consumers must initiate a mortgage loan application for a specific property and be under purchase contract for the property at least 30 days prior to lock expiration in order to extend the locked rate. All rate lock extensions are subject to Pennymac’s standard rate lock extension fees.

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Abby, our online mortgage assistant, can walk you through the process of putting together your application. Let’s walk through what an assumable mortgage is, how it works and why it’s really not much more than a buzzword for real estate gurus on TikTok trying to get clicks and views. Reach out to Churchill Mortgage so their experienced loan specialists can save you the headache of breaking down costs yourself and help you finance your home the smart way. If you have a favorable interest rate on your 30-year fixed-rate mortgage, going through the expense of refinancing just isn’t worth it. With a 15-year mortgage, you can usually get an interest rate between 0.25% to 1% lower than with a 30-year mortgage.

What were the lowest 15-year mortgage rates?

For many people, the lower payments of a 30-year mortgage are more affordable and offer an extra level of security in case times get tough. You can always make extra payments each month, effectively turning your 30-year term into a 15-year one. If you have a 30-year mortgage and are more than halfway through your loan term, refinancing into a 15-year loan with a lower rate could save you thousands in interest. Bankrate’s 15-year vs. 30-year calculator can help you make the decision. Keep in mind that rates have shifted dramatically over the past few years. If that same family chooses a 30-year mortgage at 5.34%, their monthly payments would be $669.

Why compare 15-year refinance rates today

It is the path that generations of Americans have taken to first-time homeownership. While the 28 and 36% ratios are ideal, lenders understand that life can be complicated. Depending on your income or credit score, you might be able to borrow as much as 43% of your monthly income. The table below provides a quick summary of how the differences between these two loan terms will affect you as a borrower. A means that it’s the more expensive option of the two loans, and a means that it’s the less expensive option.

Should you refinance to a 15-year loan or another 30-year loan?

And now, it’s really small, so I plan to pay it off within 12 months. If leverage is so great how come we aren’t all buying stock on margin? I think whatever mortgage term gets you to pay off your loan the fastest is the best one to choose. I consider myself somewhat informed when it comes to investments but I have a hard time with the leverage concept. Even when you’re leveraging your money on real estate your still paying interest. I understand the math on leverage, but not paying interest is still better than paying interest IMO.

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Our site has comprehensive free listings and information for a variety of financial services from mortgages to banking to insurance, but we don’t include every product in the marketplace. In addition, though we strive to make our listings as current as possible, check with the individual providers for the latest information. The cost of a 15-year mortgage depends on the loan amount and interest rate, which, in turn, depend on the home’s value, the size of your down payment, and your creditworthiness. To get an estimate of how much a 15-year mortgage would cost, enter your details into a mortgage calculator. The website you are accessing is for clients of Credit Union Investment Services, Inc. (CUIS), an Investment Adviser registered with the State of North Carolina. CUIS offers investment advisory services to North Carolina residents.

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This could be a problem to some, especially if you need additional square footage, or have your heart set on a specific neighborhood. Bottom line is that you never want to sign up for a mortgage term you cannot afford. Consider the following pros and cons to determine whether a 15 year fixed mortgage could work in your favor. Owning a home may feel like it simply provides one of your basic needs. However, homeownership is one of the most popular forms of investing in the U.S. and is often understated as a way to build wealth that can be passed on to future generations. Paying off your loan in the shortest amount of time will be the quickest way to maximize this equity growth and remove one of the most significant debts from your financial profile.

• Payment information does not include applicable taxes and insurance.
• This means you’ll be able to pay the loan off faster and pay less interest over the life of the loan.
• The 15-year mortgage has some advantages when compared to the 30-year, such as less overall interest paid, a lower interest rate, lower fees, and forced savings.
• For an investor beginning to get into real estate, it is best to have more cash reserves, so I would opt for the 30 year.
• You’ll need the cash for down payments and to cover expenses when things don’t go according to plan (tenant not paying rent, unexpected major repairs, etc.).
• This is because repayment terms are longer in the latter case.

Year Fixed-Rate Mortgage Rate Quotes

A 15-year mortgage will limit you to buy the most you can afford. It is still inverted in 2024 due to much higher short-term rates as the Fed remains tight. In addition, given my consistent belief that we’d be in a permanently low interest rate environment, it didn’t make sense to borrow money on the long end of the curve. Get connected to a licensed loan officer that can walk you through the mortgage application process.

Mortgage rates in other states

Before you decide to take on a 15 year fixed term mortgage, it is important to assess whether you are able to sustain the higher monthly cost. If you consider yourself someone with a reliable income and self-discipline to commit to a higher monthly payment, then you could be mortgage-free in just fifteen years. LoanDepot can provide you with pricing and amortization schedules for all of our loan terms, so you can make an informed decision.

Less Affordability

A general rule of thumb is to look for a mortgage with a monthly payment of no more than a third of your gross monthly income. With rising interest rates, many home buyers seek ways to lower their borrowing costs. It’s a loan with a repayment period of 15 instead of 30 years and a mortgage rate that tends to be lower than longer-term mortgage rates.

Whatever it is, there’s always a reason to spend that money somewhere else. But doing that is really no different than choosing a 15-year mortgage in the first place. Besides that, choosing to make those extra payments would be up to you. Not to mention that, as we talked about earlier, the interest rate for a 30-year mortgage is higher than a 15-year mortgage. A shocking number of people ask just one lender or broker for a quote when they buy a home or refinance. The best way to get a great deal is to request quotes from multiple lenders.

• (And don’t expect that to be any lower on a 15-year loan than a 30-year.) If you opt for discount points to lower your interest rate even further, this will increase your closing costs.
• I just locked in 1.875% with -$2968 in fees (a credit) on 15 year on my main this AM (currently have a 5 yr ARM at 2.44%).
• But the trade-off is that you’ll have a larger monthly payment due to the shorter term.
• Select both the 30-year and 15-year loan terms in turn to make your comparison.
• By contrast, buyers pay mostly interest each month during the early years of a 30-year loan, giving them little to show for the property if they decide to sell it.
• In your 20s, saving can seem impossible due to responsibilities like marriage, children or student loans.
• While it could make sense for you specifically, this loan option might not suit every prospective buyer.
• Monthly payments on a 15-year fixed-rate loan will be significantly higher than with a 30-year mortgage.

As important as focusing on your mortgage during your working years is, building retirement savings is more important. And, like paying off a mortgage, retirement savings is a long-distance run. For today, Monday, January 06, 2025, the national average 15-year fixed refinance interest rate is 6.33%, down compared to last week’s of 6.34%. The national average 15 yr mortgage rate 15-year fixed mortgage interest rate is 6.30%, down compared to last week’s of 6.34%. For today, Monday, January 06, 2025, the national average 15-year fixed refinance interest rate is 6.33%, down compared to last week’s rate of 6.34%. The national average 15-year fixed mortgage interest rate is 6.30%, down compared to last week’s rate of 6.34%.

A 15-Year Mortgage Causes Greater Forced Savings

We used The Mortgage Reports refinance calculator to show how 15-year refinance savings might compare to a 30-year refinance. Get informed about the mortgage and homebuying process, from starting your home search to planning your next move. Opting for a 30-year mortgage might allow you to also put more money in an IRA or 401(k) plan, which will grow tax-free for years until you can withdraw it without penalty. Weighing the advantages of 15-year-mortgages against 30-year-mortgages is as easy as taking a look at where you are, and where you want to be.

You can calculate how much you’ll save in interest with a 15-year mortgage and subtract the amount from the fees to determine if refinancing is financially worthwhile. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and services, or by you clicking on certain links posted on our site. While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service. The 15-year fixed rate mortgage is most popular among younger homebuyers with sufficient income to meet the higher monthly payments to pay off the house before their children start college. They own more of their home faster with this kind of mortgage, and can then begin to consider the cost of higher education for their children without having a mortgage payment to make as well.

When is the best time to consider a 15-year fixed-rate mortgage?

That said, 15-year mortgage rates tend to hover around 0.5% – 0.75% lower than their 30-year counterparts. For example, 15-year mortgages have higher monthly payments since you have less time to pay them off. However, if you can’t afford the higher monthly payment of a 15-year mortgage don’t feel alone.

• Mostly excellent credit scores are getting approved for mortgages and mortgage refinances.
• Reach out to Churchill Mortgage so their experienced loan specialists can save you the headache of breaking down costs yourself and help you finance your home the smart way.
• Your final rate will depend on various factors including loan product, loan size, credit profile, property value, geographic location, occupancy and other factors.
• In this scenario, getting a 15 year implies maxing out retirement accounts automatically.
• Writers and editors and produce editorial content with the objective to provide accurate and unbiased information.
• Perhaps the mortgage market is loosening up b/c I wasn’t able to refinance my condotel mortgage for years.
• This is composed of an upfront mortgage insurance premium as well as a monthly mortgage insurance premium.
• The Home Mortgage Disclosure Act (HMDA) data about our residential mortgage lending are available for review.

Fixed rate mortgages for 15 years are less common in the UK than they are in some other countries, but they are available from some lenders—even though we found none with the major banks at this time. Generally, most lenders in the UK offer fixed rate mortgages for either two, three, five or ten-year terms. However, there are a few lenders that offer fixed rate mortgages for 15 years, so it is worth shopping around to find the best deal if you feel that a 15-year fixed-rate mortgage is what you need.

And based on your track record of paying off your mortgages early, I have no doubt you won’t pay this one off before 30 years as well. The choice seems so obvious when you compare these options, there is a huge reduction in interest rate at the 15-year term. And don’t forget to get a 30-year term life insurance policy as well, as you are at the ideal age. Between 401K and IRA, I’m already putting away 20% of my income to retirement. You didn’t factor into tax benefits on interest and extra money saved for addiotnal investment.

The number you come up with, keeping all the pros and cons in mind, will determine if a 15-year mortgage is right for you. If an investor can afford the higher payment, it is in their interest to go with the shorter loan, especially if they are approaching retirement when they will be dependent on a fixed income. “Some of the loan-level price adjustments that exist on a 30-year do not exist on a 15-year,” says James Morin, senior vice president of retail lending at Norcom Mortgage in Avon, Conn. Most people, according to Morin, roll these costs into their mortgage as part of a higher rate, rather than paying them outright. The 30-year fixed-rate mortgage is practically an American archetype, the apple pie of financial instruments.

Then choose a lender, finalize your details, and lock in your rate. For the week of January 5th, top offers on Bankrate are X% lower than the national average.On a $340, year loan, this translates to $XXX in annual savings. If you itemize your tax deductions, you may be able to write off the mortgage interest paid on your 15-year mortgage, your property taxes, and any private mortgage insurance (PMI). Keep in mind that you may also need to pay closing costs and get a home appraisal to refinance.