Mortgages 15 year
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A 15-year fixed-rate mortgage is the ideal choice for anyone who is interested in reducing the overall mortgage costs and becoming free of mortgage sooner. Although a 15-year fixed is not as popular as a 30-year mortgage, it has certain decisive advantages over longer-term loans.
Advantages of 15-year fixed mortgage
Here are some basic features of a 15-year fixed-rate mortgage.
- Low interest. Since shorter-term loans carry less risk for the lenders, 15-year mortgage rates are lower than 30-year rates (usually 0.25% - 1% less), which over the length of the loan turns into tens of thousands of dollars saved. Low interest fee is the major reason why a 15-year loan is considered a very attractive home financing option.
- High monthly payments. You should understand that because you are going to pay off your loan in a fairly short period of time (twice shorter than a 30-year mortgage, for example), your monthly installments are bound to be much higher than on longer-term loans.
- Less financial flexibility. Large monthly payments leave less room for other expenses and make it hard to save money for such important things as education or retirement. Unless you have a steady income sufficient to cover high mortgage payments and other living expenses, you shouldn't opt for a 15-year fixed. Getting stuck with payments that you can't afford is definitely not what you want.
- Less funds provided than by a 30-year loan. Since the loan term is shorter, you can borrow smaller amount than from longer-term loans. This factor could make you buy a more modest home than you initially planned but it is not necessarily a bad thing as sometimes the decision to buy the biggest and the best results in overspending and puts extra pressure on your financial stability.
- A 15-year fixed-rate mortgage can save you substantial amounts of money provided that you can manage high monthly payments. Learn more about the best 15-year fixed mortgage plans and compare them with 10, 20 or 30-year fixed home loans using our free mortgage calculator.