Current 15-Year Mortgage Rates

Run the numbers to decide whether the flexibility will be worth it, since 30-year loans often come with higher interest rates. To get your monthly payments under the desired percentage of your income, you may need to either pay off some debts before applying for your mortgage or find a way to increase your earnings. A 15-year fixed mortgage is a loan with a repayment period of 15 years and an interest rate that remains the same throughout the life of the loan. Like other types of mortgages, you use a 15-year, fixed-rate mortgage to buy property. Many people obtain a mortgage to buy their primary residence, while others obtain a mortgage to buy a vacation home or property to rent out to others. A 15-year fixed-rate loan makes sense if you can commit to a higher payment for the term of the loan.

How Much Can You Afford to Borrow?

Be sure to consider the full financial picture before committing to a shorter-term loan.
If making the larger monthly payments and maintaining an emergency fund are beyond your budget, you may want to opt for a 30-year mortgage.
However, savvy clients who invest the savings from their 30-year loans back into the market earn a conservative 5% annually, giving them a higher net worth than those who pursue the 15-year option.
Getting a fixed interest rate for your long-term home provides stability in your budget year after year.
Assurance Financial aims to help people achieve the American dream of homeownership.
I have 3 properties total, 2 rentals and a personal residence.

Lenders decided they couldn’t make enough margin on a 5/1 ARM with a 30-year amortizing period to warrant the increased risk of defaults. Below is a graphic of the Treasury yield curve that demonstrates higher rates with longer durations. But notice how the yields for 2-year, 5-year, 7-year-, 10-year, 15-year are all lower than the yields for 1-month, 6-month, and 1-year Treasury bonds.

Introduction to 15-Year Fixed Mortgages

However, the total interest on the 15-year loan would only be $162,955.13 compared to $436,781.99 on a 30-year loan. Similarly, the total payments would amount to $482,955.13 compared to $756,781.99 on a 30-year loan. In other words, you’d save $273,826.86 in the long run by opting for a 15-year mortgage. The Home Mortgage Disclosure Act (HMDA) data about our residential mortgage lending are available for review. The data shows geographic distribution of loans and applications; ethnicity, race, sex, age, and income of applicants and borrowers; and information about loan approvals and denials. These data are available online at the consumer Financial Protection Bureau’s website (/hmda).

The pros and cons of a 15-year mortgage

Though we can’t review every available financial company or offer, we strive to make comprehensive, rigorous comparisons in order to highlight the best of them. For many of these products and services, we earn a commission. The compensation we receive may impact how products and links appear on our site. It’s a good reminder that the average rate for various mortgages are just that, averages.

Year vs. 30-Year Mortgage: What’s the Difference?

Selling Primary residence this month and getting enough cash to pay off the 2 rental mortgages from closing. Thought was to refi one of the rentals with cash out 30 yr fixed to get another 100K to put all the cash towards building a house and have smaller loan on the new house build. Can’t believe we can still save today after rates ticked up from 2020’s bottom. But mortgage rates have been falling again over the past three months. If I was forced to take out a 15-year mortgage back in 2003, I likely would not have bought the condo when I did. The increased monthly payment would have perhaps been too much.

Pros and Cons of 15-Year Fixed Mortgages

Most homebuyers can qualify for a 15-year mortgage, depending on their financial situation and lender criteria. Those with stable income and a solid financial foundation are more likely to secure this loan. Additionally, be prepared for emergencies by keeping three months’ worth of payments — including your mortgage and other debts — in reserve. CNET editors independently choose every product and service we cover.

How much more a month is a 15-year mortgage?

Use our free mortgage calculator to see how current 15-year mortgage rates will affect your monthly payments and long-term finances. You may consider a loan with a 15-year mortgage rate over a longer term loan like a 30-year fixed if you’re comfortable with making higher monthly payments. You’ll pay significantly less interest over time and pay your home off twice as fast, since you’re borrowing the money for just 15 years as opposed to 30. To qualify for a 15-year mortgage, you should aim to first get your financial house in order by securing a stable income, saving for a down payment, improving your credit score, etc. From there, gather and compare loan offers from different lenders and apply to the best ones.

Fixed Rate Mortgages

The vast majority of ARM holders saw a reset that was flat or down over the years. 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 getting neutral real estate in an area you want to live in for 5+ years is the priority, then the rental. I suppose one can refi and take money out of property again if needed but that itself comes with additional cost. For a added risk, I do agree with Sam’s approach of using an ARM if the rate spread between that and the 30 year mortgage is big enough.

Talk to a mortgage consultant

It is not the most optimal time to build due to the expense of materials and labor but we will be able to do some of the work ourselves to save on the costs. So the biggest decision will be to decide how much of the proceeds from the sale of our current home we will put towards the new mortgage and the loan term we will take out. I have changed my tune on a paid off mortgage with interest rates so low.

Explore business banking

Your loan officer can help you compare loan options and find the total cost and savings for a 15-year loan versus a 30-year loan.
If you have a lot of working years ahead of you, things to keep in mind are what kind of income increases you expect over the years and whether you have an inheritance or other windfall coming.
It would be a very weird day indeed if 15-year fixed mortgage rates were higher than 30-year fixed rates.
The rates shown above are the current rates for the purchase of a single-family primary residence based on a 45-day lock period.
Unless you plan to sell or refinance the home before the 5-year ARM’s fixed period ends, a 15-year mortgage is the lower risk option.

A 15-year mortgage is a loan that helps you pay off your home in half the time as a traditional 30-year mortgage. You’re getting a lower interest rate, with a larger chunk of your money going toward the principal. So, you’re building equity faster and spending less on overall interest.

You are unable to access rate.com

Typically, 15-year mortgage rates are lower than rates on the more popular 30-year loans. You might find considerable differences in rate, or varying fees (often reflected in the APR) and customer service experiences. 15-year fixed mortgages typically offer lower interest rates than 30-year fixed loans, but they come with higher monthly payments. There’s no single lender with the ‘best’ 15-year mortgage rates.

But for many people, keeping their monthly payments as low as possible is the goal, which is why 30-year mortgages are so popular.
I assume those who made 15-year fixed mortgage payments weren’t too happy that their property values were sliced in half.
Alternatively, take out a 15-year mortgage for your next home.
This might not get you to the 15-year mark, but the amount of principal would most certainly go down.
Rentals I think make more sense to stick with a 30 year because the interest expense is a good tax and you can improve your cash flow to buy more rentals and lower DTI calc as well.
Of course, someone who makes $152,000 could still pay $6,905 a month in mortgage payments for a 15-year mortgage.

Compare rates here, then click «Next» to get started in finding your personalized quotes.
Whether you’re buying or refinancing, you can trust Churchill Mortgage to help you choose the best mortgage with a locked-in rate.
To qualify for a 15-year mortgage, you should aim to first get your financial house in order by securing a stable income, saving for a down payment, improving your credit score, etc.
By the end of your term with the 30-year loan, you’ll have paid more than $300,000 in interest.
There are currently no lenders offering 15-year fixed rate products at the moment.
But what if you’re more established in your career, have minimal debt balances, and feel confident with your cash reserves?

The higher the interest rate, the more significant the gap between the two mortgages. The higher payment might limit the buyer to a more modest house than they would be able to buy with a 30-year loan. Using our 15 year mortgage rates today example above, let’s say the mortgage lender will only approve a maximum of $1,500 per month. The borrower would need to buy a cheaper house—a $200,000 mortgage at 4%, for 15 years, results in a $1,479 payment.

If I was forced to take out a 15-year mortgage back in 2003, I likely would not have bought the condo when I did.
Owning a home may feel like it simply provides one of your basic needs.
For instance, a 15-year FHA loan will likely require a credit score of at least 580, down payment of 3.5%, and debt-to-income ratio below 50%, just like a 30-year FHA mortgage.
2In eligible fixed-rate purchase loan transactions, Pennymac will pay 1% of the note rate for the first 12 payments of the loan.
However, the household needs to be damn sure about its income-generating future and ability to hold on during bad times.
For decades, a 30-year fixed-rate mortgage was the standard term for most homebuyers.

There are many different kinds of mortgages that homeowners can decide on which will have varying interest rates and monthly payments. A 15-year fixed-rate mortgage is a home loan paid in equal installments over 15 years. That 15-year period is known as the “loan term,” and a 15-year term usually comes with a higher monthly payment — but lower overall costs — than a 30-year fixed-rate mortgage. Rates on 15-year mortgages are usually lower than 30-year mortgage rates, which means you can save a lot by simply choosing a 15-year loan term. Lenders consider a shorter loan term less risky, which is why they’re willing to offer lower mortgage rates.

Now let’s look at a $350,000 house with a 15-year fixed-rate mortgage at 3.5%. With the shorter mortgage, you’ll pay $2,500 a month for a total of $450,000. That’s only $100,000 in interest, significantly less than what you would pay on the 30-year loan. Also note that 15-year fixed-rate mortgages have a lower interest rate than 30-year fixed-rate mortgages.

For buyers looking to maximize their purchasing power, we often recommend the 30-year term. Extending your loan term from 15 to 30 years can lower your monthly payment by thousands of dollars which can translate to hundreds of thousands of dollars in purchasing power. Yes, 15-year mortgages come with larger monthly payments, which can potentially put a strain on borrowers’ budgets and limit how much they can afford to borrow. The main benefits of getting a 15-year mortgage are a lower interest rate, less interest paid overall, and building equity faster.

Compare Fixed Rate Mortgage Loan options

This could help reduce the loan term and interest rate but also increase your monthly payments. These fees typically apply to borrowers with lower credit scores who make down payments less than 20%. Private mortgage insurance (PMI) is required by lenders when you make a down payment that’s smaller than 20% of the home’s value. A 15 year fixed year mortgage is a loan that will be completely paid off in 15 years assuming all payments are on schedule. As the name implies, this type of mortgage has a fixed rate, which keeps the payment and interest rate the same for as long as you hold the mortgage.

Less Affordability

Take a look at Fundrise, my favorite real estate investing platform for both accredited and unaccredited investors alike. Fundrise has been around since 2012 and manages over $3 billion in assets for over 350,000 investors. Fundrise primarily invests in the Sunbelt region in residential and industrial real estate.

Low 15-year mortgage rates – averaging 3.28% to 3.44% in January 2020 – save money, and buyers interested in paying down principal quickly often can do it without breaking their bank accounts. Monthly payments for a 15-year mortgage are a lot higher than 30-year mortgages, and if interest rates were higher, the monthly payment on the shorter term could be painful. But historically low interest rates have made 15-year mortgages increasingly popular.

But over time, mortgage rates on adjustable rate mortgages increase and so do the monthly payments the homeowner has to make. With a 15-year fixed-rate mortgage the interest rate may start a bit higher than an ARM, but it will stay consistent for the entire term of the loan. A 15-year fixed-rate mortgage offers homeowners the opportunity to build equity faster and save on interest over the life of the loan. This mortgage type is ideal for those who can afford higher monthly payments and want to become debt-free sooner. Total Mortgage has years of expertise in helping homebuyers secure the best 15-year mortgage deals.

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.

Deciding between a 15- or 30-year-mortgage may not seem like something you want to use a lot of mental energy on when everything else is so overwhelming. Maybe you already bought a house with a 30-year mortgage and you’re thinking this information would’ve been great to have known five years ago. Affordability accounted for 40% of the healthiest markets index, while each of the other three factors accounted for 20%. When data on any of the above four factors was unavailable for cities, we excluded these from our final rankings of healthiest markets. A financial advisor can aid you in planning for the purchase of a home. To find a financial advisor who serves your area, try SmartAsset’s free online matching tool.

According to the FICO scoring model, you’ll likely need to have a credit score of at least 740 if you want access to the best rates. Of course, the exact credit score you’ll need to qualify for a 15-year fixed-rate mortgage will depend on the mortgage lender you choose to work with. 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. There are, however, some disadvantages, such as higher monthly payments, less affordability, and less money going toward savings. Below, we take a look at all of these advantages and disadvantages. Mortgage points, or discount points, are a form of prepaid interest you can choose to pay up front in exchange for a lower interest rate and monthly payment.

When interest rates drop, astute borrowers will be quick to lock in the lowest fixed rate possible. This way, when market volatility hits and rates rise, the 15-year payment structure protects their minimum monthly payment and offers the most savings long-term. When choosing a term length, think about how much you can afford to pay each month and how quickly you want to pay off your mortgage. If you have a larger monthly budget and want to be able to own your home outright, you might opt for a shorter term. But for many people, keeping their monthly payments as low as possible is the goal, which is why 30-year mortgages are so popular.

The main difference between a 15-year and a 30-year mortgage is the loan term. With the former, you must repay the loan within 15 years, whereas with the latter, you have 30 years. Use our calculator to see what your mortgage payment might look like. There are lots of savvy individuals who recommend putting your extra cash somewhere other than the mortgage, such as in the stock market, retirement account, etc. But in areas where homes sell for much, much more, we’re talking a night and day difference in monthly payment.

Instead of paying off the mortgage in 2013 as planned, I paid it off in 2017. In addition, if you take out a 15-year mortgage, a greater percentage of your payment will go towards paying down principal. With a $1 million, 30-year mortgage at 3%, $1,716 of the $4,216 monthly payment (40.7%) goes to paying down principal.

With a predictable and stable payment plan and interest rates, this mortgage loan type is perfect for borrowers who wish to settle their loan faster than a 30-year mortgage. A 15-year fixed mortgage may attract a higher monthly payment, but you pay thousands less in interest and build equity in your home much faster. Monthly payments on a 15-year fixed-rate loan will be significantly higher than with a 30-year mortgage. For instance, a $250,000 loan would cost about $1,660 per month in principal and interest at today’s rates versus $1,040 for a 30-year fixed. But, over the lifetime of your loan, you’ll see serious savings on mortgage interest.

Using a mortgage refinance calculator can also help you shop for the best mortgage. As illustrated above, you will have saved roughly $181,248 ($604,768 less $423,520) in total interest by opting in for a 15 year fixed mortgage. When you choose a 15 year loan, you have less purchase power, meaning you will typically qualify for a less expensive property than if you had expanded the loan over a 30 year term.

Корзина