15-Year Fixed Mortgage

What is a 15-year fixed mortgage?

A 15-year fixed mortgage is a loan whose interest rate stays the same for the duration of the loan. For example, on a 15-year mortgage of $250,000 with an interest rate of 4.25%, the monthly payments would be about $1,881. So, the interest rate of 4.25% stays the same for the life of the loan.

Who should get 15-year fixed mortgages?

People who desire a predictable, fixed deduction from their monthly budget, want a shorter loan term, and can tolerate a higher monthly payment are well-suited for 15-year fixed mortgages.

What are the advantages and disadvantages of 15-year fixed mortgages?

The pros of a 15-year fixed mortgage: it's a predictable monthly payment; the paydown on a 15-year fixed is half the time of a 30-year fixed; the rates are usually lower than a 30-year fixed mortgage; and it's relatively simple and maintenance-free once you lock the rate (you don't need to worry about rate fluctuation).

The cons of a 15-year fixed mortgage: monthly payments are quite higher than a 30-year fixed mortgage, therefore making these loans more difficult to qualify for, and the mortgage tax deduction on a 15-year fixed is less than a 30-year fixed.

How a 15-year fixed-rate mortgage works

• Your monthly payment is based on your interest rate, principal loan amount, and amortized interest over 15 years
• Your payment will not change throughout the life of the loan
• Your actual payment will vary based on your situation and the current interest rates when you apply
• Pay your mortgage at any time without prepayment penalties