15-Year Fixed Mortgage | Today’s Rates (2024)

FAQs

What is a good interest rate on a 15-year mortgage? ›

Disadvantages of a 15-year fixed mortgage

Larger monthly payments: A loan term that's half as long means your monthly payments will be larger than they would be with a 30-year mortgage. Potentially tougher qualification requirements: Your lender will want to verify that you make enough to afford these larger payments.

Today's national 15-year mortgage rate trends

The national average 15-year fixed refinance interest rate is 6.43%, down compared to last week's of 6.50%.

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.

People with a 15-year term pay more per month than those with a 30-year term. In exchange, they are given a lower interest rate. This means that borrowers with a 15-year term pay their debt in half the time and possibly save thousands of dollars over the life of their mortgage.

A 15-year mortgage means larger monthly payments, but a lower rate and substantial savings on interest. A 30-year mortgage gives you a more affordable monthly payment, but expect higher borrowing costs overall. You can also take out an interest-only mortgage or pay your loan off early to maximize interest savings.

Over 30 years, the difference would save you $65,691 in interest. Buying power boost: If you budgeted about $1,846 a month for a mortgage payment, and the interest rate dropped 1 percentage point — from 7% to 6% — you could spend about $30,480 more on a home without increasing your monthly payment.

No age is too old to buy or refinance a house, if you have the means. The Equal Credit Opportunity Act prohibits lenders from blocking or discouraging anyone from a mortgage based on age. If we're basing eligibility on age alone, a 36-year-old and a 66-year-old have the same chances of qualifying for a mortgage loan.

Pro: Own Your Home Sooner

A major benefit of going with a 15-year mortgage is that you'll own your home free and clear in 15 years. You'll be free of mortgage payments after that. Many people look forward to being debt-free sooner.

Conventional Loans

To qualify, you'll generally need a credit score of 620 or higher and a down payment of at least 3% of the home's value.

What month are mortgage rates lowest? ›

So if you're on the fence about buying or refinancing a home this winter, know that January and February bring some of the lowest mortgage rates of the year.

Because you're paying the loan off over a shorter period, your monthly payments are higher than with a 30-year loan. However, because you pay for less time, the total cost of the loan is significantly lower than if you spread repayment over 30 years.

Whether you should fix your mortgage for 2 or 5 years depends on you and your individual circ*mstances. Fixing your mortgage for 2 years can give you certainty and stability in the short-term, and can also be the right choice if you only plan on staying in your home for a few years.

They have lower interest rates than most mortgage loans.

That's because, with a 15-year loan, there's less risk for the lender. The longer the term, the higher the risk that the loan won't be repaid. With a 15-year mortgage, you can usually get an interest rate between 0.25% to 1% lower than with a 30-year mortgage.

In fairness to Ramsey, he does not completely condemn mortgages the way he does other types of debt. He even recommends a mortgage company that offers no-credit approval if you meet other requirements.

Cons of 15-year Mortgages

The higher monthly payment may be too much for many people's budget. For example, not including taxes and insurance, in January of 2020, you would pay approximately $1,411 per month for a 15-year, $200,000 loan. A 30-year, $200,000 loan (without insurance and taxes), would be $898 per month.

The Bottom Line

If your aim is to pay off the mortgage sooner and you can afford higher monthly payments, a 15-year loan might be a better choice. The lower monthly payment of a 30-year loan, on the other hand, may allow you to buy more house or free up funds for other financial goals.

Can you pay off a 30 year mortgage in 15 years? ›

Let's crunch the numbers. We'll say you have a $240,000, 30-year mortgage with a 7% interest rate and a monthly payment of $1,597 for your principal and interest. If you made an extra payment just once every quarter, you'd pay off your house nearly 15 years early!

2021: The lowest 30-year mortgage rates ever

And it kept falling to a new record low of just 2.65% in January 2021.