Potential Benefits of a 15-Year Fixed Mortgage
- Pay less interest over the course of your loan.
- The security of a consistent rate and payment.
Lower mortgage rates and a shorter term than a 30-year fixed rate mortgage means less interest overall, making this loan a top choice for the financially savvy. With a shorter loan term a 15- or 20-year fixed-rate mortgage can help you pay off your home faster and build equity more quickly, although your monthly payments will be higher than with a 30-year . The 15- and 20-year fixed-rate mortgages are especially popular for refinancing.
The faster you pay off your mortgage, the quicker you build equity. A high equity may allow you to:
- Take out a home equity line of credit.
- Increase your chances of refinancing your home.
- Take out a home improvement loan.
- Take out a second mortgage.
In a fixed mortgage, your monthly principal and interest payments remain the same for the life of the loan, usually 15 or 30 years. A “conventional” (conforming) mortgage is a loan that conforms to established guidelines for the size of the loan and your financial situation. Conventional mortgages often feature lower interest rates than jumbo loans, FHA loans or VA loans.
How a 15-year fixed-rate mortgage works
- Monthly payments based on interest rate, principal loan amount, and amortized interest over 15 years
- Your principal and interest payment will not change
- Your actual payment will vary based on your situation and the current interest rates when you apply
- Pay your mortgage at any time without pre-payment penalties