WHAT IS A 15-YEAR FIXED MORTGAGE?

A 15-year fixed mortgage; just like a 30-year fixed mortgage, is a loan whose interest rate will stay the same over the entire life of the loan. The difference being that buyers make the same mortgage payment 15 years instead of 30.

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

Key Points

• Lower rate
• Shorter term
• Fixed rate
• Building equity faster