15-Year Fixed-Rate Mortgage Loans

15-Year Fixed-Rate Mortgage Loans

A 15-year fixed-rate mortgage is a mortgage loan that offers a comprehensive, structured plan for financing a home. You get a mortgage in which the interest rates and your monthly payments stay the same throughout the 15-year term of the loan and lenders require a down payment between 5-20 percent. However, the portion of your monthly payments that go towards the principal and the rest to interest will shift throughout the 15 years. In the beginning, the interest payments are frontloaded and will make up the major part of the payment, but later on the payment structure shifts to paying off loan principal faster than interest. It follows the rules set by one of the largest investors of conventional loans known as Fannie Mae (the Federal National Mortgage Association).

Advantages

The best way to purchase a home is with cash, but if you decide to take out a mortgage loan then it is recommended you opt for a 15-year fixed-rate mortgage with at least a 10% down payment. However, a 20% down-payment will be better because you can avoid PMI. (private mortgage insurance). In either case, you should ensure that your monthly payment does not exceed 25% of your take-home pay. A 15-year fixed-rate mortgage can have many advantages if you can afford it.

The interest rate and monthly payments always remain the same throughout the 15-year loan period

This saves you a lot of stress as you are protected no matter what is happening in the housing market.

Interest rates are lower than most mortgage loans

The interest rates are usually 0.25% to 1% lower than a 30-year mortgage and so helps you save thousands of dollars in the long run. Also, you will save on the fees that come with government-backed loans like an FHA loan or a VA loan.

Pay off your mortgage faster than other loans with longer terms

This would help you to be free to enjoy your retired life or help you pay off your loan before a big life event like sending you kids to college.

You build your home equity faster than with a longer-term mortgage

A 30-year mortgage will build home equity much slower than a 15-year mortgage. This may be an important consideration for you depending on what phase in life you are and what your financial goals are. If you are young and have more than 30 years before retirement, it may make sense to take out a 30-year mortgage. However, for those with fewer years before retirement, you should decide whether you will need to tap into your home’s equity sooner rather than later.

Before you decide on a 15-year fixed-rate mortgage you should understand that with the advantages, comes the drawback of higher payments. However, if you can afford a higher monthly payment than a 15-year fixed-rate mortgage may be the right choice.

If you have any queries about the 15-year mortgage and wish to determine what best suits your unique situation talk to one of our experts at (877) 877 7575