The financially savvy borrower considers a 15 year fixed rate mortgage an excellent option because it can save you thousands of dollars in interest over the life of the loan. With a 15 year fixed mortgage you pay off your loan sooner, but still have the benefit of a monthly payment that never changes. It is an excellent mortgage choice for many borrowers, whether you are looking to purchase or refinance. The long term savings do, however, come with a tradeoff, as your monthly payments will be higher than those on a 30-year mortgage.
Is a 15 year fixed rate the right choice for you?
Are you comfortable with a higher payment in return for substantial long term savings? Individuals who can handle a higher payment often choose a 15 year fixed mortgage in order to pay off their loan faster and build equity quicker than they would with a 30 year mortgage.
Do you want the security of a consistent rate and payment? If you're looking for protection against rate fluctuations and you can afford a higher monthly payment a 15 year fixed rate mortgage might be exactly what you are looking for.
Here is a comparison of a 15 and 30 year $250,000 mortgage*
30 year mortgage at 3.75% - Total Interest Paid: $166,804
15 year mortgage at 3.50% - Total Interest Paid: $71,697