A 15 year fixed-rate mortgage offers homeowners a way to pay off their home purchase twice as fast as with a conventional 30 year fixed-rate mortgage.
Fixed-rate mortgages are the most common type of mortgage loans. With a 15 year fixed-rate mortgage, the interest is paid off over the full term of the mortgage, which means your monthly payment does not change over the life of the loan.
The longer your mortgage remains outstanding, the more total interest you pay. In comparison to a traditional 30 year mortgage, a 15 year mortgage can save you tens of thousands of dollars in interest.
The shorter loan term means that borrowers are paying off their entire mortgage faster and building equity more quickly than they would with a longer loan period.
Additionally, most 15 year mortgage interest rates are lower than the rate charged for a 30 year fixed-rate mortgage.
These loans are more popular when interest rates are low, which makes the principal and interest payments more affordable even on a short term loan.
With a 15 year fixed-rate mortgage, you won’t save as much money in tax deductions over the course of your loan as you would with a longer mortgage. More of your income will ultimately go to paying off taxes than with a longer mortgage.
You’ll need to weigh the benefits of a 15 year mortgage and the money you’ll save in total interest against the downsides and the costs incurred from losing access to the mortgage interest income tax deduction.
Connect with a local lender to determine whether a 15 year mortgage is right for you.
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