Pay your loan off sooner. Lower rates, less interest, and hundreds of thousands of dollars in long term savings. With a 15-year mortgage, you can access your hard-earned money faster. You immediately pay less in interest, and you make half as many mortgage payments. It's a great option to own your home free and clear in half the time.
A 15-year mortgage has proved popular with the following
Young homebuyers with sufficient income to meet the higher monthly payments. They choose this loan so they can pay off the house before their children start college.
Homebuyers who are more established in their careers. This demographic desires to own their homes before retirement, ridding themselves of an ongoing debt.
Of course, you don't need to fall into either category to appreciate the savings this mortgage provides homebuyers. Check out the advantages below and what you need to know when considering your options.
Lower interest rate
Fixed payment that never changes
Reduced payoff term so you own your home faster
Faster access to home equity
What you need to know
A 15-year mortgage minimizes your total borrowing costs. You're getting a lower interest rate, and a larger chunk of your monthly payment goes toward paying down the loan principal instead of interest owed. So, you're building equity faster and spending less on overall interest.
Let's take for example a $350,000 home. If market rates were 4% for a 30-year mortgage (4.41% APR) and 3.25% for a 15-year mortgage (3.95% APR), you can expect to pay under $100,000 in interest through the life of the 15-year loan.
That's a savings of over $150,000!*
*Rates are for illustrative purposes only. This is a hypothetical example using numbers based on a 750 FICO, 80% LTV.