A 15-year fixed rate mortgage is an incredibly useful financial tool if you qualify for it. A 15-year FRM maintains the same fixed interest rate over its 15-year term. It’s a popular choice for homeowners who don’t mind making a slightly higher monthly payment in order to save significantly on interest over the life of their loan. Another advantage to the 15-year FRM is that its interest rate is generally lower than that of the 20-year FRM and 30-year FRM.
Although the 15-year fixed rate mortgage is one of the most common home loan options, it’s certainly not right for everyone. Here’s more about the 15-year FRM.
Is a 15-Year Fixed Rate Mortgage (FRM) Right for Me?
There are no hard and fast rules to determining if a 15-year FRM is right for you. However, most people who opt for this home loan meet some or all of the following criteria:
You’re a savvy saver.
You are comfortable with (potentially) a higher monthly mortgage payment.
You like the idea of knowing exactly what your monthly payment will be for the next 15 years.
You plan to stay in your home for at least a few years.
You can afford a large down payment.
You have a reliable source of income.
A 15-year mortgage can save you massive amounts of money. First, you’ll only be paying your loan for 15 years (rather than the more typical 30), so you’ll be debt-free in half the time. Second, interest rates are lower for 15-year mortgages than they are for longer terms, so you’ll pay less interest as well.
One of the main disadvantages of the 15-year mortgage is that your monthly payment, by comparison to a loan with a longer term, will be higher. However, if you can find the perfect home on a smaller budget, score a beautiful fixer-upper in a great neighborhood, or simply don’t mind paying a bit more per month, this loan may be ideal for you.
The Interest Rate on a 15-Year FRM
What interest rate can you expect with the 15-year FRM? Interest rates fluctuate daily, but as of 2018, the interest rate for the 15-year fixed rate mortgage is around 4 percent. One of the main benefits of the 15-year FRM is its interest rate -- which is usually significantly lower than a 20- or 30-year mortgage.