Should You Get a 15-Year Mortgage?

Posted on May 27 By Francine Huff

Thinking of refinancing into a 15-year mortgage? Or maybe you are planning to buy a home and want to finance it with a 15-year home loan instead of being tied into a 30-year mortgage. Consider the pros and cons of 15-year mortgage loans.

Current Mortgage Rates Are Low

Anytime you finance with a 15-year mortgage you are going to get a lower rate than with a 30-year loan. Rates on 15-year fixed mortgages are at 4.21% and 30-year home loans are averaging 4.78%. Mortgage rates on both types of loans are exceptional right now by historical standards, but you'll need to do the math to decide if a 15-year term makes more sense for your situation.

Monthly Payments Are Larger

Obviously you will end up paying less interest over 15 years as opposed to 30 years. But keep in mind that a 15-year loan is going to require a larger monthly payment than a 30-year mortgage. If you have any doubt about being able to make the larger monthly payments, you're probably better off going with a 30-year term. You can always make extra principal payments to pay off a mortgage loan faster.

It's hard to say how long these low mortgage rates will last. If you believe that refinancing into a 15-year mortgage can help your financial situation, now is the time to act.

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