What Is A 15-Year Fixed Loan?

A 15-year fixed mortgage is fully amortized over a 15 year period and features constant monthly payments, similar to both a 30-year fixed and a 20-year fixed mortgage. It offers all the advantages of the 30-year loan, plus a lower interest rate usually. The biggest advantage is that you’ll own your home twice as fast. The disadvantage is that with a 15-year mortgage, you commit to a higher monthly payment since the term is cut in half when compared to a 30-year fixed. Many borrowers who prefer the 15-year fixed mortgage appreciate saving substantial interest over a reduced term.

The 15-year fixed rate mortgage has a fixed interest rate and monthly payments that never change. The interest is almost always lower than a 30-year fixed and a 20-year fixed, which means much less interest paid over the term but also per payment. This is constant over the entire 15 year term of the loan. A 15-year fixed rate loan may be a good mortgage option if you plan on staying in your home forever, want to accelerate paying it off, and can manage higher monthly payments.

Who Are 15-Year Fixed Loans Best For?

The 15-year fixed rate mortgage is primarily for people who want to pay their home off much, much faster. They should also be equipped to manage higher monthly payments, which will allow rapid mortgage paydown and less interest paid over the term of the loan.

How Does A 15-Year Fixed Loan Work?

Your payments will always be the same. You will pay the mortgage off in 15 years, and you will save substantially in interest paid. Due to the way an amortization schedule works, you’ll pay significantly less interest over the life of the loan compared to a 30-year fixed loan or a 20-year fixed loan but your monthly payments will be higher since the payments are spread over a 15 year period.
Since your interest rate is locked for the entire term of your loan, your payments will never change. This stability in the payment is what appeals to many homeowners, along with mortgage-free home ownership in less time. However, if your taxes and insurance payments go up, then naturally your overall monthly payment will also go up.

15-Year Fixed Loan Benefits

  • Your monthly payments will generally be higher than a 30-year fixed loan or a 20-year fixed loan. This is entirely because the payments are spread over the term of 15 years rather than 30 years or 20 years, which ultimately means mortgage-free home ownership in half the time potentially.
  • You will pay significantly less interest over the term of the loan.
  • You can also pay off the entire mortgage at any time without incurring any prepayment penalties.
  • You may be able to avoid mortgage insurance with a down payment of at least 20%.
  • Your rate is locked for the entire loan. So no need to every worry about your rate going up.

We’re here to help make the home loan process stress-free and easy. APPLY NOW to learn more and get professional insights and recommendations from a trusted Mortgage Loan Officer.