![]() ![]() You may consider a loan with a 15-year mortgage rate over a longer term loan like a 30-year fixed if you’re comfortable with making higher monthly payments. Is a 15-year fixed-rate mortgage right for you? You can calculate how much you'll save in interest with a 15-year mortgage and subtract the amount from the fees to determine if refinancing is financially worthwhile. Since monthly payments are much higher with a 15-year mortgage than with a longer term loan, make sure that you can comfortably support the increase. Refinancing is best when the potential savings outweigh the closing cost fees, which can range from 2% to 6% of the loan’s principal amount. ![]() Typically, homeowners refinance to a 15-year fixed mortgage to save on interest and pay off the loan faster. Should I refinance to a 15-year mortgage? Unless you plan to sell or refinance the home before the 5-year ARM’s fixed period ends, a 15-year mortgage is the lower risk option. When 5-year ARMs adjust, rates and payments may increase. 5-year ARMs generally offer a lower initial interest rate compared to fixed-rate mortgages, which may save you thousands of dollars in interest over the life of the loan. How does a 15-year fixed-rate mortgage compare to a 5-year ARM?Ī 15-year fixed-rate mortgage has a 15-year term with a fixed interest rate and payments, while a 5-year ARM has a longer 30-year term with a fixed-rate for the first 5 years, and then a variable rate for the remaining term. Because the mortgage is fixed, the monthly payment and interest rate will stay the same for the life of the loan. For example, a 15-year fixed rate mortgage for a home valued at $300,000 with a 20% down payment and an interest rate of 3.75%, the monthly payments would be about $1,745 (not including taxes and insurance). Learn more about 15-year mortgages What is a 15-year fixed-rate mortgage?Ī 15-year fixed mortgage is a home loan with an interest rate that stays the same over a 15-year period. ![]()
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