Mortgage rates remain relatively low — for now — but the gap between 15-year and 30-year fixed mortgage rates are widening — and that’s good news if you’re in the market for a 15-year mortgage. Here’s how low you can go when it comes to 15-year fixed-mortgage rates.
First, some basics. A 15-year mortgage is a fixed-rate home mortgage loan where the interest rate remains the same for the life of the loan. For instance, on a 15-year, $300,000 mortgage with an interest rate of 5.75%, the monthly mortgage bill clocks in at $3,097.90. That’s the same interest rate over the entire 15 years of the loan.
Fifteen-year mortgages have their pluses and minuses. If you can handle the higher mortgage payment, you’ll save big on interest over the course of the loan, when compared to the traditional 30-year fixed-rate mortgage. Typically, interest rates are lower on 15-year home loans, too.
On the downside, 15-year mortgages are tougher to get (creditors take a much closer look at loan applicants), and the monthly payments are significantly higher with 15-year loans, leaving less wiggle room for financial calamities like the loss of a job or a debilitating illness. In addition, the mortgage tax deduction on a 15-year loan is lower than on a 30-year loan.
But if you’re in the market for a 15-year mortgage loan, and have weighed the pros and cons and decided to go ahead, now might be a great time to pull the trigger.
Let’s take a look at the numbers. BankingMyWay’s Weekly Mortgage Rate Tracker has 15-year fixed-rate mortgages at 4.47%, and 30-year fixed mortgages at 5.095% this week. That’s a spread of 63 basis points.