US 15 Year Mortgage Fixed Interest Rate

A type of mortgage where the interest rate never changes for the duration of the loan. Unless the mortgage has an interest only or other payment option features, payments are amortized over 15 years, that is, the homeowner makes fixed monthly mortgage payments and the entire mortgage loan would be paid off in 15 years.

If you are unsure whether you will be able to continue making payments on a 15 year fixed mortgage rate at some point down the road, consider a longer-term mortgage, where you pay less each month. Your mortgage professional should be able to tell you how much extra to pay each month if you still want to pay off the mortgage loan in 15 years.

Interest rates are typically lower on a 15 year fixed rate mortgage, depending on the lender, the mortgage loan program and where in the US you are located. You will build equity faster with a 15 year loan, than what you will with a 30 year loan. The reason is that more of your payments are being applied to the principal, at an earlier point than that of the 30 year fixed rate mortgage.

People are amazed at how much money they save on a 15 year mortgage versus a 30 year mortgage. Anytime you are over 80% LTV and you are required to pay PMI and you obtain a 15 year fixed rate mortgage, the percentage of coverage required for PMI is significantly lower than the percentage required for a 30 year mortgage. An example would be on a 100,000, 30 year loan at 90% LTV you might be required to have 25% coverage for your PMI (which would basically equal a PMI monthly payment of around $43.33). Now on a 100,000 loan on a 15 year term at 90% LTV you might be required to have 12% coverage for your PMI (which would equal a PMI payment of $19.17 per month). Therefore, by using a 15 year term vs. a 30 year term you may be able to cut your PMI by less than half.

When an investor purchases bonds or invest in bank CD's, the longer he commits his money for, the higher his interest rate, or yield, will be. The same is true in the mortgage industry, loans with longer terms have higher interest rates. The 15 Year Fixed Rate Mortgage usually carry interest rates that are 0.5% lower than the 30-Year Fixed.