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When you shop for a mortgage, your loan term is one of the flexible points. You can usually choose a term length that falls in a window spanning 10 to 30 years. There are several pros and cons to a 15-year fixed mortgage.
The shorter your loan term is, the faster you’ll pay off your home loan. A 15-year loan can also be beneficial if you’re buying a home and you can put down a big down payment. This can still keep your monthly payments low, but let you reduce the interest overall.
You may find it easier to qualify for a 15-year fixed loan if you have a higher income. Your monthly payment will be directed towards the principal and interest according to your amortization schedule, with the amount going to principal growing and the amount going to interest shrinking every month until the loan is paid in full.
The shorter your loan term is, the higher your monthly payment will be. Depending on your interest rate, you could end up saving a lot in mortgage interest over the life of the loan, but you could also end up in a tight spot if your financial situation changes.
You also need to consider whether or not you have to carry private mortgage insurance (PMI, common if you don’t have a 20% down payment.) It’s rare that someone will qualify for a 15-year fixed loan and put down less than 20%, but it’s possible if you have an extremely high income. If mortgage and refinance rates are favorable, you can always refinance after you build equity, and rid yourself of a PMI mandate.
Depending on your income, debt-to-income ratio, and credit score, you’ll probably be shown 15-year mortgage rates as one of your loan options.
Depending on the interest rate offered, this could be ideal. If you are capable of putting down a big monthly payment and you don’t have a high cost of living, you might be able to easily manage the higher monthly mortgage payments that come with a 15-year fixed loan.
If you already have a home loan, your credit score is decent, and you can afford to sink more into monthly payments, it could make sense to pay off your current mortgage and refinance for a shorter term to save on interest.
There is no one-size-fits-all loan program. It is important to discuss the details of your current financial situation with a qualified Loan Officer who can advise you about all of your options available.
Now is a great time for looking into a 15-year fixed rate mortgage. You can use our free Instant Rate Quote tool and Rate Tracker to find out how much you could be saving every month or over the life of your loan.
At Sammamish Mortgage, all of our Loan Officers (LOs) are salaried. This means they always put the client first, making sure you get the best loan for your budget, not the biggest one to earn a commission.
We offer some of the most competitive rates in the nation, and it’s our goal to give you a hassle-free home loan experience. We’re proud to say we close most of our loans in 30 days or less. We offer a wide variety of 15-year fixed rate home loans, including FHA and VA loans, so you can start looking for a home as soon as possible.
For more information on your fixed rate mortgage options, feel free to contact us today. We currently lend in all of Washington, Oregon, Idaho, and Colorado and have been providing mortgage programs to borrowers since 1992. Our friendly team of experienced mortgage professionals will advise you on which home loan program best meets your needs.
Are you ready to apply for your home loan and lock in a low interest rate? If so, Sammamish Mortgage can help you get started. Get in touch with us today!