Mortgage basics: 15-year fixed mortgages

Prospective homebuyers and current homeowners know that a mortgage is likely to go hand-in-hand with your home, unless another arrangement has been made. However, there are many options available for those monthly mortgage payments, most commonly through 30-year fixed rate mortgages and 15-year fixed rate mortgages.

Most know about the 30-year option, but what about the 15-year fixed mortgage?

Here’s a quick guide to three of the top questions surrounding a 15-year mortgage:

Who is applicable for a 15-year fixed rate mortgage?

Most homeowners and potential homebuyers can be eligible for a 15-year fixed rate mortgage. The qualifications will follow those set forth by your mortgage lender and can vary based on the property you find or your personal financial situation.

For those who have a secure investment and savings future and proven income stability, you may be more likely to gain a mortgage with a 15-year payoff. Likewise, you may have a limited pool of housing options available, since the loan is likely to be a bit smaller than your average 30-year mortgage.

What are the interest rates like?

Interest rates for a 15-year fixed mortgage may be lower than those of a standard 30-year mortgage. This is typically because you’re voluntarily paying higher monthly payments and have signed off on paying your loan in full within the 15-year period.

What will my monthly payments look like?

Because the loan term is shorter, your monthly mortgage payment may be larger by up to 50% (or more, depending on the loan) of what it would have originally been in a 30-year fixed mortgage. However, larger doesn’t have to be scary.

For those with a secure financial future, excellent financial health and who may not need as much property for their plans or lifestyle, a 15-year mortgage is more than an adequate option. Like a 30-year mortgage, you’ll want to ensure you’re ready for the larger monthly payments, applicable interest rate and quick-building equity that a 15-year fixed mortgage provides.