A 15 year fixed rate mortgage can be a great way to finance your new home purchase. With a fixed rate, you will always know what your payments will be. In this way, it is much like a 30 year fixedrate mortgage. However, the loan term is cut in half. Read on to determine whether this is the best option for you.
What is a 15 year fixed rate mortgage?
A 15 year fixed rate mortgage has a relatively short loan term of 15 years. The fixed rate means your interest is set and will never fluctuate. This is beneficial because there will never be any surprises when it comes to making payments. Such stability can bring peace of mind and also facilitate better monthly budgeting and planning
Why consider a 15 year fixed rate mortgage?
There are a number of reasons you might want a 15 year fixed rate mortgage, but this selection is especially well suited for a few specific situations. Consider these four points when making your decision:
- Shorter term: The clearest difference between a 30 year loan and a 15 year loan is the term length. With a 15 year mortgage, you are cutting the timeline of your lending in half. For this reason, this type of mortgage is particularly popular with younger homeowners who want to complete their payments before having to pay for kids' college as well as with more established homeowners who would like to pay off their loan before retirement. In general, you will be able to own your home sooner this way, which is a major benefit.
- Higher payments: Before selecting a 15 year fixed rate mortgage, consider your monthly budget. Because the loan term is shorter, monthly payments are greater. As such, it is important to make sure you can afford to pay more each month.
- Predictable payments: As a fixed rate mortgage, you can rest assured that you know how much will be coming out of your budget each month. The consistency is very attractive to many homeowners, and you won't have to worry about your rates going up with the market. On the other hand, as market rates decline, you won't be able to take advantage of those potential savings.
- Lower rate: A 15 year fixed rate mortgage generally has a lower rate than a 30 year fixedrate loan. This means that although your monthly payments will be higher, you will be paying less interest overall and will still save money
Who qualifies for this type of mortgage?
Because the monthly payments are higher for a 15 year fixed rate mortgage, it can be more difficult to qualify for the loan. As with a 30 year fixed rate mortgage, your lender will be interested in your income, employment history and credit score to help plan the best mortgage for you.
Your income will be useful in determining how large your monthly payments should be because your lender will want your plan to be affordable. Additionally, your employment history and credit score will help them assess your financial stability. A higher credit score will make approval easier and can usually qualify you for a lower interest rate.
If a Thompson Kane 15 year fixed rate mortgage sounds like a good fit for you, apply for one online today!