How To Save Half On Interest Costs

15-Year Fixed-Rate Mortgage

This is the 15-year Fixed-Rate Mortgage that lets home buyers own their homes free and clear in 15 years. And, while the monthly payments are somewhat higher than a 30-year loan, the interest rate on the 15-year mortgage is usually a little lower.

The home buyer pays less than half the total interest cost of the traditional 30-year mortgage. The purpose of this information is to help prospective home buyers explore the 15-year fixed-rate mortgage-a new option for saving on total mortgage interest costs.

The 15-year fixed-rate mortgage has proved popular with two very different groups of home buyers.

  1. It enables young home buyers with sufficient income to meet the higher monthly payments to pay off the house before their children start college.
  2. Buyers who are established in their careers, have higher incomes and whose desire is to own their homes before they retire, also prefer this mortgage.
    The 15-year fixed-rate mortgage gives them additional financing options using the house's equity.

Pros and Cons of this Type of Mortgage

Advantages

The 15-year Fixed-Rate Mortgage offers the qualified consumer five big advantages.

  1. 1. You own your home in half the time it would take with a traditional mortgage.
  2. You save more than half the amount of interest of a 30-year mortgage.
  3. Lenders usually offer this mortgage at a slightly lower interest rate than with 30-year loans. It is this lower interest rate added to the shorter loan life that realizes the savings for 15-year fixed-rate borrowers.
  4. Fixed-Rate means exactly that - no matter where mortgage interest rates go, the payments for this mortgage stay the same from the first to the last. This helps many borrowers plan their budgets with more certainty. They know that their monthly payments will not increase (or decrease) and throw their financial planning off.
  5. Fifteen-year mortgages can be insured by the Federal Housing Administration (FHA) and the Veterans Administration (VA), and with private mortgage insurance.

Disadvantages  

The disadvantages associated with a 15-year rate mortgage are really the qualifiers that will tell consumers if this is the mortgage for them.

  1. The monthly payments for this type of loan are higher than those for a 30-year mortgage, roughly 10 percent to 15 percent higher per month.
  2. Because borrowers pay less total interest on the 15-year fixed-rate mortgage, they lose the maximum mortgage interest tax deduction.

For more information about 15-year fixed-rate mortgages, or to find out if you qualify, talk to your Aztec Mortgage Loan Officer. He or she will be able to help you select the mortgage that is best for you.