Current 15-Year Mortgage Rates – Forbes Advisor
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Mortgage rates tend to fluctuate from day to day. So if you’re considering buying a home, it’s a good idea to keep a close eye on interest rates and evaluate different mortgage options. A common type of mortgage loan is a conventional loan with a 15-year fixed interest rate. With a fixed rate, your rate and your monthly payment will remain the same for the duration of the loan.
Plus, rates on 15-year loans tend to be lower than longer-term loans, which means you could end up saving hundreds or thousands of dollars. Remember that while a shorter term will lower your overall interest costs, it will also come with a higher monthly payment.
15-year mortgage rates today
The current average rate for a 15-year mortgage is 4.60%, compared to 4.79% the previous week.
The 52-week high rate for a 15-year mortgage was 4.88% and the 52-week low rate was 3.64%.
What are the 15-year mortgage rates?
The interest rate is basically the cost of borrowing money from a lender. It is based on a percentage of the loan (or principal) amount. A 15-year mortgage rate is precisely the amount of interest you can expect to pay on a mortgage that lasts 15 years.
Find the best mortgage rates and lenders over 15 years
Looking at national averages and advertised rates can give you a general idea of what’s going on in the mortgage market, especially when looking at how rates have changed over time.
To find the best rates on 15-year mortgages, it’s a good idea to shop around and review your options with as many lenders as possible. This way, you’ll have an easier time getting an optimal rate and choosing a lender that meets your needs.
Related: Best Mortgage Lenders
Keep in mind that several factors will affect the rates you are offered, including:
- Credit score: You’ll generally need good to excellent credit to qualify for the lowest interest rates available – a good credit score is generally considered to be 670 or higher, and an excellent score starts at 800. In general, more the higher your credit score, the better your rate will be.
- Debt to income ratio (DTI): Your DTI ratio is the amount you owe on monthly debt payments compared to your income. To get approved for a mortgage, your DTI ratio must not exceed 43%, although some lenders may be more or less flexible about this.
- Place of residence: Rates may vary depending on the state the property is in and whether it is in a rural or urban area.
- Amount of the loan: You may end up with a higher interest rate if you are looking for a particularly small or large loan.
- Advance payment: You may get a lower interest rate with a larger down payment.
Is a 15-year mortgage worth it?
The value of a 15-year mortgage depends on your personal situation and your financial goals. You will generally have a higher monthly payment with a 15-year loan compared to a 30-year loan of the same amount. Therefore, if you need a lower monthly payment, a 30-year loan might be a better option.
However, you will pay less overall interest charges with a shorter term. Plus, 15-year mortgages tend to have lower rates than 30-year mortgages, which will save you even more on interest over the life of the loan.
Advantages and disadvantages of 15 year mortgages
If you’re considering a 15-year mortgage, there are pros and cons to keep in mind.
Benefits of 15-year mortgages
- Pay less interest over time. You will pay less interest with a shorter term of 15 years than with a longer term of 30 years.
- Pay off your home sooner. With a 15-year mortgage, you’ll own your home much sooner than with a longer repayment term.
- Get rid of private mortgage insurance faster. If you take out a conventional mortgage with a down payment of less than 20%, the lender will likely require you to pay for private mortgage insurance (PMI). There are several ways to cancel or remove the PMI, one being to reach halfway through your repayment period. This means that you can cancel your PMI sooner with a 15 year term compared to a 30 year term.
Disadvantages of 15-year mortgages
- Larger monthly payments. While choosing a shorter term will save you money on interest, it also means you’ll end up with a higher monthly payment. If you can’t afford the higher payments on a 15-year mortgage, a 30-year mortgage might be a better option.
- Less flexibility in your monthly budget. You can expect more of your monthly income to go towards your mortgage with a 15-year term compared to a 30-year term, giving you less wiggle room in your budget.
- Less money for other financial goals. Since more of your income will be tied to your mortgage, you’ll have less money to spend on other goals, like saving for retirement.
15-year vs. 30-year mortgage
A 15-year mortgage can be a good option if you can afford higher monthly payments and want to keep your interest costs as low as possible. It can also be an optimal choice if you are looking to pay off your home in less time.
However, if you need a lower monthly payment and don’t mind paying more interest, a 30-year term might be better suited to your needs. Plus, you can always increase your principal payments to pay off your loan faster if you prefer.
You can compare your costs with our 15 or 30 year mortgage calculator.
Frequently Asked Questions (FAQ)
What is a good 15-year mortgage rate?
A good rate is the lowest rate you can get with reasonable fees. To find the most optimal rate you can get, be sure to compare your options with as many lenders as possible.
Remember that the rates offered to you by lenders vary depending on market conditions as well as personal financial factors like your credit score.
What do you need to qualify for a 15 year mortgage?
To qualify for a mortgage, you will need a stable income and decent credit. You will also need to have enough income to pay your existing monthly debt payments as well as your new monthly mortgage payment.
Is it harder to qualify for a 15-year mortgage?
It can be harder to qualify for a 15-year mortgage, as you’ll need to show that you can handle higher monthly payments and a shorter repayment term. Eligibility criteria for a 15-year loan can vary by mortgage lender, but common requirements typically include good to excellent credit, verifiable income, and a low DTI ratio.
Do 15-year mortgages have lower interest rates?
Yes, 15-year mortgages generally come with lower rates than 30-year mortgages. In addition to the short term, this could save you a lot of money compared to what you would pay on a 30 year mortgage.
Is it better to get a 15 year mortgage or pay extra on a 30 year mortgage?
It depends on your personal situation and financial goals. If you have a large emergency fund and can comfortably afford higher payments, choosing a 15-year mortgage to take advantage of a lower rate and save on interest might be a good idea.
However, if you don’t have a lot of savings and the larger required payments would stretch your budget, a 30-year mortgage might be a better option. Although choosing a longer term means paying more interest, you will have the flexibility to decide when you want to pay extra for your loan.
Do 15-year mortgages have a PMI?
If you don’t make a down payment of at least 20% of the purchase price of the home, you’ll likely have to pay for PMI. The cost of PMI generally ranges from 0.5% to 1% of your loan amount per year.
Keep in mind that if you pay off your principal balance at 80% of your home’s value, you can ask your loan servicer to cancel your PMI. If you don’t request your PMI to be canceled, your servicer should automatically terminate it once your principal balance reaches 78% of the home’s value or once you reach halfway through your repayment period. This means that you will probably be able to get rid of the PMI sooner with a 15 year mortgage compared to a 30 year mortgage.
Are interest rate and APR the same thing?
Although you may hear the terms interest rate and annual percentage rate (APR) used interchangeably, they are not the same thing.
- Interest rate: This is the percentage of your principal that the lender charges in exchange for offering a loan.
- APR: This percentage includes both the interest you will pay as well as fees and closing costs. Looking at your loan’s APR will give you a better idea of the overall cost of your loan.