The best way to finance a 15-year mortgage in America
Like many American homeowners, Jason Krueger refinanced his mortgage last year. The move lowered his interest rate by almost a full percentage, slashed $268 in his monthly interest costs and would allow him to pay for his home more than a decade ago.
navel? Choose a 15-year loan instead of a 30-year loan.
“We were able to go from a 30-year loan at 3.375% to a 15-year loan at 2.5%,” said Krueger, a certified financial planner with Ameriprise Financial. “Our required monthly payments are up slightly, but we will be saving a significant amount of interest every month.”
Choosing Kroger is one that more and more homeowners have made in recent months, particularly when refinancing. In fact, according to policy research organization
The Urban Institute, 15-year loans accounted for roughly 17% of all loan assets in October 2020. This is up from just 10% the year before.
15 year mortgage rates today
The increase in popularity is largely due to the very low interest rates currently offered by short-term loans.
According to the latest data from mortgage buyer Freddie Mac, the average 15-year loan rate is just 2.21% — 0.56 percentage points lower than the 30-year loan rate. On a $200,000 mortgage, that amounts to approximately $60,000 saved for the life of the loan.
“Because of the pandemic, mortgage rates have fallen to the lowest levels in U.S. history, yet 15-year mortgage rates are becoming incredibly attractive,” said Matt Weaver, vice president at CrossCountry Mortgage in Boca Raton, Florida.