15 Year Fixed Rate
Conventional Home Loans
The conventional 15 year fixed rate home loan is a
mortgage in which the monthly payments remain the same over the life of
the
loan. Once the
mortgage is in effect, the interest rate does not fluctuate but remains
constant.
The 15
year fixed rate loan is one of the most commonly used mortgages for
residential financing in America. The greatest advantage for a home
buyer is the predictability of the payments each month because it never
changes. This type of loan is often recommended for home buyers
living on a fixed income, a set budget, or those planning on living in
their home for more than five years. If interest rates increase, the
loan rate will remain the same. Unfortunately should rates decline
below the set interest rate on the loan, the only way to change it is to
refinance the mortgage and incur a loss of equity or additional closing
costs to take advantage of the lower interest rate.
Generally the 15 year fixed rate loan has a lower interest
rate than the 30 year fixed rate loan, the monthly payment tends to be
approximately 28% higher than the 30 year. Furthermore, the borrower
will pay considerably less interest with the 15 year fixed rate loan than
the 30 year due to the shortened amortization period (15 years versus 30
years) thus saving a home owner tens of thousands of dollars in costs over
the life of the loan.
