The advantage of the 15-year fixed rate mortgage is that it allows homeowners to own their homes in half the time and for less total interest costs of the traditional 30-year loan. The loan’s term is shortened by the 10 percent to 15 percent higher monthly payments.
The 15-year fixed rate mortgage has proved popular with two very different groups of homebuyers. First, it enables young homebuyers with sufficient income to meet the higher monthly payments to pay off the house before their children start college. They own more of their home faster with this kind of mortgage. Other homebuyers, who are more established in their careers, have higher incomes and whose desire is to own their homes before they retire, may also prefer this mortgage. The 15-year fixed rate mortgage gives them additional financing options using the house’s equity. For example, they can easily take out a second mortgage if they want to make use of the equity in their home.The major disadvantages or the 15-year fixed rate mortgage are the sometimes higher monthly payments. But if saving on total interest costs and cutting the time to free and clear ownership are important to you, the 15-year fixed rate mortgage is a good option.
