Updated: October 23, 2024
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A mortgage is a reliable financial tool that makes homeownership achievable. Those who want to build equity faster gravitate towards a 15-year repayment term due to its quicker payoff and reduced interest payments.
15-year mortgage rates change daily, and understanding the factors behind them can help you determine the best time to lock in a rate. Staying updated on current rates can also help you through the various decision points in your home-buying journey.
Today's 15-year mortgage rates are averaging 5.78%. However, factors like your credit score, location and down payment size can influence the rate you qualify for.
Improve your credit score and consider paying points to secure better rates for 15-year mortgages.
A 15-year mortgage can be a solid option if you have financial reserves or want to build equity for future investments.
Nationally, the current 15-year mortgage rates are 5.83% as of August 2024. However, your unique rate will depend on several factors, including the type of mortgage you choose. Our table below shows how rates vary across loan types.
Type of 15-Year Mortgages | APR |
|---|---|
5.83% | |
5.85% | |
5.46% | |
6.62% |
USDA loans primarily cater to rural and suburban homebuyers, offering low-interest, no-down-payment mortgages. While we don't display their rates in the table, USDA loans are also available in 15-year repayment terms, providing affordable homeownership options to eligible borrowers in certain areas.
Current average 15-year mortgage rates average 5.83%, compared to 6.61% for a 30-year fixed-rate mortgage. The shorter loan term usually translates to lower rates because mortgage lenders face less risk. Opting for a 15-year mortgage often results in higher monthly payments but can save you more on interest over the long term.
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Current 15-year mortgage rates vary significantly, influenced by location, credit score and down payment size. Having a strong financial profile can help you secure a lower interest rate, resulting in significant savings compared to 30-year mortgage rates.
Use the table below to compare rates across states and understand which rates you may qualify for based on your unique circumstances.
| 15-year Fixed | 5.55% |
Where does this data come from?
This data comes from Zillow and was updated in August 2024.
Refinancing to a 15-year mortgage can help you pay off your home faster and save on interest costs. However, expect an increase in monthly payments and see if it aligns with your financial capabilities.
Remember that refinance APRs, currently at 6.96%, differ from purchase APRs of 5.83% for current 15-year fixed mortgage rates. Consider the impact on your budget and check current rates before proceeding.
Applying for a home loan requires lenders to evaluate your financial health. Positioning yourself well can help you secure the best possible rates for a 15-year mortgage. Consider these strategies:
Shop Around
Don't limit yourself to your current bank or the first mortgage lender you encounter. Different lenders can offer different rates, even for the same type of loan. Compare offers from multiple lenders to ensure you're getting the best deal.
Boost Your Credit Score
Lenders use your credit score to determine your creditworthiness. Having a higher score can help you secure lower interest rates. If your score isn't excellent, consider taking steps to improve it before applying.
Consider the Loan-to-Value Ratio
The more equity you have in your home (or the larger your down payment if you're buying), the lower your loan-to-value ratio, which can get you a lower interest rate.
Watch Economic Trends
Many factors, including economic trends and Federal Reserve policy, influence mortgage rates. While you can't control these, being aware of them can help you time your mortgage application for when rates are low.
Negotiate
Don't hesitate to negotiate your mortgage terms with potential lenders. Every fraction of a percentage point in interest rate matters and can lead to significant savings.
Understanding the pros and cons of a 15-year mortgage can help you decide if it's worth considering when purchasing a home. While you can enjoy lower overall interest payments, it comes with higher monthly installments. Review the table below to see if a 15-year mortgage aligns with your homeownership goals.
Pros | Cons |
|---|---|
Lower Interest Rates: You can benefit from reduced rates over a shorter term, saving you money on interest. | Higher Monthly Payments: Prepare for significantly larger monthly payments, which may impact your budget. |
Faster Equity Build-up: Build equity faster by focusing more of your payments on the principal. | Reduced Flexibility: Higher monthly installments could limit your financial flexibility. |
Less Interest Paid Overall: A shorter loan term means less interest paid overall, saving you money. | Limited Cash Flow: With higher monthly payments, you might have less disposable income for other needs. |
Shorter Debt Commitment: Enjoy the security of paying off your home in half the time compared to a 30-year mortgage. | Stricter Qualification: Lenders may have stricter requirements due to higher monthly payments. |
Potentially Faster Homeownership: You'll own your home outright much sooner than with a longer-term mortgage. | Potential Opportunity Cost: Higher mortgage payments might limit your ability to invest elsewhere. |
Knowing when to get a 15-year mortgage may not suit everyone’s financial situation. Understanding when this option is most beneficial, such as steady income and desire for quick homeownership, can guide potential homebuyers. Let’s explore the following scenarios.
Lucy, a senior project manager at a tech firm, enjoys a stable and generous salary. Over the years, she has accumulated substantial savings and made wise investment decisions that have grown her wealth. Despite her current affordable rent, she's looking to invest in a home where she can raise her family.
Lucy's ample savings and stable income make her a prime candidate for a 15-year mortgage. With her financial reserves, she can comfortably afford higher monthly payments, allowing her to pay off her mortgage faster and save on interest. The shorter loan term aligns with her goal to own a home quickly, giving her greater financial freedom to focus on other investments.
Sarah, a middle school teacher, is navigating a difficult financial situation due to high-interest credit card debt and a personal loan. Although her income is steady, she often struggles to make ends meet due to the overwhelming debt payments, which makes managing her finances challenging.
Given her high-interest debt, a 15-year mortgage isn't ideal for Sarah. The higher monthly payments would exacerbate her financial burden, limiting her ability to pay down her existing debt. Prioritizing debt repayment and improving her financial situation is crucial before considering a mortgage with high monthly payments, like a 15-year loan.
Mark is an entrepreneur with a thriving digital marketing agency who wants to diversify his portfolio by investing in real estate. He has a history of successful ventures and substantial assets that provide a solid financial foundation. He aims to buy a property, pay it off quickly and leverage the equity for future investments.
With Mark's ambition to invest in real estate, a 15-year mortgage aligns perfectly with his strategy. The faster equity build-up will enable him to leverage that equity sooner for other investment opportunities. His stable income and financial acumen support the higher monthly payments, positioning a 15-year mortgage as a smart choice for his goals.
Jason, a freelance graphic designer, loves the flexibility and creativity of his job but faces irregular income. Some months are lucrative, while others bring minimal earnings, challenging financial planning. He aims to buy a home but needs to work on the unpredictability of his income.
Due to his unstable income, a 15-year mortgage isn't the best option for Jason. The high monthly payments could be risky during lean months, making it hard to maintain consistent mortgage payments. Opting for a more flexible and manageable mortgage would better suit his fluctuating income and help prevent potential financial strain.
In our FAQ section, we aim to clarify 15-year mortgage rates, helping potential borrowers grasp the specifics of this mortgage option. Understanding these insights will empower you to make more informed decisions about home financing.
The national average for 15-year fixed-rate mortgages is currently 5.83%. Still, rates can vary depending on market conditions and your financial profile.
A shorter loan term typically results in lower overall interest costs compared to longer-term mortgages.
Consider converting if you can afford the higher monthly payments and want to pay off your home sooner to save on interest.
The higher monthly payments can strain your budget, reducing your financial flexibility for other expenses or investments.
Rates depend on several factors, including your credit score, income, loan amount and current market conditions.
Paying mortgage points typically lowers the interest rate, making it a viable option if you plan to stay in your home long-term.
Closing costs usually include fees like appraisal, origination, title insurance and taxes, often totaling 2-5% of the loan amount.
About Zachary Romeo, CBCA
Zachary Romeo is a certified Commercial Banking and Credit Analyst (CBCA), and the Head of Loans and Banking at MoneyGeek. Previously, he led production teams for some of the largest online informational resources in higher education, with over 13 years of experience in editorial production.
Romeo has a bachelor's degree in biological engineering from Cornell University. He geeks out on minimizing personal debt and helping others do the same through people-first content.
