2011 was the year of historic lows in mortgage rates. 30-year-fixed rates dipped below 4% in the Fall, and now hover around 4%. Many buyers and homeowners thinking of refinancing may not be aware that the 15-year-fixed rate mortgage has also seen historic lows. Today that rate is 3.125%.
15-Year-Fixed Rate Mortgage
Between October and December 2011 25% of refinances were from 30-year fixed rates to 15-year fixed rate mortgages. The 15-year fixed rate mortgage is very similar to the 30-year fixed rate, except in the term of the note. You’re compressing the same debt into 15 years instead of 30 years, so naturally, the monthly payment will be more, usually about 50% more. The savings are gained in the amount of interest paid over the 15 years instead of 30 years. Here is an example on a typical Frederick home:
Scenario of a $300,000 mortgage:
| $300,000 Home | Monthly Payment | Life of Loan |
Total Interest Paid |
| 30-year-fixed mortgage = 4% | $1432 | $515,609 | $215,609 |
| 15-year-fixed mortgage = 3.3% | $2089 | $376,169 | $76,169 |
| % Difference | 46% higher pmt | 37% savings | 183% savings ($139,440) |
You can use this handy mortgage calculator to see the difference in the two mortgage products. Contact us for a list of recommended Lenders.
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The Highland Group
Chris & Karen Highland * 301-831-9947
Turning Point Real Estate “ 301-831-8232
email us: isell4u2@msn.com
Text Us: 301-401-5119
