Why I Should Apply for a 15 Year Home Loan

Mortgage rates again hit an all-time low last week. In fact, for the week ending July 12, 2012, Freddie Mac reported that the 3.56% interest rate for 30 year fixed-rate loans was the lowest it had seen since 1971. This marks the 16th consecutive week that 30 year fixed-rate loans have seen rates below 4%. The average interest rate for a 15 year fixed-rate mortgage loan also hit an all-time low at 2.86%, marking the 7th week in a row that it was below 3%. This may leave you scratching your head and asking yourself, "Why don't I apply for a 15 year home loan instead of a traditional 30 year?".

While a 30 year, fixed-rate loan makes the monthly payment a little easier for many / home buyers to afford, it also comes with a longer payment time and much more money paid in interest. A 15 year fixed-rate loan not only means you pay your / home note off in half the time, providing you stay in the home for the entire length of the loan, but it also means that you can save a ton of money in interest by paying a little more each month. For example, if you are purchasing a home for $250,000 and secure funding at the best rates listed above, you would be paying $1131 per month with a 30 year fixed-rate loan and $1709.67 per month with a 15 year fixed-rate loan. That's less than $600 more per month for the 15 year loan. However, here is the best part. The total money you pay when you finance with a 15-year home loan is just $307,741. That's just $57,741 in interest. By the end of your term on a 30 year loan, you will have paid $407,161. That's a whopping $157,161 in interest and almost $100,000 more than a 15 year loan. If you split your monthly mortgage payment in half and pay that much every two weeks, you will be making three extra mortgage payments per year, which pays off your loan in even less time!

Are you still asking yourself "why should I apply for a 15 year home loan"? If you have the credit and financial means to afford paying a little bit extra each month, a 15 year fixed-rate mortgage loan makes the most dollars and sense around. Your / home will officially be yours in half the time and will save you a ton of money in interest payments. That money can be invested in other areas, including buying another / home if you want. Contact me soon so I can help you find the perfect / home for you and your family right away.

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Originally posted on my Northern Virginia real estate blog here: .