Is Now the Time for a 15-Year Mortgage?

So there you are, sitting around the kitchen table, bemoaning the fact that you have 25 years left on the mortgage you took out back in 2012 and with rates on the rise, “It’s time to hunker down, hon…”

Or maybe not…

With 15-Year fixed rates still in the 3.25-3.5% range, now may be the time to potentially save over $100,000 by shortening the term of your loan. Say what? Yep, you heard it right. If you took out a $400,000 30 year mortgage in 2012 with a 4% rate you would be sitting at a principal balance of about $362,000. By converting it now to a 15-year fixed mortgage at 3.5% you would save $103,159 in principal and interest payments by cutting the term short by 10 years. Of course, the monthly payment will be higher with a 15-year term, but so is your income now, and it should continue rising over the next 10-15 years.

Fifteen year fixed loans aren’t for everyone, but it may be something to consider as there are a number of benefits to a shorter loan term vs. the traditional 30-year fixed.

Here are 5 indisputable reasons you may want to consider a 15-year or even 20-year term:

  1. Interest Paid – Over the life of the loan a 15 Year mortgage will typically result in more than 60% less Interest-paid – that is a huge savings!
  2. Payoff the Mortgage Faster – especially for borrower’s nearing retirement who will see disposable income significantly reduced with a mortgage payment in retirement.
  3. Same Rate, Less Risk – The 15 Year is comparable to a 5 or 7/1 ARM rate today, but with no interest rate risk vs. an ARM which adjusts after the initial fixed period.
  4. Loan Level Price Adjustments – 15 Year Fixed loans (FNMA) carry less LLPA’s, meaning better rates and more rebate for higher LTVs and Lower FICO scores.
  5. Build Equity Fast – Down the line there will be more flexibility for HELOCs, and cash-out in general (such as for home improvements).


Give us a call to discuss if a 15-year could be right for you!


Todd Galde
Sr. Mortgage Advisor
nmls #256864
tel 925-394-7732 | cell 925-381-8190



VP, Marketing at Commerce Home Mortgage. Background in tech with a passion for art and design.