A fixed rate means that the principal and interest rate of the loan does not change during the life of the loan. A 15 year fixed rate mortgage is similar to a 30 year fixed
rate loan except that it offers a lower interest rate but higher monthly payments.
With consistent payments, the borrowers can pay off their loans in half the time it takes for a 30 year loan, thus freeing up funds for retirement.
That’s why this loan is a popular choice for borrowers who are focused on paying off their mortgage as quickly as possible and have the income to support higher payments over a shorter term. The typical minimum down payment is 5% although some loan types will allow as little as 3% down.
In comparison to a 30 year fixed rate mortgage, a 15 year mortgage costs less in the long run since borrowers pay less in total interest. Many borrowers, however, opt for a 30 year fixed rate loan and voluntarily make larger payments that will pay off their loan faster.