How to compare current 15-year mortgage rates

For the best chance of getting the lowest possible mortgage rate, compare loan offers from more than one lender. You might even consider working with a mortgage broker. Here’s how:

1. Get preapproved: Get rate quotes from at least three mortgage lenders, ideally on the same day so you have an accurate basis for comparison. Lenders determine your interest rate based on your credit score, debt-to-income (DTI) ratio and other factors, including the size of your down payment. Generally, borrowers with a credit score of 740 and up, a substantial down payment (20 percent is ideal, but not required) and a DTI ratio of no more than 43 percent score the most attractive offers.
2. Compare the interest rate and APR: The interest rate and annual percentage rate (APR) reflect the cost of the loan. The interest rate is the cost to borrow the funds, while the APR includes the interest rate and other costs such as the origination fee and any points. When comparing rate offers, the APR is a more complete picture of the all-in cost.
3. Consider the lender’s ratings and your experience: Aside from the numbers, evaluate other factors such as convenience and the lender’s responsiveness. Take a look at what other borrowers have had to say about the lender, too.

Factors considered in 15-year mortgage rates

Mortgage lenders set 15-year interest rates based on a number of factors, including your individual credit profile, income, debt and savings. Generally, the stronger your credit and financials, the lower the rate you’ll get.

Mortgage rates are also influenced by outside forces. This includes:

• 10-year Treasury yield: Broadly speaking, if investors feel confident in the state and direction of the U.S. economy, mortgage pricing — guided by the 10-year Treasury yield — tends to increase. On the flip side, if investors are wary, mortgage rates go down.
• Federal Reserve policy: While the Federal Reserve doesn’t set fixed mortgage rates, its decisions about the movement of the federal funds rate have ripple effects on home loans.
• Inflation: Inflation raises prices across the board, including on interest rates.
• Business environment: Lenders ultimately decide how to price their loans. If a lender needs to drum up more business, for example, they might lower their rates to attract more customers.

Keep in mind: Fifteen-year mortgage rates are lower than 30-year rates, in part because you’re repaying your lender sooner with the shorter loan term. This translates to less risk for the lender, and lower overall costs for you.

Pros and cons of a 15-year mortgage

Let’s look at both the benefits and drawbacks of a 15-year mortgage so you can see how one might fit your financial goals:

Pros

• You’ll build equity faster. Compared to a 30-year loan, you’ll pay down your balance much more quickly.
• You’ll pay less interest. Rates on 15-year loans are typically lower than rates on 30-year loans. What’s more, you’ll pay less interest over the life of the loan.
• A larger chunk of monthly payments go toward the loan principal rather than interest. With a 30-year mortgage, only a fraction of early payments go to repaying principal. A 15-year loan speeds up that process.

Cons

• You’ll have higher monthly payments compared to longer-term loans. If you’re struggling to qualify, a 15-year mortgage will only increase the challenge.
• There’s an opportunity cost. Maybe it makes more sense to borrow more against your house and to invest the proceeds for retirement or other financial goals.
• There’s a potential loss of mortgage interest tax breaks due to paying less interest. Most Americans no longer benefit from the mortgage interest deduction, but if you do, consider the tax implications.

Differences between a 15-year and 30-year fixed-rate mortgage

A 15-year mortgage means you’ll pay off your loan faster and at a lower rate, but with the tradeoff of higher monthly payments. A 30-year mortgage comes with lower monthly payments, which not only lends more flexibility to your budget, but could also allow you to borrow a larger amount. However, you’ll pay more in interest with the 30-year, and for a longer time.

Even if the total amount you’re interested in borrowing would be the same for a 15- or 30-year mortgage, you might have an easier time qualifying for the longer-term loan because its monthly payments are smaller and more manageable.

Example 15-year vs. 30-year mortgage payments

Should you get a 15-year mortgage?

There’s no right or wrong answer, and the decision really depends on the answers to two questions:

1. Do you have the income to qualify for a 15-year mortgage? Many borrowers stretch as it is to fit a 30-year mortgage payment into their monthly budget. If that’s the case for you, it might be better to stick with the longer mortgage term, even if you don’t plan to stay in the home the full 30 years.
2. How do you feel about debt? If you’re comfortable with the concept of debt as a financial tool, it might make more sense to go with a 30-year loan. If you prefer paying down the mortgage more quickly, then check out 15-year term options.

Refinancing into a 15-year mortgage

If you have a 30-year mortgage and are more than halfway through your loan term, refinancing into a 15-year loan with a lower rate could save you thousands in interest.

In general, 15-year mortgages have higher monthly payments due to the shorter term — but, depending on how much lower you can cut your rate and the balance of your current loan, your monthly payment might not increase as much as you think it will, or at all.

Whichever type of refinance you pursue, shop around for rates and compare offers, including lender fees.

Learn more about how to refinance your mortgage.

15-year mortgage FAQ

More resources on 15-year fixed mortgages

• What is a fixed-rate mortgage and how does it work?
• Pros and cons of a 15-year mortgage
• 15-year or 30-year fixed mortgage calculator