Finding the right mortgage can be a little like shopping for a pair of shoes: the perfect fit is not too big and not too small, and ideally, will be comfortable for years to come. Some homeowners find that comfortable fit in the 20-year mortgage.

Instead of the popular 30-year mortgage, with a 20-year mortgage, the homeowner commits to paying off the principal in 20 years, shaving 10 years off the term as well as a ton of interest. A 20-year mortgage is a middle ground between the longer term and a 15-year mortgage or the even more aggressive 10-year mortgage.

Whether you’re looking to get a mortgage on a new home or refinance your existing mortgage, it’s important to consider the pros and cons of each to choose the one that will give you that perfect “goldilocks” scenario—not too fast for your financial situation and not too slow. Read on to help determine if a 20-year mortgage is right for you.

What is a 20-year fixed-rate mortgage?

A 20-year fixed-rate mortgage is a 20-year amortization, where your loan is repaid fully over that period.

“A 20-year-fixed is likely [good] for someone who is refinancing for a lower rate and doesn’t want to extend their term back to 30 years. This way, if they are five to 10 years into payments on their current mortgage, they can continue making payments with the hopes of paying off the loan within their target time period,” explains David Reiling, CEO of Sunrise Banks, based in Saint Paul, Minnesota. “In a purchase situation, if a client has a goal of paying off their home in less than 30 years, a 20-year fixed is a good alternative that offers lower monthly payments, [as opposed to] a 15-year mortgage.”

To determine if a 20-year mortgage is right for you, do the math using a mortgage calculator. Get the latest interest rates for 20-year fixed-rate mortgages above. Be sure to check back regularly, as rates do change.

Today’s 20-Year Mortgage Rates

Product Interest Rate APR
20-Year Fixed Rate 3.65% 3.81%

Rates as of 11/20/2019 at 6:30 AM

The table above brings together a comprehensive national survey of mortgage lenders to help you know what is the most competitive 20 year mortgage interest rate. This interest rate table is updated daily to give you the most current rate when choosing a 20 year mortgage home loan.

What are the benefits of a 20-year fixed-rate mortgage?

While much depends on the individual mortgage terms, in general, 20-year mortgages have a “shorter term than the traditional 30-year mortgage—which means a faster payoff—and a lower rate than the 30-year option,” Reilling says. He adds that it’s important to carefully consider your household income and whether the monthly payments—including any additional expenses like HOA dues, homeowner’s insurance, property taxes and fees—fit comfortably into your budget.

And, though you’ll pay off the mortgage at a faster clip than a longer term, the payments will be more manageable than an even shorter mortgage. A 10-year term will require a much higher payment than a 20-year mortgage.

What are the downsides of a 20-year fixed-rate mortgage?

If you’re choosing between a 30-year mortgage and a 20-year mortgage, the most significant disadvantage to a 20-year is that the monthly payments will be higher. “With a higher payment, you may need to opt for a more modest house than you would with a 30-year term,” Reilling notes.

On the other hand, if you’re deciding between a 10-year or 15-year mortgage and a 20-year mortgage, the drawback of the 20-year is that you’ll pay interest on the loan for either five or 10 more years. However, if you choose a 20-year mortgage with no early repayment penalty (most mortgages don’t have any such penalties), you could choose to pay the mortgage off even faster, either with additional principal payments each month or with a lump sum to close the mortgage out early.

The point is, the choice of paying more is yours each month with a longer-term loan. But if you lock yourself into a 10-, 15- or 20-year mortgage, you must pay the agreed amount each month. There’s no provision to send less money when your budget is tight.

Fees to consider with a 20-year mortgage

The costs and fees with a 20-year mortgage are identical to those of mortgages with other terms. The lender’s costs really don’t vary much depending on the term of the loan. Expect to pay an average of about 2 percent to 4 percent of the loan’s principal amount at closing in fees, including origination fees and third-party costs like title insurance. It’s possible to wrap these fees into the loan, but this will cost you in the form of a slightly higher interest rate over the entire loan term.

How to find the best mortgage for you

Once you’ve settled on the length of the mortgage, it’s time to do your research to find the best mortgage for you (see these five kinds of mortgages to consider). This due diligence will mean comparing mortgage rates from several lenders, which might include mortgage brokers, traditional banks and online lenders. It’s smart to prepare for your mortgage search by reviewing your credit report to confirm it’s correct and evaluating your financial landscape to determine how much you can afford to put toward a home each month. “The key is to make sure the client is comfortable with their budget and payment,” says Reilling.

While there is no official “best season” to shop for a mortgage since rates are driven by the market and overall economic landscape, Reilling says, “Banks are much more competitive on rates when business is slow, which tends to be in the dead of winter around January or February.”

Other useful tools