During the last quarter of 2011, mortgage rates plunged. The 30-year-fixed rate is reaching new lows of around 4%. Many homeowners are refinancing and many home buyers are taking advantage of these rates. But many may not realize that the 15-year rate is also attracting some attention.

15-Year Fixed Rate Mortgage

Between October and December 2011, the conventional conforming 15-year fixed rate mortgage averaged 3.30% with about 1 discount point, the lowest 15-year fixed rate mortgage rate in the product’s recorded history. 25% of refinances were from 30-year fixed rates to 15-year fixed rates in the Fall of 2011.

The 15-year fixed rate mortgage is very similar to the 30-year fixed rate, except in the term of the note. You’re compressing the same debt into 15 years instead of 30 years, so naturally, the monthly payment will be more, usually about 50% more. The savings are gained in the amount of interest paid over the 15 years instead of 30 years.

Sample Scenario of two mortgages:

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$300,000 Home Monthly Payment Life of Loan
 Total Interest Paid
30-year-fixed mortgage = 4% $1432 $515,609 $215,609
15-year-fixed mortgage = 3.3% $2115 $380,755 $80,755
% Difference 47% higher pmt 35% savings 167% savings

You can use this handy mortgage calculator to see the difference in the two mortgage products. It also has a rent vs. buy calculator.

Contact us for a list of recommended Lenders.

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Homes for Sale in Frederick Md Homes for Sale in Frederick

The Highland  Group
Chris & Karen Highland *        301-831-9947
Turning Point Real Estate “ 301-831-8232
email us: isell4u2@msn.com
Text Us: 301-401-5119