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The Kathy O'Neal Team

Real Estate in Chantilly Blog

Looking at a 15-Year Mortgage: Basic Considerations

Comparing 15-year mortgage rates to 30-year mortgage rates

Chantilly and Northern Virginia area home buyers, as well as home owners, who have been thinking about the issue of financing or re-financing their new or current home should at least be aware of the 15-year mortgage option.  Take a careful look and see if it could work for you.

Currently, the 15-year/30-year interest rate spread is near its 5-year high.

Of course, higher monthly payments is part of the 15-year mortgage.  The principal is paid down in half the time, so naturally the payments are higher.

There is another price to pay.  Because you are paying so much more principle (a good thing), you are not able to get as much on itemized deductions come tax time.  You may consider that a small price to pay, but it is important to be aware of it, and factor it into your decision process.

Also to consider is the amount of that larger payment each month.  If you want to change it, you will likely need to go through a refinance process again, and doing so will cost you.

As a ballpark figure, at today’s rates, a 15-year fixed and 30-year fixed is $230 per $100,000 borrowed.  Interest rates changes so check what is current.  And of course, call us if we can help with a few referrals for mortgage professionals.