15 Year Mortgages Especially Attractive

By now, nobody gets too excited to hear that mortgage rates are at record lows; they've been low for a while.

However, 15 year mortgages are especially interesting right now. In addition to record low rates, the difference between rates on 15 and 30 year mortgages is in record territory. The "spread" is 0.7%, meaning you save almost three quarters of a percent by going with a 15 year loan.

Amy Hoak, writing for Marketwatch.com, reports that "Thirty-one percent of those who refinanced during the first quarter paid off a 30-year fixed-rate mortgage and swapped it for a shorter-term loan." They had a variety of reasons to do so, and now there's one more compelling reason: you'll pay a lot less in interest.

The main reason people use 15 year loans is to keep the total amount of interest they pay to a minimum. This happens in two ways. First, you get a lower interest rate when using a shorter term loan. Also, you pay the loan off more quickly -- as opposed to paying interest for an additional 15 years when you use a 30 year mortgage. Those factors mean that borrowers spend less over their lifetimes (and they can afford to spend their savings elsewhere).

Take a look at 15 year mortgages and see if they make sense for you. Keep in mind that you will have closing costs, and you may have to commit to a larger monthly payment. If that doesn't work for you, you can always pay more than the minimum on your existing 30 year loan and you'll still save on interest costs.