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Fifteen-year loans became quite popular in the 90′s. Thanks to historically low rates, borrowers can use a 15-year loan to pay off their home loans quickly without an unbearably high mortgage payment.

The benefits are simple: You could own your house free and clear more quickly and you might save a great deal of interest. For example, a couple in their mid-40s may like this concept knowing that by the time they reach age 60, they own their home and will no longer have mortgage payments. For a young couple in the mid-20s, it may not make as much sense as having a longer term 30-year loan.

The key to deciding is to compare the monthly payments and see how comfortable you are with the higher payments of a 15-year loan. If you want to pay off your loan early but can’t quite handle the payments on a 15-year loan, ask us about our 20-year loans. For those who want to pay off their loan even more quickly, we can offer a 10-year fully amortizing loan.

The traditional 30-year fixed rate mortgage has a constant interest rate with the monthly payments (principal and interest only) that never change for both conforming and jumbo loan programs. This may be a good choice if you plan to stay in your home for seven years or longer. If you plan to move within seven years, adjustable-rate loans are usually more cost effective.

As a rule of thumb, fixed-rate loans may be harder to qualify for than adjustable-rate loans. When interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run because you can lock in the rate for the life of your loan.

Adjustable-rate mortgage programs charge a fixed-interest rate for the first three, five, seven, or ten years. After that time, the loan turns into a variable interest rate loan (with a rate cap) for the remaining years on the life of the loan, based on the then-current interest rates.

When it comes to Adjustable-Rate Mortgages (ARMs), there is a basic rule to remember: The longer you ask the lender to charge a specific rate, the more expensive the loan.

If you plan to own the house for three years or less, the perfect loan is one that is fixed for three years before starting to adjust. This way you’ll benefit from the lower rate offered by an ARM without being subjected to the uncertainty of payments that could be higher. Similarly, if you think you’ll be in the house for five or fewer years, the perfect loan is our loan that is fixed for five years before starting to adjust. The same logic applies to our loan that is fixed for seven years before adjusting.