Choosing A 15-Year Fixed Rate Mortgage Over A 30-Year Fixed Rate Mortgage

It's not just 30-year fixed rate mortgages that are posting all-time lows these days. The 15-year mortgage has been plunging, too.

If you've ever considered a 15-year loan term, it's a terrific time to talk to your lender. According to Freddie Mac's weekly mortgage rate survey of roughly 125 U.S. lenders, at 3.30 percent, the 15-year fixed rate mortgage is at its lowest point in history.

The 3.30% rate doesn't come for free, however. Based on average loan term nationwide, borrowers in North Carolina choosing to "go 15" should expect to pay 0.6 discount points at closing. 1 discount point is equal to 1 percent of your loan size.

With low rates, 15-year fixed rate mortgage can be enticing; a primary benefit is the huge reduction in the long-term interest costs of your loan. The downside, though, is that monthly mortgage payments can be relatively large.

At today's mortgage rates, a 15-year fixed rate loan carries a principal + interest payment of $705.10 per $100,000 borrowed -- a 46% increase over a comparable 30-year fixed rate loan. If you can manage the bigger payments, though, you'll reap $47,000 in interest payments savings per $100,000 borrowed in paying off your loan in full.

$47,000 per $100,000 borrowed is a huge amount of savings and those saved monies can be used to fund items such as college, home improvement, and retirement, among others.

That said, the 15-year fixed rate mortgage is not for everyone.

Because it comes with higher monthly payments, the 15-year fixed rate mortgage may add financial stress to your household budget. And, once you have committed to a 15-year loan term and its payments, you're can't "go back". Your lender won't revert your loan to a 30-year schedule without a refinance, and a refinance could be costly.

Is This The Start Of A Refi Boom? Mortgage Rates Fall For 8 Straight Weeks.

Mortgage rates are falling, falling, falling.

On a wave of uncertainty about Greece and its debt; and weaker-than-expected economic data at home, conforming 30-year fixed rate mortgage rates have fallen to levels not seen since December 2, 2010.

Mortgage rates have dropped 8 weeks in a row. Not even last year's Refi Boom produced an 8-week winning streak. This season's streak is historic.

The 30-year fixed rate mortgage now averages 4.49% nationally, down 42 basis points, or 0.42%, since early-April. For every $100,000 borrowed, that equates to a monthly savings of $25.24.

Adjustable-rate mortgages have shed even more, giving back 50 basis points since the streak began.

Because of low rates, it's an excellent time to buy or refinance a home relative to just a few weeks ago. Note, though, that depending on where you live, you may find your quoted interest rates to be slightly higher or lower than what Freddie Mac reports in its survey. This is because the Freddie Mac figure is a national average.

Mortgage rates and fees vary by region:

• Northeast : 4.49 with 0.6 points
• Southeast : 4.52 with 0.8 points
• North Central : 4.52 with 0.6 points
• Southeast : 4.52 with 0.6 points
• West : 4.45 with 0.8 points

You'll notice that, in the West Region, rates tend to be low and fees tend to be high; in the North Central Region, the opposite is true. You should expect North Carolina to have its own pricing norm within this region, too.

Is there a particular rate-and-fee setup that suits you best? The good news is that you can ask for it -- no matter where you live.

If having the absolute lowest mortgage rate is more important to you than having the absolute lowest fees, ask your loan officer to structure your loan in the "West" style. Or, if low costs are more your style, ask for them.

Mortgage rates appears as if they're headed lower but don't forget how quickly markets can change. Once they do, mortgage rates in Cary should spike. Exploit today's market while you still can.