If you are looking to pay your loan off as quickly as possible a 15 year fixed may be the best option for you.

This loan is fully amortized over a 15-year period and features constant monthly payments. It offers all the advantages of the 30-year loan, plus a lower interest rate—and you’ll own your home twice as fast. The disadvantage is that, with a 15-year loan, even with a lower interest rate you will have a higher overall payment, because you are shorting the repayment term by half. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments that simulate a 15 year payment schedule. This approach is safer than committing to a higher monthly payment by allowing you to switch payments back to a 30 year schedule if need be, but you will not be able to take advantage of the lower interest rate offered with a 15 year loan.

Pros:

  • Lower interest rate than 30 year fixed
  • Shorter term – pay your loan off faster
  • PMI will cancel once 20% equity is reached

Cons:

  • Higher monthly payment due to shorter term