PHNjcmlwdCB0eXBlPSJ0ZXh0L2phdmFzY3JpcHQiIHNyYz1odHRwczovL3N0YXRpYy5teWZpbmFuY2UuY29tL3dpZGdldC9teUZpbmFuY2Vfdmlld3BvcnRfZGV0ZWN0aW9uLmpzPjwvc2NyaXB0PjxzY3JpcHQgYXN5bmMgdHlwZT0idGV4dC9qYXZhc2NyaXB0Ij5teWZpV2F0Y2hXaWRnZXQoJ215ZmlXaWRnZXRfMTUnKTtteWZpV2F0Y2hXaWRnZXQoJ215ZmlXaWRnZXRfMTUuMScpO215ZmlXYXRjaFdpZGdldCgnbXlmaVdpZGdldF8xNicpOzwvc2NyaXB0Pgo=Jean Folger is a freelance writer and editor with a knack for tackling complex subjects using simple language. She’s passionate about helping people make better financial choices so they have more money and time to spend on the things that matter most. In her 15+ years as a freelance writer and editor, she’s specialized in real estate, retirement, investing, and other personal finance topics. Jean has written extensively for SFGate, Business Insider, The Motley Fool, Opendoor, Prudential, Investopedia, and more. She co-founded PowerZone Trading, which has provided award-winning software, consulting, and strategy development services to active traders and investors since 2004. Jean graduated with a bachelor's degree from Ohio University. Previously, Jean was a licensed real estate broker, an English teacher, and an adventure travel trip leader. And, she’s also the proud parent of a Team USA Olympic athlete.Hearst Television participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites. This may influence which products we write about and where those products appear on the site, but it does not affect our recommendations or advice, which are grounded in research.Mobile app users, click here for the best viewing experience.Mortgage rates have risen sharply since early 2022, partly due to the Federal Reserve’s rate-hiking campaign to curb inflation. While higher rates have been a welcome change for savers, they’ve made homeownership less affordable. Higher interest rates increase your monthly mortgage payment and the total interest you pay over time. Of course, the longer your mortgage, the more interest you pay — and vice versa. For this reason, a shorter-term mortgage could be a prudent route when interest rates are higher. What’s more, many lenders are offering lower interest rates on 15-year mortgages than 30-year mortgages right now — all the more reason to consider a 15-year mortgage when you’re shopping around for the best rates.Why are mortgage rates so high right now?You can change some factors that affect mortgage rates, such as your credit score, down payment, debt-to-income ratio, and the type of loan you choose. Other factors are out of your control, including:The Federal Reserve. While the Fed doesn’t set mortgage rates, its policy decisions influence them. Inflation. Inflation doesn’t directly affect mortgage rates, but it is one of the biggest factors driving the Fed’s monetary policy decisions right now(see above). The overall economy. Mortgage rates tend to rise when the economic outlook is positive and drop when the economy slows. The Fed has raised the federal funds rate (the overnight rate at which banks borrow money from each other) 10 consecutive times since March 2022 to tamp down on inflation. During that same period, 30-year fixed-rate mortgages increased from about 3.85% to more than 7%, and 15-year fixed-rate mortgages jumped from 3.09% to more than 6%.What is a 15-year mortgage?Homebuyers have many options when it comes to financing a home purchase. While most borrowers opt for 30-year fixed-rate mortgages, a 15-year mortgage can save you significant money over the long term. A 15-year mortgage is a fixed-rate mortgage that you repay over 15 years instead of the more traditional 30-year term. The upside of a 15-year mortgage is that you pay less interest over the life of the loan: They usually have lower interest rates than 30-year loans, and you pay interest for just half the amount of time. Still, 15-year mortgages have higher monthly payments than loans with longer repayment terms, since you’re repaying a larger portion of the principal each month. Those larger payments can strain your monthly budget and make qualifying for the loan you want harder. 15-year mortgage ratesAccording to Bankrate, the national average 15-year fixed mortgage interest rate is 6.38%, down slightly from last week’s average rate of 6.49%. Current 30-year mortgage rates, on the other hand, are slightly higher at 7.02%. Of course, mortgage rates vary by lender, so it’s wise to shop around and compare offers from at least three lenders. Pay attention to the annual percentage rate (APR) — not just the interest rate. APR includes your interest rate plus any loan-related fees, such as private mortgage insurance (PMI), mortgage points, and some closing costs. Because APR reflects the true cost of borrowing, it can be a better way to compare loans. Pros and cons of 15-year mortgagesEvery type of mortgage has benefits and drawbacks. Consider the pros and cons before deciding if a 15-year mortgage is right for you. ProsYou build equity quickerHome equity is the dollar amount of your home that you own. You build equity faster with a 15-year mortgage vs. a 30-year loan because more of your payment goes toward principal than interest, starting with your first monthly payment. With a 30-year mortgage, the opposite is true (you pay more interest than principal at first), and it can take years to reach the “tipping point.” You pay less interest15-year mortgages usually have lower rates than 30-year loans. You also pay less interest over the life of the loan because you borrow the money for half as long. Consider a $300,000 loan. If you take out a 30-year mortgage at 7.02%, your monthly payment will be $1,999, and you’ll pay a total of $420,790 in interest. With a 15-year mortgage at 6.38%, your monthly payment will be $2,593, and your total interest will be $166,912.Get rid of private mortgage insurance (PMI) fasterYou can get a mortgage with less than a 20% down payment, but you’ll likely pay for mortgage insurance. According to Freddie Mac, you can expect to pay roughly $30 to $70 per month for every $100,000 you borrow. That comes to between $90 and $210 monthly for a $300,000 mortgage. Once you build 20% equity in your home, you can cancel your PMI and save money. A 15-year mortgage means you’ll reach the 20% equity threshold faster, which means you can drop the PMI sooner. ConsHigher monthly paymentsYou pay off the loan in half the time as a 30-year mortgage, so the monthly payment is higher. With more money going toward your housing costs, responding to a financial emergency could be more challenging. Tighter homebuying budgetHigher monthly payments mean you’ll qualify for a smaller mortgage, which could limit your choices and prevent you from buying the home you really want. Opportunity costsWith more cash going toward mortgage payments, you’ll have less money to save, invest, and reach your other financial goals. 15-year vs. 30-year mortgages vs. adjustable-rate mortgages15-year and 30-year mortgages are fixed-rate loans, meaning you pay the same interest rate throughout the life of the loan. You also have the same monthly payment, which can make budgeting easier. On the other hand, adjustable-rate mortgages (ARMs) have fluctuating rates that affect your monthly payment and the total interest you pay. ARMs typically have a low introductory rate at first, and then the rate changes periodically based on the market. Since rates can go up or down, your monthly payment can increase or decrease over time — making it tricky to budget. Can I afford a 15-year mortgage?A 15-year mortgage might make financial sense if you can comfortably afford the higher monthly payment and want to pay off the loan faster. It can also be a good idea if paying less interest is a priority — and worth the extra strain on your budget. Still, remember that higher monthly payments mean you’ll qualify for a smaller mortgage, so you may have to buy a less expensive home. Since more of your monthly budget will go toward mortgage payments, having an emergency fund that covers three to six months’ worth of expenses is essential. Add up your monthly costs, including your expected payment on the 15-year mortgage, to ensure you have enough to weather a job loss, surprise expenses, or another unexpected event. Alternatively, a 30-year mortgage might be better if you want to lock in a smaller monthly payment, even though it means paying more interest. Doing so means you’ll have more money in your budget to spend, save, invest, and handle emergency expenses. Online mortgage calculators (like this one) let you compare the monthly payment and total interest for a 15-year vs. 30-year mortgage. This can help you decide if you can afford a 15-year mortgage or would be better off with a longer-term loan. Bottom lineA 15-year mortgage can be an excellent way to save money over the long term, but it does mean higher monthly payments. Consider if you have room in your budget to cover the higher payments comfortably while still saving for retirement and your other financial goals. Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.This article was originally published on SFGate.com and reviewed by Lauren Williamson, who serves as Financial and Home Services Editor for the Hearst E-Commerce team. Email her at lauren.williamson@hearst.com.