WASHINGTON (AP) -- A plunge in mortgage rates is giving homeowners a rare opportunity to lock in a 15-year fixed-rate loan for less than 4 percent.Rates haven't dipped this low in decades. For those who can qualify, it's the chance to pay off a home in half the time while saving tens of thousands of dollars -- if not more.
The average rate on the 15-year fixed loan dropped to 3.95 percent last week, according to mortgage company Freddie Mac. That's the lowest on records the company has kept since 1991. The average rate for a 30-year fixed loan fell to 4.49 percent. Rates haven't been that low since the 1950s, when longer-term mortgages typically lasted 20 to 25 years.
On the surface, there might not seem to be a huge difference in the two rates, both of which are historically low. But consider the savings on a $200,000 mortgage over 15 years at the current rates.
A borrower who refinances over that term could expect to save $65,000 in interest compared with the 30-year fixed loan. Still, they would pay $1,474 a month before taxes and insurance. With the 30-year loan, the payments would be $1,010 a month.
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