Refinancing into a 15-year mortgage from a 30-year mortgage can be a great way to save money. You\u2019ll pay a lower interest rate for fewer years and own your home sooner.<\/p>\n
However, you\u2019ll pay closing costs to take out the new loan, plus your new monthly payment will probably be higher, giving you less financial flexibility.<\/p>\n
Here\u2019s what you should know about refinancing to a 15-year mortgage: <\/b><\/p>\n <\/a><\/p>\n When you refinance<\/a> a mortgage, you\u2019ll get a new home loan and use it to pay off your current mortgage. Then, you make payments on the new mortgage instead. Your interest rate and monthly payment should change after refinancing.<\/p>\n According to the most recent mortgage refinance statistics from Freddie Mac<\/a>, 75% of homeowners with a 30-year fixed-rate mortgage refinanced into the same type of loan, while 16% refinanced into a 15-year mortgage. Among homeowners with a 15-year mortgage, 70% refinanced into the same loan type.<\/p>\n Find Out: <\/i><\/b>How to Refinance Your Mortgage in 6 Easy Steps<\/i><\/b><\/a> If you refinance from a 30-year mortgage<\/a> to a 15-year mortgage<\/a>, your new monthly payment will most likely be higher, but the total interest you\u2019ll pay over the life of the loan will be lower. You\u2019ll also own your home outright sooner.<\/p>\n Let\u2019s say you\u2019re four years into your 30-year mortgage, and you now want to refinance to a new 15-year mortgage. Your current balance is $231,724. Rates are low, and you manage to secure a great APR, dropping down from 4.15% to 2.20%.<\/p>\n While this will raise your monthly payment by about $300, you\u2019ll stand to save over $106,000 in interest with the new loan.<\/p>\n Here\u2019s a breakdown of how much in interest you could save in this scenario by refinancing into a 15-year loan:<\/p>\n\n Even after paying $4,600 in closing costs to get the new loan \u2014 about 2% of the loan amount \u2014 you\u2019ll come out way ahead in this example. Your breakeven period would be $4,600 divided by $300, or just over 15 months. So by month 16 of your new loan, you\u2019d be coming out ahead.<\/p>\n The choice to refinance won\u2019t always be so clear cut, and refinancing into a shorter loan term isn\u2019t right for everyone. But it\u2019s worth at least doing the math to see what you could save.<\/p>\n For a more customized approach, use our mortgage payment calculator below to determine how much you could save on interest by switching from a 30-year loan to a 15-year loan.<\/p>\n Enter your loan information to calculate how much you could pay<\/span><\/p>\n\n \n
What happens when you refinance to a 15-year mortgage?<\/h2>\n
\n<\/a><\/p>\nHow much you could save on interest by refinancing to a 15-year mortgage<\/h2>\n
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\n\t <\/td> Original 30-year mortgage
\r\n(26 years left)<\/small><\/strong><\/th>New 15-year mortgage<\/strong><\/th>\n<\/tr>\n<\/thead>\n\n \n\t Current balance<\/strong><\/td> $231,724<\/td> $231,724<\/td>\n<\/tr>\n \n\t APR<\/strong><\/td> 4.15%<\/td> 2.20%<\/td>\n<\/tr>\n \n\t Monthly payment<\/strong><\/td> $1,215<\/td> $1,513<\/td>\n<\/tr>\n \n\t Total interest over life of loan<\/strong><\/td> $187,493<\/td> $40,544<\/td>\n<\/tr>\n \n\t Interest paid so far<\/strong><\/td> $40,057<\/td> $40,057<\/td>\n<\/tr>\n \n\t Interest remaining<\/strong><\/td> $147,436<\/td> $40,544<\/td>\n<\/tr>\n \n\t Total interest savings<\/strong><\/td> None<\/td> $106,892<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n