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Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.
Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner. Bankrate logo
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo
Can I Switch My 30 Year Mortgage to 15 1?
Many homeowners take out 30-year mortgages when they first purchase their home. The long repayment term results in lower monthly payments making these loans more affordable. However 30-year loans also mean you’ll pay more in interest over the life of the loan.
If you want to pay off your mortgage faster and reduce the amount of interest you pay, you may be wondering if you can switch your 30-year mortgage to a 15-year loan The short answer is yes, you can refinance your 30-year mortgage into a 15-year loan Here’s what you need to know about making the switch.
Benefits of Refinancing to a 15-Year Mortgage
There are several advantages to refinancing from a 30-year to a 15-year mortgage:
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Save substantially on interest payments. With 15 years less to pay off the loan, you’ll save thousands in interest costs over the life of the loan.
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Pay off your home faster. A 15-year mortgage means you’ll own your home free and clear in half the time.
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Build equity quicker. Faster repayment results in more of your monthly payments going toward the principal, helping you build equity faster.
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Lower interest rate. Interest rates are typically 0.25% to 0.5% lower on 15-year mortgages compared to 30-year loans.
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Increase monthly cash flow sooner. Once your mortgage is paid off, you’ll have hundreds more in disposable income each month.
For example, let’s say you have a $200,000 mortgage at 4.5% interest on a 30-year term. By refinancing to a 15-year loan at 4% interest, you would save over $60,000 in interest and be mortgage-free 15 years sooner.
Drawbacks of Refinancing to a 15-Year Mortgage
While there are many benefits, switching to a 15-year mortgage also has some potential drawbacks:
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Higher monthly payments. Because you’re repaying the loan in half the time, expect your monthly mortgage payments to increase substantially. Make sure you can afford the higher payment.
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Closing costs. Refinancing comes with upfront closing costs, which can be 2% to 5% of your loan amount. These fees can take several years to recoup through interest savings.
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Loan seasoning requirements. Most lenders require you to have had your current mortgage for at least 12 months before refinancing to a new loan.
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Length of time remaining. If you don’t have at least 15 years left on your current 30-year mortgage, refinancing may not make sense.
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Prepayment penalties. Your existing loan may charge early repayment penalties if you refinance within the first few years.
When Is the Right Time to Switch to a 15-Year Mortgage?
Generally, it makes the most financial sense to refinance from a 30-year to a 15-year mortgage when:
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You have at least 15 to 20 years left on your current mortgage. This allows you to take full advantage of the interest savings.
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Interest rates have dropped significantly since you originated your first mortgage. To maximize savings, look for at least a 1% rate drop.
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Your income and credit score have improved since you first bought your home, qualifying you for better loan terms.
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You have enough equity built up to qualify for the lowest rates and avoid private mortgage insurance (PMI).
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You’ve met the loan seasoning requirements set by most lenders (typically 12 months).
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You don’t anticipate needing to move or sell in the next 5+ years so you can recoup closing costs.
If you meet most of these criteria, running the numbers to see if refinancing to a 15-year term results in considerable interest savings could be worthwhile.
How to Refinance from a 30-Year to 15-Year Mortgage
The process of refinancing a 30-year mortgage into a 15-year loan is very similar to getting a new purchase mortgage. Here are the basic steps:
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Check your eligibility. Confirm you meet basic requirements like seasoning rules, loan-to-value ratio, and credit score minimums.
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Compare mortgage rates. Shop around with multiple lenders to find the best 15-year rate and closing costs.
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Complete your loan application. Gather all required documents and fill out forms for your chosen lender. Allow a few weeks for processing.
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Get an appraisal. The lender will order a home appraisal to verify the property value and determine the appropriate loan amount.
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Close on your new loan. After signing final paperwork, your old mortgage will be paid off and replaced with the new 15-year loan.
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Start making payments. Begin making the new, higher monthly payments on your refinanced 15-year mortgage.
Be sure to budget for closing costs when refinancing. Shop around among lenders to find the best combination of competitive rates and affordable fees.
Alternatives to Refinancing to a 15-Year Mortgage
Some alternatives to refinancing into a 15-year mortgage include:
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Making extra principal payments on your existing 30-year loan each month to pay it off faster. This avoids refinancing costs.
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Refinancing to a 20-year or 25-year mortgage. This also shortens the repayment term to reduce interest but won’t raise monthly payments as much as a 15-year loan.
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Taking out a home equity loan or HELOC to pay down your mortgage principal. This can shorten your term without refinancing.
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Refinancing only a portion of your balance to a 15-year loan. For example, you could refinance 50% or 75% of your mortgage to a 15-year term.
The Bottom Line
Refinancing from a 30-year to a 15-year fixed-rate mortgage can allow you to pay off your home faster and save substantially on interest. But before making the switch, be sure you can afford the higher monthly payments and have a timeline that allows you to recoup the upfront costs.
Carefully crunch the numbers and consider your budget and financial situation before deciding if switching to a 15-year loan is the right move. While not right for everyone, for some homeowners it can provide a faster path to mortgage payoff and long-term savings.
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Calendar Icon 5 years of experience covering mortgages Andrew Dehan writes about home loans, real estate and personal finance. Hes taken the NMLS Loan Originator education classes and passed the MLO SAFE test. Besides Bankrate, his work has been published by Rocket Mortgage, Forbes Advisor and Business Insider. He’s also a poet, musician and nature-lover. He lives in metro Detroit with his wife and children.
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Calendar Icon 6 years of experience Laurie Richards is a mortgage editor on Bankrate’s Home Lending team.
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Emmanuel Nyame is a member of Bankrate’s Financial Review Board and the CEO of Twelvenets, where he leads campaigns that drive community and economic growth.
At Bankrate, we take the accuracy of our content seriously.
“Expert verified” means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced.
Their reviews hold us accountable for publishing high-quality and trustworthy content.
Bankrate is always editorially independent. While we adhere to strict , this post may contain references to products from our partners. Heres an explanation for . Our is to ensure everything we publish is objective, accurate and trustworthy. Bankrate logo
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.
Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner. Bankrate logo
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo
Cons of refinancing to a 15-year mortgage
- Potential for higher monthly payment: Because 15-year loans are shorter, your monthly payment could increase. You’ll need to be able to afford that on top of other obligations month to month.
- Closing costs: If you can’t afford the closing costs of a 15-year refi upfront, you won’t save as much as you hope to.
- Other costs: The process to refinance involves paperwork and waiting, which can be inconvenient. In addition, applying for a refinance temporarily lowers your credit score.
- Less money for other things: Homes are an illiquid asset, meaning you can’t easily turn them into cash. Aside from that risk, if more of your budget is going to a higher 15-year payment, you might have less to contribute to a retirement plan, other investments and emergency savings, or paying down debt. If you’re overextended, that can make it harder to qualify for other forms of credit, too.
Can I Pay Off My 30 Year Mortgage in 15 Years
FAQ
Can you switch from a 30-year mortgage to a 15-year mortgage?
Refinancing your mortgage is a strategic way to adjust your loan terms to better fit your financial goals. One powerful option within refinancing is shifting from a 30-year mortgage to a 15-year mortgage. This change can offer several significant benefits.
Is paying off a 30-year mortgage in 15 years worth it?
Key Takeaways. Paying off a typical mortgage in 15 years can save you hundreds of thousands in interest. You can do this by choosing a 15-year home loan or by prepaying a 30-year home loan. Interest rates for 15-year loans are lower, but qualifying can be harder.
Should I refinance my mortgage to a 15-year mortgage?
Refinancing from a 30-year to a 15-year mortgage could help you pay off your loan faster, build equity quicker, and lower your interest rate. Despite these potential benefits, a 15-year mortgage often comes with upfront costs and a higher monthly repayment.
How to turn a 30-year mortgage into 15?