15 Year Fixed Mortgage Refinance Calculator
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Reviewed by Calculator Editorial Team
Use this calculator to determine your potential savings and new monthly payment when refinancing your mortgage to a 15-year fixed term. Compare different scenarios by adjusting loan amounts, interest rates, and current loan terms.
How the 15-Year Fixed Refinance Works
A 15-year fixed mortgage refinance involves replacing your current mortgage with a new loan that has a 15-year repayment term. This typically comes with a lower interest rate than your current mortgage, allowing you to pay off your home faster and save on interest costs.
Key Components of a 15-Year Refinance
- Loan Amount: The amount you're borrowing, which may be the same as your current mortgage balance or adjusted for equity
- Interest Rate: The annual percentage rate (APR) you'll pay on the loan
- Term: The 15-year repayment period
- Monthly Payment: The amount you'll pay each month
- Total Interest Paid: The cumulative interest over the life of the loan
The formula above calculates the fixed monthly payment for a 15-year mortgage. The calculator uses this formula to determine your new payment based on the inputs you provide.
Benefits of a 15-Year Refinance
Refinancing to a 15-year fixed mortgage offers several advantages:
Lower Monthly Payments
With a shorter repayment term, your monthly payments will typically be lower than with a 30-year mortgage, freeing up cash flow for other expenses.
Faster Payoff
You'll pay off your mortgage in half the time, which can save you thousands in interest payments over the life of the loan.
Potential Tax Benefits
In some cases, you may qualify for mortgage interest deduction savings by paying off your loan faster.
Stability in Rising Rates
If interest rates are expected to rise, locking in a lower rate for 15 years can protect you from future rate increases.
Note: While 15-year refinances offer benefits, they also come with higher monthly payments than 30-year loans. Consider your financial situation and goals before deciding.
Key Considerations Before Refinancing
Before proceeding with a 15-year refinance, consider these important factors:
Credit Score Requirements
Lenders typically require a good credit score (usually 620 or higher) for 15-year fixed mortgages. Check your credit report before applying.
Closing Costs
Refinancing involves closing costs, which can range from 2% to 5% of the loan amount. Factor these costs into your decision.
Cash-Out Refinance
If you have equity in your home, you may be able to cash out and use the funds for other purposes, but this increases your monthly payments.
Rate Lock Period
Ensure you have a rate lock in place to protect against rate increases while you're in the refinancing process.
Future Rate Changes
Consider how future interest rate changes might affect your monthly payments and overall loan cost.
Worked Example
Let's look at an example to illustrate how the calculator works. Suppose you currently have a $200,000 mortgage with a 30-year term at 6% APR. You're considering refinancing to a 15-year term at 4.5% APR.
Current Mortgage Details
- Loan Amount: $200,000
- Interest Rate: 6% APR
- Term: 30 years
Refinance Scenario
- Loan Amount: $200,000
- Interest Rate: 4.5% APR
- Term: 15 years
Calculated Results
- Monthly Payment: $1,423.50
- Total Interest Paid: $103,500
- Total Payments: $303,500
In this example, refinancing to a 15-year term at a lower rate would result in a monthly payment of $1,423.50, compared to approximately $1,073.64 for a 30-year mortgage at the same rate. The shorter term would save you $100,000 in interest over the life of the loan.
Frequently Asked Questions
What is the difference between a 15-year and 30-year fixed mortgage?
A 15-year fixed mortgage typically has lower monthly payments than a 30-year mortgage, but the payments are higher than with an adjustable-rate mortgage (ARM). The shorter term means you'll pay off your loan faster and save on interest costs.
Can I refinance to a 15-year fixed mortgage if I have bad credit?
It's more challenging to qualify for a 15-year fixed mortgage with bad credit, as lenders typically require a minimum credit score of 620 or higher. You may need to improve your credit score or consider other loan options.
What are the closing costs for a 15-year mortgage refinance?
Closing costs for a 15-year mortgage refinance typically range from 2% to 5% of the loan amount. These costs may include appraisal fees, title insurance, origination fees, and other expenses.
Can I cash out when refinancing to a 15-year fixed mortgage?
Yes, you can cash out if you have equity in your home. However, cashing out will increase your monthly payments and may not be the best option if you're looking to reduce your debt.
How does a 15-year fixed mortgage compare to an adjustable-rate mortgage (ARM)?
A 15-year fixed mortgage typically has lower monthly payments than an ARM, but the payments are higher than with a 30-year fixed mortgage. The ARM's interest rate may adjust periodically, which could result in higher payments if rates rise.