15 Year Fixed Refinance Calculator
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Reviewed by Calculator Editorial Team
Refinancing your mortgage to a 15-year fixed rate can potentially save you thousands of dollars in interest payments over the life of the loan. This calculator helps you estimate your savings by comparing your current mortgage terms with a new 15-year fixed rate loan.
What is refinancing?
Refinancing is the process of replacing your existing mortgage with a new one. When you refinance, you typically take out a new loan to pay off your old one, which can help you secure a lower interest rate or change the loan term.
Refinancing doesn't change the amount you owe, but it can change your monthly payments, interest rate, and loan term.
Types of refinancing
There are two main types of refinancing:
- Rate-and-term refinance: You get a new interest rate and loan term, typically with a lower rate and shorter term.
- Cash-out refinance: You get a new loan that's larger than the amount you owe, allowing you to use the extra cash for home improvements or other purposes.
Benefits of refinancing
- Lower monthly payments
- Potential savings on interest
- Access to cash for home improvements
- Change from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage
When to refinance
Refinancing can be a good financial move if you meet certain criteria. Here are some common reasons to consider refinancing:
Refinance if:
- Your current interest rate is significantly higher than current market rates
- You have good credit and can qualify for a lower rate
- You plan to stay in your home for at least 5-7 years
- You want to reduce your monthly payments
- You need cash for home improvements or other expenses
When not to refinance
There are also situations where refinancing might not be the best option:
- You have an adjustable-rate mortgage (ARM) with a low, fixed initial rate
- You're planning to sell your home within 5-7 years
- You have a high debt-to-income ratio
- You're concerned about closing costs
How to refinance
The refinancing process typically involves these steps:
- Check your eligibility: Review your credit score, debt-to-income ratio, and current mortgage terms.
- Compare loan options: Shop around for the best interest rates and terms.
- Get pre-approved: Work with a lender to get a pre-approval letter.
- Gather documents: Prepare necessary paperwork including tax returns, pay stubs, and bank statements.
- Choose a lender: Select a lender that offers competitive rates and good customer service.
- Apply for the loan: Submit your application and wait for approval.
- Close on the loan: Sign the necessary paperwork and pay any closing costs.
- Receive your new mortgage: Your new loan will be funded and you'll receive your new mortgage statement.
Closing costs for refinancing typically range from 2% to 5% of the loan amount, depending on your loan type and lender.
Using the 15 Year Fixed Refinance Calculator
This calculator helps you estimate your potential savings by comparing your current mortgage with a new 15-year fixed rate loan. Here's how to use it:
- Enter your current mortgage details including principal, interest rate, and term.
- Enter the details for your potential new 15-year fixed rate loan.
- Click "Calculate" to see your estimated savings.
- Review the results and chart to understand your potential savings over time.
Example calculation
Let's say you have a $200,000 mortgage with a 6% interest rate and a 30-year term. You're considering refinancing to a 15-year fixed rate loan with a 4% interest rate. Here's what the calculator might show:
| Metric | Current Mortgage | 15-Year Refinance |
|---|---|---|
| Monthly Payment | $1,247.64 | $1,458.23 |
| Total Interest Paid | $247,642.00 | $145,823.00 |
| Total Cost | $447,642.00 | $345,823.00 |
| Interest Savings | $101,819.00 |
In this example, refinancing to a 15-year fixed rate loan would save you $101,819 in interest over the life of the loan, even though your monthly payment would be higher.
FAQ
- How much can I save by refinancing to a 15-year fixed rate?
- The amount you can save depends on your current interest rate, loan term, and the new interest rate you qualify for. Generally, refinancing to a shorter term can save you thousands in interest payments.
- Is a 15-year fixed rate loan right for me?
- A 15-year fixed rate loan can be a good option if you want to pay off your mortgage faster and save on interest, but it may result in higher monthly payments. Consider your financial situation and how long you plan to stay in your home before deciding.
- What are the closing costs for refinancing?
- Closing costs for refinancing 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 refinance if I have bad credit?
- It's more difficult to refinance with bad credit, but it's not impossible. Some lenders specialize in helping borrowers with less-than-perfect credit. You may need to pay higher interest rates or closing costs.
- How long does the refinancing process take?
- The refinancing process can take anywhere from 30 to 60 days, depending on your lender, the complexity of your loan, and how quickly you can gather the required documents.