Refi to 15 Year Calculator

Use our refi to 15 year calculator to estimate your new mortgage payment and savings when refinancing to a 15-year term. This tool helps you compare different refinancing scenarios and understand the potential impact on your monthly payments and total interest paid.

What is a Refi to 15 Year?

A refi to 15 year refers to refinancing your existing mortgage loan to a new loan with a 15-year term. This typically results in lower monthly payments compared to a 30-year mortgage, but you'll pay more in total interest over the life of the loan.

Refinancing to a 15-year term is often attractive to homeowners who want to pay off their mortgage faster, reduce monthly housing costs, or take advantage of lower interest rates. However, it's important to carefully consider the trade-offs between lower payments and higher total interest costs.

Refinancing to a shorter term can be a good strategy if you plan to sell your home soon or if you want to free up cash flow for other financial goals. However, it may not be the best option if you plan to stay in your home for many years.

Benefits of Refi to 15 Year

Lower monthly payments compared to a 30-year mortgage
Potential tax benefits from deducting mortgage interest
Opportunity to take advantage of lower interest rates
Faster payoff of your mortgage principal

Considerations Before Refi to 15 Year

Higher total interest paid over the life of the loan
Potential for increased monthly payments if interest rates rise
Impact on your overall financial plan and cash flow
Closing costs associated with refinancing

How to Use This Calculator

Our refi to 15 year calculator is designed to be simple and straightforward. Follow these steps to get your results:

Enter your current mortgage balance (the amount you owe on your existing mortgage)
Input your current interest rate (the APR on your existing mortgage)
Specify the remaining term of your current mortgage (how many years are left on your existing loan)
Enter your new interest rate (the APR you qualify for on your refinanced loan)
Click the "Calculate" button to see your results

The calculator uses standard mortgage payment formulas to compute your new monthly payment and compare it to your current payment. The formulas account for the remaining term of your current mortgage and the new term you're refinancing to.

After you've entered your information, the calculator will display your estimated new monthly payment, the difference between your current and new payment, and the total interest you'll pay over the life of the loan. You'll also see a chart comparing your current and new payment schedules.

Formula and Assumptions

The refi to 15 year calculator uses the following formula to calculate your new monthly payment:

Monthly Payment = P * (r(1+r)^n) / ((1+r)^n - 1)

Where:

P = Principal loan amount (current mortgage balance)
r = Monthly interest rate (annual rate divided by 12)
n = Number of payments (loan term in years multiplied by 12)

This formula is based on standard mortgage payment calculations. The calculator assumes:

Monthly compounding of interest
A consistent interest rate throughout the life of the loan
No prepayment penalties or other fees
No changes to your income or credit score that would affect your ability to qualify for the refinanced loan

These assumptions may not reflect your actual refinancing experience. Always consult with a mortgage professional before making any refinancing decisions.

Example Calculation

Let's look at an example to illustrate how the refi to 15 year calculator works. Suppose you have a current mortgage with the following characteristics:

Current mortgage balance: $200,000
Current interest rate: 4.5%
Remaining term: 10 years

You're considering refinancing to a 15-year term with a new interest rate of 3.5%. Here's how the calculation would work:

1. Calculate your current monthly payment:

Monthly Payment = $200,000 * (0.045/12(1+0.045/12)^120) / ((1+0.045/12)^120 - 1)

Current Monthly Payment ≈ $1,837.50

2. Calculate your new monthly payment:

Monthly Payment = $200,000 * (0.035/12(1+0.035/12)^180) / ((1+0.035/12)^180 - 1)

New Monthly Payment ≈ $1,450.25

3. Calculate the difference:

Payment Difference = $1,837.50 - $1,450.25 = $387.25

4. Calculate total interest paid:

Total Interest = (New Monthly Payment * 180) - Principal = ($1,450.25 * 180) - $200,000 ≈ $14,346.50

In this example, refinancing to a 15-year term would save you approximately $387.25 per month, but you would pay about $14,346.50 more in total interest over the life of the loan.

Frequently Asked Questions

What is the difference between a refi to 15 year and a traditional 30-year mortgage?

A refi to 15 year typically results in lower monthly payments but higher total interest costs compared to a traditional 30-year mortgage. The choice depends on your financial goals and how long you plan to stay in your home.

Can I refinance to a 15-year term if I have a variable-rate mortgage?

Yes, you can refinance a variable-rate mortgage to a 15-year fixed-rate term. However, you'll need to qualify for the new loan based on your current interest rate and creditworthiness.

Are there any closing costs associated with refinancing to a 15-year term?

Yes, refinancing typically involves closing costs such as appraisal fees, title insurance, and origination fees. These costs can vary depending on your lender and the specifics of your loan.

What happens if interest rates rise after I refinance to a 15-year term?

If interest rates rise, your monthly payments may increase if you have an adjustable-rate mortgage (ARM). With a fixed-rate mortgage, your payments would remain the same, but you would pay more in total interest.

Is a refi to 15 year a good idea if I plan to sell my home soon?

Yes, refinancing to a 15-year term can be a good strategy if you plan to sell your home within a few years. It allows you to pay off your mortgage faster and potentially save on interest costs.