The Ifs and Whens of a 15-Year Mortgage

Wondering if you should refinance from a 30-year mortgage to a 15-year mortgage? There are certainly pros and cons to doing so. For those who can afford higher payments, a 15-year loan offers a quicker path to equity and homeownership, and more interest savings. But a 15-year loan also comes with higher monthly payments and less available cash that could otherwise be used for college savings or retirement. Answer these questions to help you further weigh your options.

Are Lower Payments or a Lower Total More Important?

Monthly mortgage payments will likely be higher if you refinance from a 30-year to a 15-year mortgage. It depends on how much of your original mortgage you’ve paid down, what your interest rate is, and other factors. But over the term of a 15-year mortgage, you’ll pay much less interest — often tens of thousands of dollars less. The savings come from two factors: 1) 15-year mortgages have lower interest rates than 30-year mortgages, and 2) you’ll only make payments for half as long. This also helps you build equity more quickly.

Do You Plan to Stay Long in Your Home?

Refinancing a mortgage — no matter what the term — involves paying fees. You’ll recover that money by paying a lower interest rate, but it won’t happen immediately. Knowing when to refinance your mortgage is key to ensuring you receive the financial benefit. Refinancing only makes sense if you plan to keep the home long enough to recoup your closing costs.

Is It Important That Your Mortgage Is Paid off by a Particular Time?

You’ll be done with mortgage payments in half the time with a 15-year mortgage compared to a 30-year. This is a significant factor for those who want to be free of mortgage payments when they retire or when their children enter college. Not having mortgage debt can create room in your monthly budget for other priorities.

If you can afford the monthly payments and want to save on interest, refinancing to a 15-year mortgage may make sense for you. A mortgage specialist at Magnifi Financial Credit Union can help you decide. Call us (888) 330-8482 or visit to learn more.