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Refinancing to a 15-year fixed-rate mortgage can help homeowners save money on interest and pay off their mortgage faster.
Check out today's 15-year refinance rates to see if one of these loans makes sense for you.
15-year refinance rate
According to data from Zillow, refinance rates for 15-year mortgages averaged 6.37% in May, down 4 basis points from the previous month. June refinance rates have been somewhat variable so far, but are generally trending similarly to last month.
See how current 15-year mortgage refinance rates compare to other types of mortgage refinance rates.
Mortgage Type Today's Average Interest Rates
This information is provided by Zillow. See more mortgage rates on Zillow Zillow Real Estate
Current trends in 15-year refinance rates
Current market situation
Over the past few years, record high inflation has driven up mortgage rates across the board. Inflation has fallen significantly since peaking in 2022, but it still remains at relatively high levels.
If inflation slows further, mortgage rates should fall, but because inflation has been sluggish so far this year, it will take longer for rates to fall than initially expected.
Interest rate forecast for 2024
If you're considering refinancing, lower interest rates in the second half of 2024 could provide an opportunity to do so. However, rates are unlikely to fall significantly this year, so you may be better off waiting until 2025 or later.
Understanding 15-Year Refinance Rates
How are these rates determined?
Mortgage interest rates are determined primarily by investor demand, which in turn is driven by the overall performance of the U.S. economy.
Generally, when the economy is doing well or inflation is high, mortgage interest rates rise. When economic growth is slowing or there is a recession, mortgage interest rates usually fall.
Interest rates also depend on the financial status of the mortgage borrower: the better the credit score, the lower the interest rate.
The pros and cons of refinancing to a 15-year mortgage
“The advantage is that you can pay off your mortgage faster,” says Jose Hernandez, a real estate agent with Coldwell Banker Realty in Chicago, “but the disadvantage is that your monthly payments will be much higher than with a 30-year loan.”
Hernandez advises that borrowers should only opt for a 15-year mortgage if they can reduce their interest rate by more than two percentage points or if their new mortgage payments will be comparable to their current payments.
“The key is to make monthly payments that you can comfortably afford each month,” he says.
At a lower price
Mortgage interest rates on a 15-year refinance will be lower than those on a 30-year refinance. The shorter the term, the lower the interest rate.
Build wealth faster
Because you pay off your mortgage faster, you can build equity faster than you would with a 30-year term.
You pay less interest over the life of the loan
Due to the shorter term and lower interest rate, a borrower who takes out a 15-year mortgage will pay less interest over the life of the loan compared to a borrower who takes out a 30-year mortgage.
Pay off your mortgage faster
If you plan on living in your home for the long term, a 15-year loan is advantageous because it allows you to own your home outright much sooner than a 30-year loan.
Monthly payments increase
The downside to a shorter mortgage term is that your monthly payments will be higher, which will leave less money for other needs, wants, or financial goals.
Harder to qualify
If the high monthly payments that come with a 15-year loan make your debt-to-income ratio too high, you may not be able to qualify for refinancing.
How to get the best rate on a 15-year loan
Improve your credit score
You can improve your credit score by paying down debt, limiting your credit card usage, and asking your credit card issuer for an increase in your credit limit.
Compare and consider various financial institutions
Mortgage interest rates and loan fees vary from lender to lender, so be sure to compare offers from at least two or three lenders to find the lender that offers you the best overall terms.
If you're happy with your current mortgage lender, you may want to get pre-approved with them first. However, don't assume that they're still offering you the best mortgage refinance rates — there may be another lender out there who can offer you better terms right now.
Calculate savings and costs
Mortgage Calculator
Use Insider's free mortgage calculator to see how much you could save in interest if you choose a 15-year mortgage refinance term.
Mortgage Calculator
$1,161 Estimated Monthly Payment
Paying a 25% higher down payment would save you $8,916.08 in interest. Lowering your interest rate by 1% would save you $51,562.03. Paying an extra $500 per month would shorten the term of your loan by 146 months.
Consider closing costs and break-even points
Generally, refinancing is only worth it if you plan to stay in the home until you break even, which is when you've recouped what you spent on the refinance.
For example, let's say you pay $2,000 in refinance settlement costs and your new mortgage is $100 less per month than your original mortgage. Your break-even point is when you're saving $2,000 per month.
To calculate this, divide 2,000 by 100. 2,000 ÷ 100 = 20, so it would take you 20 months to break even, or 1 year and 8 months.
15 Year Cash Out Refinance
When you refinance your mortgage, you need to decide whether to do an interest rate and term refinance or a cash-out refinance. The difference is that an interest rate and term refinance doesn't take away from your home's equity.
A cash-out refinance lets you convert some of the money you've made on your home into cash. You get that cash at closing and can use it for whatever you like, like home improvements or paying off other debts.
15-Year Refinance Frequently Asked Questions
The lender offering the best 15-year refinance rates will vary greatly from borrower to borrower, and mortgage rates vary depending on where you live and your financial situation, which is why it's so important to compare offers from multiple lenders.
According to Freddie Mac data, the average interest rate on a 15-year mortgage reached 2.10% in the last week of July 2021 and remained at that level through the first week of August 2021. This is the lowest rate for a 15-year mortgage since Freddie Mac began tracking rates in 1991.
If you're looking to take cash out of your home and either stay in it or refinance to a shorter-term loan, a 15-year cash-out refinance is a great option, but keep in mind that refinancing to a shorter-term loan means your monthly payments will go up.
The main advantage of refinancing to a 15-year loan is that the shorter term will result in a lower interest rate, meaning you'll save money on interest because you'll pay less interest over the life of the loan. But the main disadvantage is that your monthly payments will be higher than they would be with a longer term.
The shorter the mortgage term, the lower the interest rate, so you'll get a lower interest rate on a 15-year refinance than you would on a 30-year refinance. With a shorter loan term, the lender has less risk and can offer you a lower interest rate for a shorter term.
To get the best 15-year refinance rate, you'll need to have a good credit score, significant equity in your home, and a low debt-to-income ratio.
Not necessarily. Mortgage interest rates have increased significantly in recent years. If you took out your current mortgage when interest rates were historically low, you probably won't save much by refinancing to a 15-year loan even if you're currently paying off a 30-year loan. You also need to consider the overall cost of the loan, including closing costs.
Mortgage interest rates, including 15-year refinance rates, are currently relatively high. Inflation has caused mortgage rates to rise across the board, and interest rates are unlikely to fall until the economy stabilizes.
Using a mortgage calculator or refinance calculator can help you see how much you could save each month and over the life of your loan, but don't forget to also calculate how long it will take to recoup any closing costs you may pay.
Molly Grace
Mortgage Reporter
Elias Shaya
Compliance Associate
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