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Refinancing into a 15-year fixed-rate mortgage can help homeowners save on interest and pay off their mortgages faster.
Check out today’s 15-year refinance rates to see if one of these loans makes sense for you.
What are 15-year refinance rates today?
Mortgage rates increased in the first half of July, but they trended down a bit toward the end of the month. Overall, 15-year refinance rates averaged 6.37% in July. This is 27 basis points higher than they were the month before. Rates may start to trend down in the coming months, offering some affordability to borrowers.
Compare current 15-year refinance rates
See how today’s 15-year refinance rates compare to other types of mortgage refinance loans.
Average 15-year refinance rates vs. 30-year refinance rates
Mortgages with shorter terms come with lower rates, meaning that those who refinance from a 30-year fixed-rate mortgage into a 15-year fixed-rate mortgage may be able to get a lower rate, depending on when they got their original mortgage.
In the first week of May, the average 15-year fixed rate was 0.63 percentage points lower than the average 30-year fixed rate, according to Freddie Mac. This, combined with the shorter term, means that a borrower with a $400,000 mortgage could save more than $300,000 in interest over the life of the loan by opting for the 15-year mortgage.
Pros and cons of refinancing into a 15-year fixed-rate mortgage
Refinancing into a 15-year fixed-rate mortgage can make sense if you’re looking to save on interest, but there are trade-offs.
Pros
Get a lower interest rate compared to a 30-year fixed-rate mortgageSave on interest over the life of the loanBuild equity fasterPay off your mortgage sooner
Cons
Monthly payments are higher compared to longer termsIf the monthly payment pushes your debt-to-income ratio too high, you might not qualify to refinanceLess money each month for other needs, wants, or financial goals
“The benefits are that you will pay off your mortgage sooner,” says Jose Hernandez, a real estate agent with Coldwell Banker Realty in Chicago. “However, the drawback is that your monthly payment will be much higher compared to a 30-year mortgage.”
Hernandez advises that borrowers should only opt for a 15-year mortgage if they can lower their interest rate by more than two percentage points or if their new mortgage payment will be similar to their current one.
“The key is to have a monthly payment that you will be able to afford every month without struggling,” he says.
Shop around to get the best 15-year refinance rate
One of the most important things a borrower can do to ensure they get the most out of their refinance is to shop around with multiple lenders.
If you like your current mortgage lender, you may decide to get preapproved there first. But don’t assume that they’ll still have the best rate — there may be another lender that can offer you a better deal now. Aim to get preapproved with at least two or three different lenders.
Mortgage calculator
Use Insider’s free mortgage calculator to see how much you could save on interest by refinancing into a 15-year mortgage.
15-year refinance frequently asked questions
Who has the best 15-year refinance rates?
The lender with the best 15-year refinance rates can vary a lot from one borrower to the next. Mortgage rates differ depending on where you live and your financial profile. This is why comparing offers from multiple lenders is so important.
What is the lowest 15-year refinance rate ever?
Average 15-year mortgage rates hit 2.10% in the last week of July 2021 and remained there through the first week of August 2021, according to Freddie Mac data. This is the lowest 15-year rates have ever been since Freddie Mac started tracking them in 1991.
At what point is it not worth it to refinance?
Whether or not it’s worth it to refinance depends on your goals. If you’re considering refinancing to save money on interest, use a mortgage calculator to determine how much you’d save.
You should also consider how long you plan to remain in the home. If you end up spending more on the refinance than you save because you sell your house shortly after getting the loan, then refinancing won’t have been worth it.
Is it worth it to refinance for 1% lower?
Experts typically recommend refinancing only if you can lower your rate by at least 1% or 2%, so refinancing could be worth it in this case. But again, consider your goals and the overall costs of the refinance.