Should I refinance to a 15-year mortgage?

Taking on a mortgage is a big commitment, so many people opt to get a 30-year loan so they can spread out the payments over a longer period. However, you may find yourself thinking about refinancing your mortgage for one reason or another, such as accessing your home equity or reducing your loan’s interest rate.

Refinancing to a 15-year mortgage means taking on a faster repayment schedule, which usually means higher monthly payments. However, shorter loans come with lower rates and leave less time for interest to accrue, so you could save tens of thousands of dollars in the long run.

If you’re thinking about refinancing to a 15-year loan, we’ll break down what you need to know.

What is a 15-year mortgage refinance?

Refinancing a mortgage involves taking on a new mortgage and using the proceeds to pay off the old one. In effect, you replace your old loan with a new one.

A 15-year mortgage refinance means refinancing your existing loan to one with a 15-year term, half that of a more typical 30-year mortgage.

Because of the shorter repayment period (180 payments total instead of 360), monthly payments are typically much higher for a 15-year loan. However, the shorter term pays off in the long run due to the loan usually having a lower interest rate and leaving less time for interest to accrue.

Refinancing to a 15-year loan works like applying for any other mortgage, so you’ll go through a thorough underwriting process and pay closing costs like you did for the original loan.

Current 15-year refinance rates

One perk of 15-year mortgages is that they generally have lower rates than 30-year mortgages.

As of August 14, 2025, the average 30-year loan had a rate of 6.8% while a 15-year loan had a rate of just 5.71%, almost a full percent lower. Rates, and the difference between 30-year and 15-year rates, change constantly based on factors like the economy, your credit and financial profile, the lender you choose, and the type of loan you apply for.

For current data, you can check the Rocket Mortgage refinance rates page.

Benefits of refinancing to a 15-year mortgage

15-year mortgages offer a number of benefits, generally related to making the loan cheaper in the long run.

Interest savings

Typically, 15-year loans carry interest rates between 0.25% and 1% lower than 30-year loans. That means less interest accrues each month. The shorter repayment term also means that there is less time for interest to accrue on the loan.

Over the life of a mortgage, those savings can add up to tens or even hundreds of thousands of dollars. You can use the refinance calculator from Rocket Mortgage to estimate how much you could save by refinancing.

Faster mortgage debt payoff

The shorter loan term of a 15-year mortgage means you’ll pay off your home loan more quickly.

Being debt-free, especially owning your home free and clear of any debt, can offer a huge amount of peace of mind. It also frees up a lot of money in your monthly budget for other goals, like saving for retirement.

Quicker equity buildup and access

With any mortgage, each payment you make helps you build equity in your home. With a 15-year loan, more of your payments go toward reducing the principal of your loan, so you build equity more quickly.

Building home equity is useful for a number of reasons. For example, having more equity means you have the flexibility to get a home equity loan or HELOC to use for things like home renovations. You could also get a cash-out refinance to turn that equity into money you can use for other purposes.

Ability to change loan options

Refinancing your mortgage gives you the chance to adjust some of the details of your loan. For example, if you want to convert from an adjustable-rate loan to a fixed-rate loan, refinancing will let you do that.

You could also refinance to get out of PMI payments, especially if you’ve built some equity and your home has appreciated in value.

Drawbacks of refinancing to a 15-year mortgage

While refinancing to a 15-year loan can help you save money overall, there are a few drawbacks you need to keep in mind.

Up-front costs

Any time you apply for a mortgage, you have to pay some up-front closing costs. These costs can total between 2% and 6% of the loan amount, eating into any potential savings.

These costs include appraisal fees, application fees, underwriting costs, loan origination fees, attorney fees, and more.

Possibly higher monthly payments

Even though the interest rate of a 15-year loan is usually lower, the shorter repayment term usually translates to a higher monthly payment, which can be difficult for some people to afford or qualify for based on their credit and debt-to-income ratio.

A good rule of thumb to follow is the 28% rule, which says you should avoid spending more than 28% of your monthly income on your mortgage. The payment calculator from Rocket Mortgage can help you see if a 15-year loan could be affordable for you.

Fewer opportunities during repayment

Because 15-year loans have higher monthly payments, that means you have less flexibility overall. You must dedicate a larger percentage of your income toward your housing payment, and you can’t use it for goals like saving for retirement or building an emergency fund.

The higher monthly payment will also boost your DTI ratio, which may make it harder to qualify for other loans.

How much can you save by refinancing?

The savings offered by a 15-year mortgage refinance can be significant. Consider this example.

You applied for a $150,000 mortgage with a 30-year term and an interest rate of 6.7%. Your monthly payment is $967.92. After 5 years of payments, you consider refinancing to a 15-year loan.

After 5 years, the loan’s remaining balance is $140,735.21. If you keep your existing loan for the remaining 25 years, you’d pay a total of $290,376, of which $149,640.79 is interest.

If you refinance to a 15-year loan with a balance of $140,735.21 and the same 6.7% interest rate, your monthly payment would rise to $1,180.01. You’d pay a total of $212,401.80 over the next 15 years, of which $71,666.59 would be interest.

In total, you’d save almost $78,000 in interest, minus any closing costs you’d pay. Keep in mind that 15-year loans usually have a lower interest rate, so the savings will usually be even higher.

Is a 15-year home refinance right for you?

Refinancing to a 15-year mortgage involves considering a few factors, such as your remaining mortgage term, how long you plan to live in the house, the potential interest savings, and the affordability of the monthly payment.

Timing your refinance is key to getting the most savings. Refinancing too soon after getting a loan or too frequently will let closing costs eat into your savings, so try to wait for a good time when rates are low to start the process.

If you want help deciding if a 15-year mortgage refinance is right for you, speak to a Home Loan Expert about the decision.

FAQ

Refinancing to a 15-year mortgage is a big decision to make, so it’s important to understand the process, as well as the pros and cons, before you make that choice. Let’s go over some questions you might still have.

How do I refinance to a 15-year mortgage?

Refinancing to a 15-year loan follows much the same process as applying for any other refinance loan or your original mortgage.

Start by shopping around and comparing lenders to see if they meet your requirements and what type of loans and interest rates they offer. Select a lender and submit the necessary documents. Work with the lender throughout the underwriting process and, once the process is complete, close on the loan.

What documentation will I need to refinance to a 15-year mortgage?

When you apply for a mortgage, lenders will need to examine your credit and finances. Some documents you may need to provide include:

• Identification
• Bank statements
• Paystubs
• Your home insurance policy
• Account statements for other loans
• Account statements for your bank and investment accounts

Depending on the lender and the loan amount, you may also need to get a home appraisal done and provide the results to the lender.

What credit score do I need to refinance?

The minimum credit score required to finance will depend on the lender and loan program you choose. For example, FHA and VA loans can require as little as a 580 credit score, while other loans often have a minimum score of 620.

What are alternatives to a 15-year mortgage refinance?

When you refinance your mortgage, you can also choose other terms, such as a 30-year term or 20-year term, which can have more affordable monthly payments.

If your goal is to save money on interest, you may opt to make additional principal payments on your existing loan. This will reduce the amount of interest that accrues on your loan without committing you to the higher monthly payment of a 15-year mortgage.

If part of your reason for refinancing is to get equity out of the home, you could consider a home equity loan or HELOC instead.

The bottom line: Consider all aspects of a 15-year refinance

A 15-year mortgage has a lower interest rate and leaves less time for interest to accrue, so refinancing to a shorter loan can help you save a lot of money in the long run. However, it can have significantly higher monthly payments, making it harder to afford and costing you some flexibility.

If you’re thinking about refinancing, carefully weigh the pros and cons to decide if a 15-year refinance is right for you. If it is, you can apply for your new loan with Rocket Mortgage.

Home Equity Loan product requires full documentation of income and assets, credit score and max loan-to-value (LTV), combined loan-to-value (CLTV), and home equity combined loan-to-value (HCLTV) ratios. Requirements were updated 11/19/25 and are tiered as follows: 680 minimum FICO with a max LTV/CLTV/HCLTV of 80%, 700 minimum FICO with a max LTV/CLTV/HCLTV of 85%, and 740 minimum FICO with a max LTV/CLTV/HCLTV of 90%. Your debt-to-income ratio (DTI) must be 50% or below. Valid for loan amounts between $45,000.00 and $500,000.00 (minimum loan amount for properties located in Michigan is $10,000.00). Product is a second standalone lien and may not be used for piggyback transactions. Product not available on Ameriprise products. Guidelines may vary for self-employed individuals. Some mortgages may be considered “higher priced” based on the APOR spread test. Higher priced loans are not allowed on properties located in New York. Additional restrictions apply. This is not a commitment to lend.

Refinancing may increase finance charges over the life of the loan.

To qualify for this offer, you must meet all standard FHA eligibility requirements. In addition, your total mortgage payment, including taxes and insurance, cannot exceed 38% of your income, your debt-to-income (DTI) ratio cannot exceed 45%, and you must have 12 months of verifiable housing history immediately prior to your application, no late payments 30 days or greater in the last 12-months, and no derogatory marks on your credit report. Not available on jumbo loans. Asset statements may be needed, no more than 1 day of non-sufficient fund fees are allowed in the most recent 2 months prior to application. Additional restrictions/conditions may apply.