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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.
15-year refinance rates
In December, 15-year refinance rates averaged 5.88%, according to Zillow data. This is eight basis points down from the month before. But refinance rates, along with other types of mortgage rates, have increased recently.
As long as inflation continues to decelerate, we should see mortgage rates trend back down throughout 2025.
See how today's 15-year refinance rates compare to other types of mortgage refinance loans.
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Current trends in 15-year refinance rates
Current market conditions
Record high inflation pushed mortgage rates up across the board over the past few years. Inflation has come down a lot since it peaked in 2022, and it's nearing the Federal Reserve's target rate of 2%.
As inflation slows further and the Fed lowers the federal funds rate, mortgage rates should go down.
Predictions for rate movements in 2025
If you're thinking about refinancing, you could have an opportunity to do so later this year. But it depends on your current rate. If you already have a low rate, you might not benefit from refinancing this year.
Understanding 15-year refinance rates
How these rates are determined
Mortgage rates are largely determined by investor demand, which in turn is influenced by what's going on in the broader U.S. economy.
In general, when the economy is strong or inflation is high, mortgage rates go up. When economic growth is slow or we're in a recession, mortgage rates typically go down.
Rates also depend on the financial profile of the borrower getting a mortgage. The more creditworthy you are, the better your rate.
Benefits and drawbacks of refinancing to a 15-year mortgage
"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.
Get a lower rate
Mortgage rates on a 15-year refinance are lower than 30-year refinance rates. The shorter the term, the lower your rate.
Build equity faster
Because you're paying off your mortgage faster, you'll build equity more quickly than you would with a 30-year term.
Less interest paid over the life of the loan
Because the terms are shorter and interest rates are lower, borrowers with a 15-year mortgage will pay less in interest over the life of the loan compared to a borrower with a 30-year mortgage.
Pay off your mortgage sooner
If you plan to stay in your home long term, getting a 15-year mortgage can be beneficial because you'll own your home outright much faster than with a 30-year mortgage.
Higher monthly payments
The downside of a shorter mortgage term is that you'll have larger monthly payments. This leaves less money in your budget for other needs, wants, or financial goals.
Harder to qualify for
If the higher monthly payment that comes with a 15-year mortgage pushes your debt-to-income ratio too high, you might not qualify to refinance.
How to get the best 15-year refinance rate
Improve your credit score
You can pay down debt, limit your credit card usage, or ask your credit card issuer for a credit line increase to improve your credit score.
Shop around and compare lender offers
Mortgage rates and loan fees vary by lender, so be sure to compare offers from at least two or three different lenders to see who can offer you the best overall deal.
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 mortgage refinance rate — there may be another lender that can offer you a better deal now.
Calculating savings and costs
Mortgage calculator
Use Insider's free mortgage calculator to see how much you could save on interest by choosing a 15-year term for your mortgage refinance.
Mortgage Calculator
- Paying a 25% higher down payment would save you $8,916.08 on interest charges
- Lowering the interest rate by 1% would save you $51,562.03
- Paying an additional $500 each month would reduce the loan length by 146 months
Considering closing costs and break-even points
Refinancing is typically only worth it if you plan to stay in the home long enough that you pass the break-even point. This is the point at which you've recouped the amount you spent on the refinance.
For example, say you paid $2,000 in closing costs to refinance and the new mortgage is $100 less a month than your original mortgage. Your break-even point is the point at which you've saved enough each month to equal $2,000.
To find this, divide 2,000 by 100. If 2,000 ÷ 100 = 20, then that means it would take 20 months, or a year and eight months, to break even.
15-year cash-out refinance
When you refinance your mortgage, you'll need to decide whether you want to do a rate-and-term or cash-out refinance. The difference is that you won't be taking any equity out of your home with a rate-and-term refinance.
A cash-out refinance lets you tap into some of the money you've gained in your home and convert it into cash. You'll get that cash at closing and you can use it for whatever you want, such as a home improvement or to pay off other debts.
15-year refinance FAQs
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.
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.
If you're looking to take cash out of your home and stay in or refinance into a shorter term, a 15-year cash-out refinance could be a great option for you. Just remember that when you refinance into a shorter term, your monthly payment will go up.
The main pro of refinancing into a 15-year mortgage is that the shorter term will allow you to save money on interest because you'll get a lower interest rate and pay less in interest over the life of the loan. But the main con is that you'll have a larger monthly payment than you would with a longer term.
Shorter mortgage terms have lower interest rates compared to longer terms, so you'll pay less in interest on a 15-year refinance compared to a 30-year refinance. Because you're borrowing the money for a shorter amount of time, there's less risk to the lender, so they're able to offer lower rates on shorter terms.
To get the best 15-year refinance rate, you'll want to make sure you have a great credit score, a decent amount of equity in your home, and a low debt-to-income ratio.
Not necessarily. Mortgage rates have increased significantly in recent years. If you got your current mortgage when rates were historically low, you probably wouldn't save by refinancing into a 15-year mortgage, even if you're currently paying a 30-year loan. You'll also need to consider the overall cost of the loan, including closing costs.
Mortgage rates, including 15-year refinance rates, have gone up recently and are higher than they were a year ago.
You can use a mortgage calculator or refinance calculator to see how much you could save each month and over the life of the loan. But remember to also calculate how long it will take you to recoup any closing costs you might pay.
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