📈 How does refinancing to a 15Y mortgage affect future home buying power?
Calculate how refinancing your mortgage from 30Y to 15Y affects your home equity growth and future buying power for your next home.
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Refinancing to a 15-year mortgage can build equity faster, acting as a powerful forced savings plan. However, the higher monthly payment means less cash available to invest elsewhere. This calculator compares these two paths to see which strategy maximizes your buying power for your next home.
Start with your current home's value and the details of your existing 30-year mortgage. This information establishes the baseline for our comparison and calculates your current loan balance and equity position.
Estimated Current Loan Balance
Estimated Current P&I Payment
Your future buying power is determined by your new loan terms and future home value.
Future Home Value
Total Appreciation at Sale
Estimated 15Y P&I Payment
Monthly Payment Increase
In the case where you don't refinance, you can account for your putting your closing costs and monthly savings into a high-yield savings account or brokerage account.
Invested Savings Value
When you sell a primary residence, you can exclude a significant amount of the profit from capital gains tax. The exclusion is $250,000 for single filers and $500,000 for those married filing jointly, provided you have lived in the home for at least two of the past five years.
This capital gains rate is also used to determine your taxes for the investment route if you don't refinance.
Capital Gains Exemption
Taxable Gain
These fields show the underlying numbers used to compare the two scenarios. Follow the logic from your monthly payments to your final net proceeds from the sale.
30Y Balance at Sale
15Y Balance at Sale
30Y Net Sale Proceeds
15Y Net Sale Proceeds
Avg Equity/Mo (30Y)
Avg Equity/Mo (15Y)
15Y Additional Equity per Month
Effective Refi APR (Annual)
Most of the net advantage to a 15Y refi comes from avoiding paying interest, and most of the payments paying down principal. This means less to pay back to the bank when selling the property.
Total Interest Savings
There is another "hidden" advantage of the 15-year path: tax asymmetry.
- Stock Market: When you "invest the difference," you pay capital gains tax on the growth.
- Primary Residence: Home equity growth (up to $500k for couples) is tax-free. Because interest savings are "money you didn't have to spend," they are 100% tax-exempt. As we saw in your ROI calculation, a 1.6% rate drop can result in an effective tax-free yield of 18%–20%. A brokerage account would need to return nearly 25% to match that after-tax performance.
This mostly applies to properties with high expected appreciation, as 100% of the property value appreciation belongs to the owner. Longer mortgages with lower monthly payments make more sense when expecting higher property appreciation.
One closing thought: mortgage paydown (whether voluntary or "forced" by refinancing to a 15Y mortgage) is effectively a "reverse leverage" play. You are reducing debt on an appreciating asset, which stabilizes your balance sheet regardless of market swings.
🏁 Results
30Y Path Buying Power
15Y Path Buying Power
Refi Advantage Net
Walk Away Boost
Last updated by mahmoud (v25.12.0)
Privacy: None of your data is transmitted to the author of this view or any other third parties. Financial inputs are not used to for identification purposes, and are only used to calculate the result.
Disclaimer: This content and any calculations provided are for informational purposes only. The views, calculations, and methodologies expressed are those of the author and do not necessarily reflect those of this platform. Not financial advice. Users are solely responsible for any decisions made based on this information.
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