📈 When does refinancing your 30 year mortgage to a 15 year term make sense?

Refinancing from a 30-year to a 15-year mortgage can save you a significant amount in interest and help you build equity faster. However, it typically comes with higher monthly payments and upfront closing costs. There are good reasons why 15-year mortgages make up a small fraction of newly originated mortgages. To be specific, 4.2% in late 2024 compared to 88% for 30-year loans. This calculator helps you compare your current loan to a potential refinance scenario to see if it makes financial sense for you.

First, let's confirm the details of your current mortgage. The values from your question have been pre-filled. Note that mortgage calculations are based on Principal and Interest (P&I), so your actual payment including taxes and insurance (PITI) will be higher.

Now, enter the details for the 15-year mortgage you are considering. A 15-year loan builds equity much faster, acting as a form of forced savings. The trade-off is a higher monthly payment, which reduces financial flexibility for other investments or expenses. You can also decide whether to pay the refinance costs out of pocket or roll them into the new loan balance.