The short answer
Refinancing to a 15-year mortgage usually saves a large amount of interest because the loan is shorter and 15-year rates tend to be lower. On a $400,000 loan, moving from a 30-year at 6.5% to a 15-year at 6.0% saves about $302,600 in interest, before closing costs. The cost is a payment that's about $847 higher every month, plus closing costs that often run $8,000 to $20,000. Paying the same amount extra on your current loan gets close to the same result with no closing costs and more flexibility.
What changes when you refinance to 15 years
Refinancing replaces your current loan with a new one. When the new loan has a 15-year term, two things work in your favor.
First, the loan simply runs for half as long, so interest has half as much time to pile up. Second, lenders usually charge a lower rate on 15-year loans than on 30-year loans, because they get their money back sooner.
Two things work against you. The payment goes up, because you're paying the same balance off in half the time. And a refinance comes with closing costs.
The numbers on a $400,000 loan
| Loan | Monthly payment | Total interest | Interest saved vs. the 30-year |
|---|---|---|---|
| 30-year at 6.5% | $2,528 | $510,178 | |
| 15-year at 6.0% | $3,375 | $207,577 | $302,601 |
| 15-year at 5.75% | $3,322 | $197,895 | $312,283 |
Every quarter point counts. The difference between 6.0% and 5.75% on a 15-year loan is almost $10,000 in interest.
Want to see these numbers for your own balance and rate? A free payoff projection lays them out.
The free alternative: pay extra on the 30-year
Here's the comparison most refinance ads leave out. What if you kept your 30-year loan at 6.5% and simply paid $3,375 a month, the same as the 15-year payment?
| Approach | Monthly payment | Paid off in | Total interest | Closing costs |
|---|---|---|---|---|
| Refinance to 15-year at 6.0% | $3,375 required | 15 years | $207,577 | About $8,000 to $20,000 |
| Keep the 30-year, pay $3,375 voluntarily | $3,375 by choice, $2,528 required | 15 years, 11 months | $241,668 | None |
The refinance saves about $34,100 more in interest. Subtract closing costs of $8,000 to $20,000, and the real advantage shrinks to somewhere between $14,000 and $26,000.
That's still meaningful. But the 30-year approach gives you something the refinance doesn't: the right to pay less in a hard month. If you lose a job, have a medical bill, or go through a slow season, your required payment stays at $2,528. On a 15-year loan, $3,375 is due no matter what.
When refinancing to 15 years makes sense
A 15-year refinance is a good move when:
- Your current rate is meaningfully higher than today's 15-year rates.
- Your income is high and stable, with room to spare after the bigger payment.
- You have a solid emergency fund.
- You plan to stay in the home long enough to earn back the closing costs.
If all four are true, the forced discipline of a 15-year loan can be a feature. Some people simply do better with a payment they can't skip.
When it doesn't
Skip the refinance if your rate is already low, if your income is uneven, or if you might move within a few years. In those cases, paying extra on your current loan gets you most of the benefit with none of the risk. See extra mortgage payments for what each amount saves.
Also check your current loan for a prepayment penalty before you refinance. Most mortgages made since 2014 don't have one, but some do. Our guide to mortgage prepayment penalties explains what to look for.
Avoid the reset trap
Whatever you do, be careful about refinancing into a new 30-year loan just to lower your payment. Restarting the clock years into your mortgage can cost tens of thousands in extra interest, even at a lower rate. We show the math in recast vs. refinance.
Protect the bigger payment
A 15-year payment is a larger commitment. If your household depends on your income to make it, consider how the mortgage would get paid if something happened to you. That's what mortgage protection is designed for.
A different approach
Refinancing and extra payments both work by sending more money to the loan. Ridgewell's Mortgage Accelerator Program is designed to change how your mortgage is structured instead, so the money you already earn does more of the work. For qualifying households, it is designed to pay off a home in as little as 5 to 7 years.
Payoff timelines are illustrations for qualifying households and are not guaranteed.
Where to start
Get a real 15-year rate quote and the full list of closing costs. Then compare it against simply paying the same amount extra on your current loan, as we did above. For every option side by side, see how to pay off your mortgage faster.
If you'd like a licensed agent to run the comparison on your real numbers, get a free payoff projection.
Examples assume a new $400,000 loan, principal and interest only, with figures rounded. Closing costs vary by lender and state.
