A 15-year term refinance gives borrowers 15 years to pay off their loan. This is typically the shortest term available for fixed-rate mortgage loans, which makes it appealing for homeowners looking for lower interest rates and a faster payoff period.
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Why Choose a 15-Year Term?
As one of the shortest-term options for fixed-rate loans, a 15-year term is the fastest track to true homeownership. Homeowners who refinance to a 15-year term can expect lower interest rates and fewer interest payments over the course of their loan than their 30-year counterparts. Along with the faster payment period, it's the potential for savings that attracts many homeowners to this type of loan. However, such a short term does mean higher monthly payments, which may be overwhelming for some.
If you have the extra income in your monthly budget, refinancing to a 15-year term from a longer-term loan may lead to significant savings over time due to the lower cost of interest. This will be particularly beneficial if interest rates are lower now than when you first applied for your current mortgage loan. Additionally, you will own your home fully much faster than those who opt for a longer loan term. With fixed interest rates, a 15-year term also offers more stability than an ARM does. However, as mentioned above, this type of loan does mean higher monthly payments -- if you’re unsure if you can afford this, or if your aim with refinancing is to lower your monthly payments, you may be better off with a 20 or 30-year term.
Whether a 15-year term refinance is right for you will depend on your own finances and your reasons for refinancing. By researching different loan options ahead of time, comparing multiple lenders, and using resources such as our site, you should be able to find the right refinance option for your needs.