A lot of homeowners are deciding to refinance to a 15 year mortgage rather than a 30 year mortgage. This is because mortgages with shorter terms have lower interest rates and can save homeowners a lot of money down the road. Plus the mortgage will be paid off sooner, which allows you to use those savings for other vital life costs like retirement, education, healthcare, etc.

However, a 15 year mortgage isn’t the right choice for everyone. You’ll want to make sure you fit the criteria and understand what it would mean to switch. In this blog, we will cover how to prepare for a 15 year mortgage, who best fits the criteria, and what the pros and cons would be if this is the best option for you.

How to Prepare for a 15 Year Mortgage

Before you make the switch to a shorter refinancing term, you should do the following:

  1. Save up enough money to cover the first three to six payments, in case of emergency.
  2. Make sure that you have the budget to pay more each month.
  3. Fill your retirement funds completely.
  4. Contribute to your savings account regularly.

Who Should Refinance to a 15 Year Mortgage

The candidates that would be a perfect fit for a 15 year mortgage include the following:

Past Your First Year

Typically, it would be best if you’ve been paying your mortgage off for a few years. If you refinance too early, it will add more fees and you’ll have a harder time hitting that break even point (when the amount you save is higher than your closing costs).

Currently Pay Extra

If you’re already paying more towards your mortgage each month then this is the perfect option for you because you likely have the budget to pay your home off faster.

Looking to Retire

If you plan on retiring without having the burden of making payments towards your mortgage then it would help expedite the process to switch to a 15 year mortgage.

Extra Cash is Available

If you have extra cash coming in that you’re just putting into a savings account then it could be a smart decision to put that extra money towards paying off your mortgage faster instead, thus lowering your interest costs.

15 Year Mortgage Pros vs. Cons


Save on Interest: Just by switching from a 30 year mortgage to 15 you could save .75 percent, which equates to tens of thousands of dollars over the duration of the loan.

Get Out of Debt Faster: It’s a bit of a given, but by shortening the term of your mortgage payments, you’ll pay off your mortgage faster and get out of debt quicker. Then you can start saving more money or spend your money on other living expenses.

Eliminate Private Mortgage Insurance (PMI): When you put down under 20 percent on your home value then a PMI fee is added to every mortgage payment. If you have 20 percent equity in your home (or more) and you switch to a 15 year mortgage then you could save about $100 per month, depending on how much your PMI fee is.

Plan Better for the Future: If you’re looking to retire debt free then it helps to plan for the future and make your mortgage payments faster. Plus you could save more money after you pay off your mortgage than you would by putting your money into a savings account.  


Higher Monthly Payments: Your monthly payments will likely increase at least couple of hundred dollars every month, which definitely adds up. If you aren’t fully prepared to pay more each month then it could be burdensome to make your payments.

Might Dip into Your Savings Plans: You should definitely look at your long term plans before making the switch because the increased payments may take money that was put away for your children’s college fund, retirement, or even to pay off other debt.

Less Payment Flexibility: Because your monthly payments will increase it could take up all, if not more, of that extra cash you had leftover after making your 30 year mortgage payments. You’ll really have to check your budget to see if this option is feasible and ensure you don’t need that extra cash each month.

Speak with a Professional

Trusted House Finance can help answer all of your mortgage refinancing questions. If you’re interested in switching to a 15 year mortgage, we can work with you to find you the best deal. Don’t wait any longer, speak with a trusted professional today.