Advertiser Disclosure: Many of the savings offers appearing on this site are from advertisers from which this website receives compensation for being listed here. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). These offers do not represent all deposit accounts available.

Ask the expert: 30-year vs. 15-year refinancing at current mortgage rates?

December 07, 2010

By Richard Barrington | MoneyRates.com Senior Financial Analyst, CFA

Q: My husband and I have been paying our mortgage off for about ten years now, and we are finally getting around to looking at refinancing. I know we probably should have refinanced before this, but we aren't always as on top of these things as we should be. Anyway, with only 20 years left on our payments, we are reluctant to sign up for another 30-year mortgage. What would be the pros and cons of going with a 15-year mortgage instead?

A: The year 2000 was the last time 30-year mortgage rates averaged above 8 percent for the year. Anyone who woke up from a deep sleep ten years later would find current mortgage rates hard to believe. 30-year rates are down around 4.5 percent, and 15-year rates are down around 3.8 percent.

This means that current mortgage rates give a person refinancing a ten-year-old, 30-year mortgage some interesting options. You could refinance to a fresh 30-year mortgage, and find your monthly payments considerably lower. Not only would you be reducing the interest rate drastically, but you'd also be lowering the payments by spreading the remaining 20 years of debt back out over 30 years.

However, if you've had no trouble meeting your monthly mortgage payments, you might question why you'd want to pay interest for another 30 years. Current mortgage rates are low enough to make a 15-year mortgage an enticing refinancing option to anyone with a 2000-era mortgage. By effectively cutting your interest rate in half, you could both lower the monthly payments and the remaining length of your mortgage.

That's a rare deal that illustrates how low current mortgage rates are. Anyone awaking from a 10-year sleep today would be thrilled at current mortgage rates; however, anyone who continues to snooze on these rates will probably kick themselves when they wake up.

Got a financial question about saving, investing, or banking? MoneyRates.com invites you to submit your questions to our "Ask the Expert" feature. Just go to the MoneyRates.com home page and look for the "Ask the Expert" box on the lower left.

Your responses to ‘Ask the expert: 30-year vs. 15-year refinancing at current mortgage rates?’

Showing 1 comment | Add your comment
Travis Vayssie

22 August 2011 at 4:11 pm

Great Post. Mortgage Rates in general are best to find when dealing directly with a lender face to face, but you can always search the net for a low rate.

Add your comment
(will not be published, required)