My Perfect Mortgage
15-Year Refinance Assessing the Cost-Saving Potential
2 minute read
December 20, 2021

Market experts who accurately predicted volatile rates in December now are advising homeowners to keep an eye on current fluctuations for savings opportunities.

Due to 10-year and 15-year fixed rates at a near match, experts believe a 15-year refinance could be the most practical way for homeowners to shorten their repayment term while saving on interest.

In the past few weeks, 30-year fixed rates moved down and stabilized, while 20-year and 15-year fixed rates have remained stable. Ten-year fixed rates moved up to match the 15-year rates.

Rates at the start of the week were around the following percentages:

  • 30-year fixed rate: 3.1 percent
  • 20-year fixed rate: 2.9 percent
  • 15-year fixed rate: 2.4 percent
  • 10-year fixed rate: 2.4 percent

Ten-year fixed monthly payments are likely to be higher than 15-year, so opting for a 15-year term may offer some monthly relief while providing a comparable interest rate to the shorter 10-year term.

For homeowners who have been eyeing a 30-year fixed-rate term, experts caution that while rates have moved down, this may not have much of an effect on total interest costs or their monthly payment.

Likewise, refinancing from a 10-year or 15-year mortgage to a 30-year may mean lower monthly payments, but higher interest.

Fixed rates generally are higher than the initial rate for adjustable-rate mortgages (ARMs), but since they don’t change over time, homeowners will know what to expect for the life of the loan.

ARMs could potentially fluctuate significantly over the life of the loan. 

Despite the rate volatility this month, experts still predict rates will continue to rise overall into 2022. The economic uncertainty, news of a new Covid variant, and inflation fears have contributed to the current fluctuations.

Despite the uncertainty, experts don’t think rates will drop much lower than what they are currently. They recommend homebuyers and homeowners act soon to gain the most significant benefits.

Historically speaking, current rates still are considered favorable.

Mortgage experts recommend those interested in purchasing a home or refinancing their current mortgage reach out to a loan officer to determine the best course of action.

Rates will continue to fluctuate daily, and the rate a lender will offer a buyer depends on a variety of factors, including income, credit history, debts, and down payment amount.

A “good rate” should result in manageable monthly payments, is competitive to area rates, and leaves room for savings and investments, experts say.

Photo by Liza Summer from Pexels

Our advise is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.