20-Year Refinance Rates

When should you consider a 20-year refinance loan over other refinance loan terms?

A 20-year mortgage offers the opportunity to pay off your home loan faster since it’s shorter than a 30-year term, by far the most popular loan term. Although your monthly payments will be slightly higher, the 20-year can be more affordable on a monthly payment basis than a shorter term, like a 15 or 10-year one. Plus, you’ll get a bit lower interest rate than the 30-year loan as well.

Homeowners should consider a 20-year refinance loan if they want to pay off their mortgage faster — this can save you a significant amount in interest over the long term. That, and whether you can afford a slightly higher monthly payment (assuming you’re refinancing from a 30-year term). Or perhaps you’re locked into a 10-year or 15-year mortgage and find that you’re struggling to make the payments, or want to free up cash flow.

Those who have adjustable-rate mortgages nearing the end of their initial term might want to consider looking to refinance to save money if the reset of the loan means a significantly higher interest rate. You’ll want to want to look at current refinance rates for 20-year fixed mortgages, since your rate won’t change for the lifetime of your loan.

It’s important to look closely at your household income and whether your mortgage plus additional housing expenses — think homeowner’s insurance and utilities — can fit your new payment into your current budget comfortably.

One more thing to keep in mind: You can pay off any mortgage loan at any pace you want as long as you make the minimum payment. By making extra principal payments each month (check with your lender on how this is done) you can turn a 30-year loan into a 20, or a 15 or a 10. This way if you need extra cash, you can skip the additional principal payment any month you like.

When is the right time to refinance?

The right time to refinance depends on your financial situation and whether the savings are significant enough to be worth it.

Before applying, check your credit score and whether your payment history has improved since you took out your mortgage. Depending on your creditworthiness, you might qualify for a lower interest rate, which will help you save more each month.

However, if your credit isn’t great, it can affect your ability to qualify for the best rates. In this case, consider making higher monthly payments (assuming you don’t have any prepayment penalties) if you want to pay off your mortgage early or work on improving your credit before refinancing.

Take at look at how much you could save — there are costs to refinance like origination fees, closing costs and an appraisal. Your current lender may also charge you a fee or penalty for paying off your loan early. Add these up then look at what interest rate you might qualify for on your new mortgage and see if there are any savings. If yes, you’ll need to decide if it’s worth it, and how long it will take to recoup the costs. Bankrate’s mortgage refinance breakeven calculator can help you decide.

A cash-out refinance is a popular way for homeowners to tap into their home equity — use the money for almost any purpose, though a common reason is for home renovations. That way, you can take advantage of a potentially lower interest rate and use the extra cash to improve your home.

When should you refinance into a fixed loan from another type of loan?

Refinancing into a fixed-rate loan from a FHA loan could result in sizable cost savings since these types of loans have costly insurance premiums. For borrowers who have jumbo loans, refinancing is typically the better option because you could see even more savings.

Other loans such as a VA or ARM (adjustable rate mortgage) don’t necessarily have to worry about large payments or insurance premiums, so refinancing makes sense if borrowers are able to get a much lower rate — enough to offset any refinancing costs.

How much does a refinance possibly save?

A refinance can save you in interest paid over the life of the loan, but you’ll need to make sure the fees you’ll pay won’t negate the savings.

There are costs to refinance like origination fees, closing costs and an appraisal. Your current lender may also charge you a fee or penalty for paying off your loan early. Depending on the lender, other fees can include title search, attorney (to close on your loan) and application fees.

Add these up then look at what interest rate you might qualify for on your new mortgage and see if there are any savings there. If yes, you’ll need to decide if it’s worth it.

How do I find the best fixed refinance rate?

Finding the best refinance rates for a 20-year fixed term requires that you shop around. Once you have a sense of your credit situation, get multiple quotes from different lenders.

Then compare these quotes and look at interest rates and fees to see which is the best fit. In some cases lenders will advertise low rates only to discover you’ll need to purchase discount points to get them. Each point is equal to 1 percent of the loan amount, up front when you close the mortgage.

You’ll probably need to complete an application with each lender you’re comparing to see all the terms and offered APR — but it’ll be worth it to get the best rate.

Learn more about specific loan type rates
Loan Type Purchase Rates Refinance Rates
The table above links out to loan-specific content to help you learn more about rates by loan type.
30-Year Loan 30-Year Mortgage Rates 30-Year Refinance Rates
20-Year Loan 20-Year Mortgage Rates 20-Year Refinance Rates
15-Year Loan 15-Year Mortgage Rates 15-Year Refinance Rates
10-Year Loan 10-Year Mortgage Rates 10-Year Refinance Rates
FHA Loan FHA Mortgage Rates FHA Refinance Rates
VA Loan VA Mortgage Rates VA Refinance Rates
ARM Loan ARM Mortgage Rates ARM Refinance Rates
Jumbo Loan Jumbo Mortgage Rates Jumbo Refinance Rates

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