Should You Refinance Back to a 30-Year Home Loan?

Refinancing back to a 30-year home loan may offer lower payments, but you'll pay more interest in the long run.

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Updated · 2 min read
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Written by Holden Lewis
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When you refinance a 30-year mortgage to get a lower interest rate, you can also pick a new term — that is, the number of years you’ll get to pay your mortgage back.

One common option is to maintain the current repayment term. For example, if you got the original mortgage five years ago, you can refinance to a 25-year term.

You can also refinance to a shorter term. Using that same example, you could reduce the payoff term from 25 years to 20 years instead. When you lock in a lower refinance rate, this strategy can save thousands of dollars in interest over the life of the loan, though your monthly payments may increase.

You might also consider starting over with a new 30-year term. Maybe your financial situation has changed and you want to lower your monthly mortgage payments. That’s one way to save in the short term, but over time, you’ll pay a lot more in interest.

Let’s compare the advantages and disadvantages so you can decide what’s best for you.

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