Thinking about refinancing to a 20-year term? Make sure you’re getting the best rates by using one of our top refinance lenders.
| Loan Type | Rate | APR |
|---|---|---|
| 30-year fixed | 7.058% | 7.404% |
| 15-year fixed | 6.155% | 6.452% |
| 7/1 ARM (adjustable rate) | N/A | N/A |
| 5/1 ARM (adjustable rate) | N/A | N/A |
What Is a 20-Year Refinance?
A 20-year refinance refers to the process of refinancing a mortgage loan for a period of 20 years. It involves replacing an existing mortgage with a new loan that has a lower interest rate. For example, if a you are a homeowner who initially had a 30-year mortgage and decides to refinance after 10 years, you can opt for a 20-year refinance to finish paying your their mortgage within the next 20 years.
20-Year Refinance Advantages
If you’re considering multiple refinance options, it’s important to understand the pros and cons of each potential mortgage term. Let’s take a look at some of the advantages of refinancing with a 20-year term:
- Own your home sooner. If you’re shortening your mortgage term from a 30-year term to a 20-year term, you’ll pay your loan off sooner. This means that you’ll pay less in interest and you’ll build equity in your property at a faster rate.
- Take advantage of a lower interest rate. When you refinance to a 30-year to a 20-year term, you’re a lower risk in the eyes of lenders. This means that you can refinance a mortgage to a loan with a lower APR, which can save you tens of thousands by the time you fully pay off your loan.
- You won’t need to restart the amortization process. When most people refinance their 30-year mortgage loan, they refinance to another 30-year loan. While this may lower your payment, it can also cost you thousands of dollars more by the time you pay off your loan. Taking a 20-year mortgage loan instead of another 30-year loan allows you to continue building equity while also keeping a more manageable payment on your terms.
20-Year Refinance Disadvantages
Let’s also consider the disadvantages of 20-year loans when compared to 15-year and 30-year term options:
- Fewer mortgage companies offer them. The overwhelming majority of people who refinance choose a 30-year or 15-year term on their new loan. This means that most lenders cater primarily to this group. You might find it harder to find banks and online mortgage companies who readily have 20-year loan rates available when you need them.
- Your monthly payment will be higher than a 30-year loan. If you’re debating between refinancing to a 20-year term or a 30-year term, know that you’ll pay a higher monthly payment if you take a 20-year loan. However, you’ll also pay less each month on a 20-year loan than a 15-year loan.
Best Mortgage Lenders for Refinancing
Now that you understand what you might pay for a 20-year loan term as well as the advantages and disadvantages, let’s take a look at some of the best places to refinance a mortgage on a 20-year term.
1. Best Overall: Rocket Mortgage
- Best For:Online MortgagesVIEW PROS & CONS:securely through Rocket Mortgage (formerly Quicken Loans)'s website
You’ve probably heard of Quicken Loans, America’s largest mortgage lender.1 Despite its size, Quicken Loans remains the best mortgage company for offering a comprehensive solution to refinancing needs.
Quicken Loans issues mortgage refinances through its intuitive Rocket Mortgage® or you can also talk to a Home Loan Expert. Quicken Loans has made the mortgage refinancing process so simple that most homeowners can now complete it on their phones or tablets. You’ll receive a decision instantly in most cases — and if Rocket Mortgage® needs to collect a little more information about your situation, a representative will contact you.
Rocket Mortgage® also offers a comprehensive online library full of information on refinancing, what you can expect after you apply for a refinance, and what you might expect to pay for your loan. The company also services nearly any type of refinance, ranging from basic FHA loan interest rate reduction refinancing to cash-out jumbo loan refinances. No matter which type of loan you want, where you are in the refinancing process or what you hope to achieve after your refinance, Quicken Loans has a solution for you.
2. Best for Low-Interest Solutions: better.com
better.com is an online mortgage company committed to providing affordable home loan and refinancing solutions across the country. Better.com is easy and convenient to use — just enter information about your current loan and how you’d like to refinance, your location and your credit score and you’ll instantly be able to view up-to-the-minute interest rates customized to your unique situation.
Interest rates can change on a daily and sometimes hourly basis depending on a range of unique factors. When you get a refinance quote through better.com, you won’t need to wait to learn what you can expect to pay in interest. You’ll see instant, exact interest rates and APRs, and you can quickly compare interest rates on loan options. This makes it easy to find the lowest possible rate for your refinance without requesting quotes from dozens of lenders.
Thanks to its Better Price Guarantee, better.com will beat any qualifying offers you receive from competing refinance companies. If you’re looking to ensure that you’re getting the most affordable loan possible, be sure to consider better.com in your search for the right lender.
3. Best for Personalized Loan Solutions: Flagstar
If you’ve just graduated from a specialized graduate or medical school, you might find yourself having a harder time getting a refinance. Mortgage companies look at your debt and current income when you apply, not the income level representing your future earning potential.
Flagstar is one of the best places to refinance a mortgage if you have a unique financial situation that requires a look beyond the hard numbers. The company offers a unique “professional loan program” specifically for those who are beginning their career after graduating or receiving an advanced degree.
Its refinances include lower interest rates than you could find with competing mortgage companies, which can help you put more money toward your loans as you pay down your mortgage. Flagstar also offers specialized mortgage refinancing programs for borrowers who own their own businesses and self-employed.
4. Best for Faster Closings: CloseYourOwnLoan.com
Do you need to refinance to pay off debt before it continues to accrue interest? Is your monthly mortgage payment starting to drain your savings account or emergency fund? If your refinance is urgent, you might not be able to wait the standard 30 to 90 days to close on your new loan.
CloseYourOwnLoan.com is a DIY online mortgage refinance company with a highly streamlined refinance process. It is powered by Magnolia Bank. In our review, we found that you may be able to close your refinance in as little as 3 days when you choose CloseYourOwnLoan.com. Its efficient and easy-to-understand process is also able to offer lower mortgage interest rates than competitors as well by cutting out unnecessary steps and fees associated with standard refinance.
Should You Consider a Finding the Right Refinance for Your Home
No matter, if you’re searching for the right cash-out, refinance to cover your credit card debt or you simply want to take advantage of a market dip in interest rates, it’s important to remember that the right refinance begins with knowing all your options. Speak with multiple refinance lenders before you choose the one that’s right for you. Consider your loan options carefully in terms of interest rates, terms, monthly payments, and fees — the time spent now will be money in the bank.
Frequently Asked Questions
How much should I save for a down payment?
Lenders advise saving 20% for a home down payment to lower monthly payments and save on interest costs. If unable to save 20%, there are home buyer programs and assistance available.
How much interest will I pay?
The amount of interest you pay on a loan is based on the interest rate, amount borrowed, and loan term. For example, borrowing $208,800 at 3.62% over a 30-year loan would result in $133,793.14 in interest paid.
How do I get pre-approved?
To apply for a mortgage, gather the required documents and submit an application to a lender. Approval or denial typically takes 2-7 days after processing. Choose a lender and secure your mortgage interest rate.
Disclosure
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1Based on Quicken Loans data in comparison to public data records.
About Sarah Horvath
Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.