Should you pay your mortgage off faster or keep more cash flow? Here's everything you need to know to make the right choice.
This is the most common refinance question I get: "Should I do 15 years or 30?" The answer isn't one-size-fits-all. A 15-year mortgage will save you massive amounts of interest and build equity faster. A 30-year gives you breathing room and flexibility. Most people pick based on payment size alone—that's a mistake.
Let's compare both options with real numbers, real tradeoffs, and real scenarios so you can make the right call for your situation.
| Factor | 15-Year | 30-Year |
|---|---|---|
| Interest Rate (2026 avg) | 6.0% - 6.5% | 6.5% - 7.0% |
| Monthly Payment ($400k loan) | $3,375 | $2,661 |
| Total Interest Paid | $207,500 | $558,000 |
| Interest Savings | Save $350,500 | Pay $350k more |
| Equity Build Speed | 3x faster | Gradual |
| Cash Flow Flexibility | Lower (higher payment) | Higher (lower payment) |
| Best for | High income, wealth building | Maximizing flexibility |
💡 Payment Difference: $714/month lower with 30-year
But you'll pay $350,500 MORE in interest over the life of the loan.
Go with a 15-year refinance if:
Go with a 30-year refinance if:
Yes, but you'll pay closing costs again (typically $3k-$8k). Better to pick the right term now or just make extra payments on a 30-year.
Smart move. You get flexibility but can still pay it off early. The catch: your 30-year rate will be 0.5% higher, so you'll pay slightly more interest. But you have the option to slow down payments if life happens.
Yes! 20-year rates are usually only 0.125-0.25% higher than 15-year, and the payment is much lower. It's a solid compromise if 15 feels too aggressive.
On a $400k loan, the 15-year payment is about $714/month higher. Over 15 years, that's $128,520 in extra payments. But you save $350k in interest. Net savings: $221,480.
You can always refinance again. But don't wait for rates to drop—they might not. Lock in savings now if refinancing makes sense at today's rates.
If you can afford the higher payment without stress and you're committed to staying in the home, go 15-year. You'll save massive amounts of interest and own your home free and clear in half the time. If cash flow flexibility matters more, go 30-year and make extra payments when you can.
The worst choice is picking a 15-year, stretching your budget, and being house-poor with no emergency fund. Don't let the interest savings blind you to real-world cash flow needs.
Licensed California mortgage broker (DRE #01212512) with 15+ years of experience. Bill has helped hundreds of clients choose between 15-year and 30-year refinance options based on their financial goals, cash flow needs, and long-term plans.