Using Home Equity to Consolidate Debt: Is Refinancing Right for You?
Explore how using home equity to consolidate debt could work for you. Weigh the pros and cons to find out what's right for you.
8 Min
Refinancing your mortgage can be one of the smartest financial decisions you make, but it’s not always easy to decide what type of refinance term is best for you. For many Florida homeowners in 2025, the combination of rising equity and falling interest rates has made refinancing an attractive prospect. Choosing between a 30-year and a 15-year mortgage is one of the most critical decisions you’ll face during this process. Refinancing to a 15-year mortgage allows you to pay off your home in half the time compared to a 30-year loan.
While moving to a 15-year mortgage offers benefits such as faster payoff and lower total interest payments, it’s not the right choice for everyone. Borrowing money for a shorter term, such as 15 years, can significantly reduce the total interest paid over the life of the loan. This guide will help you weigh the pros and cons of refinancing from a 30-year to a 15-year mortgage, so you can decide if it’s the right financial move for your situation. Factors like your down payment can also affect your refinancing options and costs.
Refinancing your mortgage is a strategic way to improve your financial situation, whether your goal is to lower your monthly payments, access your home equity, or switch from an adjustable-rate to a fixed-rate mortgage. As interest rates fluctuate, many homeowners find that refinancing can help them secure a lower interest rate, which can translate into substantial savings on interest payments over the life of the loan. However, it’s important to look beyond just the potential for lower monthly payments. You’ll need to consider closing costs, your current credit score, and how refinancing fits into your long-term financial goals. Consulting with a mortgage broker or financial advisor can help you navigate the refinancing process, compare fixed-rate mortgage options, and determine if refinancing is the right move for your unique needs and circumstances.
Before you decide to refinance, it’s essential to understand the core differences between a 30-year and a 15-year mortgage term. Here’s what you need to know:
Before deciding to refinance, it's important to consider how the new monthly payment will fit into your overall monthly budget.
With a 15-year term, your home equity builds faster because more of your loan payment reduces the principal balance. This can offer financial flexibility down the road, whether through selling your home or leveraging equity for other investments.
Making extra payments toward your principal can accelerate equity growth even further, helping you pay off your mortgage faster and reduce interest costs.
Curious what your new payment would be on a 15-year refinance? Get prequalified with Rate Leaf today.
One of the biggest advantages of a 15-year mortgage is the potential savings on interest. For instance, if you refinance a $350,000 balance at 6.5% on a 30-year term into a 15-year term at 5.75%, the total interest paid over the life of the loan would be dramatically lower. With current refinance rates often lower than previous years, locking in a reduced rate can further increase your savings. Additionally, the shorter term helps borrowers achieve financial freedom faster.
To maximize your interest savings, be sure to compare different refinance options and assess which best fits your financial goals.
For more insights, read about how long it takes for your refinance to pay off.
Refinancing to a shorter-term mortgage, such as a 15-year mortgage, allows you to pay off your home sooner, which can be advantageous for retirement planning or early financial freedom. By paying more principal with each payment, you also reduce the risk of being “underwater” in the event of market fluctuations.
Additionally, making biweekly payments can help you pay off your mortgage even faster by increasing the frequency of your payments and reducing the total interest paid over time.
Switching to a 15-year loan will likely increase your monthly mortgage payment, which can strain your budget. For example:
This $600 increase may be manageable for some, but could be a dealreaker for others. Higher monthly payments can divert funds from other important financial goals, such as saving for college tuition or retirement. It’s crucial to stress test your finances for unexpected events, such as job losses or medical emergencies.
When considering higher payments, make sure you can still maintain an adequate emergency fund to protect your long-term financial stability.
Not sure if you can handle the higher payments? Compare options side by side with Rate Leaf.
While the accelerated payoff is appealing, committing to higher monthly payments can reduce flexibility, particularly if you have variable income or significant monthly expenses like childcare or tuition. Instead, making additional payments toward your mortgage principal when possible can help reduce your loan term without locking in higher monthly payments. If your loan requires mortgage insurance, this can further impact your monthly cash flow. Maintaining cash flow for emergencies or investments should also factor into your decision.
Before you start the refinancing process, take a close look at your existing mortgage. Review your current interest rate, loan term, and monthly payments to get a clear picture of where you stand. Understanding the details of your existing mortgage will help you evaluate whether refinancing to a 15-year mortgage with a lower interest rate could save you tens of thousands of dollars in interest payments over the life of the loan. It’s also important to consider your remaining loan term and how much you’ve already paid in interest. Calculating the break-even point—the moment when your savings from lower monthly payments or reduced interest costs outweigh the upfront expenses of refinancing—will help you decide if making the switch makes financial sense for your situation.
The process of refinancing your mortgage involves several key steps, starting with applying for a new loan and providing financial documentation such as pay stubs and tax returns. You’ll also need to account for closing costs, which typically range from 2% to 5% of your loan amount and may include fees for loan origination, appraisals, and title insurance. Before moving forward, use a refinance calculator to estimate your potential savings and see how different loan terms, interest rates, and monthly payments could impact your finances. Carefully review the terms of your new loan to ensure it aligns with your financial goals, whether that means securing a lower interest rate, reducing your loan term, or achieving lower monthly payments. By weighing the upfront costs against the potential long-term savings, you can make an informed decision about whether refinancing is the right choice for your mortgage payments and overall financial future.
If you’re not ready to fully commit to a higher monthly payment, consider exploring mortgage recasting. Before making a lump sum payment or recasting, check your original mortgage for any prepayment penalties, as some loans may charge fees for paying off principal early. Recasting allows you to make a lump sum payment toward your principal balance, which reduces your monthly payments without shortening your loan term or changing the interest rate. Unlike refinancing, which involves applying for a new loan similar to when you took out your original mortgage, recasting simply adjusts your existing loan terms.
For Florida homeowners who already have a favorable interest rate, recasting can be a cost-effective way to reduce payments when compared to refinancing. Learn more about how to explore mortgage recasting as another strategy.
A 15-year refinance often makes sense if:
When you apply for a 15-year refinance, your mortgage lender will evaluate your financial profile and property value to determine your eligibility and the terms of your new loan.
You might want to stick with your 30-year loan if:
Before making a decision, it's important to understand the terms of your current loan, including the remaining balance and interest rate. Mortgage lenders may have varying requirements and offers, so comparing your current loan with available options can help you determine whether refinancing or staying with your existing mortgage is the best choice.
Determining whether a 15-year refinance is the right move comes down to your financial goals and budget. To make the best decision:
Prequalify now to see if a 15-year mortgage will save you money. Get started with Rate Leaf.
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