Thinking about refinancing to a 20-year term? Make sure you’re getting the best rates by using one of our top refinance lenders.
*Mortgage rates as of 11/28/23. For the most recent mortgage rates, click here.
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 term.
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
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
- securely through Flagstar Mortgage's websiteBest For:Specialized Loan ProductsRating:
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 more 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. 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 payment and fees — the time spent now will be money in the bank.
Frequently Asked Questions
How much should I save for a down payment?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first time buyers. Check out the lenders that specialize in making the home buying experience a breeze.
How much interest will I pay?
Interest that you’ll pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.
How do I get pre-approved?
First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your mortgage interest rate today!
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1Based on Quicken Loans data in comparison to public data records.
Get Ready for Take Off
Rocket Mortgage® is an online mortgage experience developed by the firm formerly known as Quicken Loans®, America’s largest mortgage lender. Rocket Mortgage® makes it easy to get a mortgage — you just tell the company about yourself, your home, your finances and Rocket Mortgage® gives you real interest rates and numbers. You can use Rocket Mortgage® to get approved, ask questions about your mortgage, manage your payments and more.
You can work at your own pace and someone is always there to answer your questions — 24 hours a day, 7 days a week. Want a fast, convenient way to get a mortgage? Give Rocket Mortgage® a try.