refinance 20 year mortgage: smart ways to trim interest and keep payments manageable

Why choose a 20-year term

A 20-year refi often strikes a sweet spot: you shed years of interest compared with a 30-year, yet the payment jump is usually gentler than a 15-year. If rates have dipped or your credit has improved, refinancing can convert savings into faster principal paydown.

What to check first

Look beyond the headline rate. Weigh total closing costs, points, and any prepayment penalties on your current loan. Estimate a breakeven date so you know how long you must keep the home to come out ahead.

• Rate vs. APR: APR bakes in fees; it’s better for apples-to-apples comparisons.
• Equity and credit: Higher equity and scores can unlock sharper pricing.
• Loan purpose: Rate-and-term usually costs less than cash-out.
• DTI and income stability matter for approval.

How the savings add up

Shortening to 20 years compresses amortization, front-loading principal. Even a modest rate cut can reduce lifetime interest by tens of thousands. If payment shock worries you, consider buying points, making biweekly payments, or rolling partial costs in while keeping a cushion.