3 reasons to refinance your 30-year mortgage into a 15-year home loan

someone signs home loan papers
someone signs home loan papers

In the decade-long run-up to the bursting of the housing market bubble, millions of Americans got caught up in playing a game of home loan limbo: how low can my payments go? And with every cha-ching of the refinance ATM, the recipe of lower payments and more cash-out led to one result: an extended mortgage payoff date. For some, this just meant they would pay on a 30-year loan for a year, then refinance it every year, hitting the snooze button on that 30-year clock and never getting any closer to paying their mortgage off. Other homeowners, however, went from 30-year mortgages to 40-year mortgages, getting a lower payment -- despite increasing the loan's balance -- just by virtue of spreading that payment out over more years. The prevailing sentiment was that most people would never pay their mortgages off anyway, so why try?

Why indeed. Fast-forward to today, after the bubble. Conspicuous Consumption is OUT. Conspicuous Frugality is IN. Americans everywhere are trying to save as much as they can, anywhere they can. And with interest rates at historically low levels, many savvy homeowners are refinancing into today's low rates, not to extend their loans or get cash out, but to get shorter loan terms!