You can refinance an existing 15-year mortgage rate and replace it with a new lower-rate 15-year loan. The process is essentially the same as any other refinance. Your lender verifies your credit scores, income and equity to ensure you meet the minimum mortgage requirements.
However, government-backed refinance loans come with some extra hoops for you to jump through to switch from a 30-year to a 15-year term.
Conventional rate-and-term refinance. As long as you qualify for the higher payment, swapping your 30-year fixed loan for a 15-year loan should be straightforward. Just monitor your DTI ratio with the higher payment; conventional guidelines won’t allow total monthly debt including the new mortgage that makes up over 50% of your earnings each month.
FHA streamline refinance. Lenders approved by the Federal Housing Administration (FHA) may offer the FHA streamline refinance option to homeowners with a current FHA loan. You can skip the income docs and an appraisal, but there’s a catch: To switch from a 30-year term to a 15-year mortgage, the refi rate must be lower than what you’re paying now and the new monthly payment can’t increase by more than $50.
VA IRRRL. Short for “interest rate reduction refinance loan,” the U.S. Department of Veterans Affairs (VA) IRRRL gives military borrowers with a current VA loan a simple way to refinance without documenting income or the hassle of an appraisal. However, if you flip from a long-term to mortgage to a shorter term, your payment can’t rise by 20% or more.