Q. I appreciated your recent article about doing the math associated with mortgage rates. Building on that topic, does the math change when considering a move from a 30-year mortgage to a 15-year mortgage? Yes, we have to consider how long we will stay in the house. But since we are early in a 30-year mortgage, moving to a 15-year mortgage shifts the loan end date up. Are there other factors to consider?

A: The most successful candidates for a refinance will focus on achieving something in each of these three categories: lowering the interest rate on your loan, lowering your monthly payment, and shortening the length of your loan.

So, in your case, if you can shorten your loan from 27 years (that you have remaining in the original loan term) to 15 years, you’ve saved 12 years of payments and tens of thousands of dollars in interest (or more). If at the same time you can lower the interest rate and lower your monthly payment, you’ve hit the trifecta.

What happens if you only get two out of the three categories? If you can go from a 30-year loan to a 15-year loan and lower the interest rate, but the payment stays the same or even goes up a few bucks, it’s still a win in my book because you’ve saved 15 years of payments.

Please don’t forget to pay attention to closing costs. Lenders have really upped the ante, so be sure to shop around for the best deal. You’ll want to make sure your savings pays off your closing costs in a reasonable amount of time.

May 6, 2009