You can save money by refinancing from a 30 year mortgage to a 20 year mortgage. First of all, it’s important to remember that shorter terms generally have a lower rate. So a 20 year mortgage will typically have a rate that’s lower than a 30 year. Because the term is shorter than a 30 year, the borrower pays less interest over the life of the loan. This translates into long-term savings. This example is to illustrate the importance of the term in determining the right loan for you and your family.
As you can see, the 30 year loan is the cheapest per month, but will cost you the most over the life of the loan. On the other hand, the monthly payment will be higher for a 20 year mortgage as opposed to a 30 year mortgage. So you need to decide if you are more concerned with short-term savings or long-term savings.