20-Year Refinancing:
Refinancing to a 20-year mortgage term can potentially help you save on interest or lower monthly payments. Finding top lenders with the best rates is key, regardless of what your main financial goal is.
Refinancing your home mortgage loan allows you to take advantage of changes in your credit profile, better interest rates or adjust your repayment terms. Some of the most common refinancing loans are for 30 year terms, but 20-year refinance options are available from many of the top banks, credit unions, lenders and financial institutions.
If you’re a homeowner whose mortgage loan still has more than 20 years left, you may see extensive savings on overall interest costs from refinancing to a 20 year loan. For homeowners who have less than 20 years left on the life of their loan, refinancing to a 20 year loan term could result in reduced monthly payments, but refinancing may not lead to interest savings over the long term since the loan will be for a longer term. The exact savings and type of savings will depend on your loan size, credit score, location and the type of loan being refinanced.
Current 20-year refinance rates
4 best 20-year refinance rates of 2020
- Bank of America: Best for traditional banks
- PNC Bank: Best for customer support
- U.S. Bank: Best for refinance options
- Suncoast Credit Union: Best for credit unions
Bank of America — Best for traditional banks
If you’re looking to refinance through a major brick and mortar bank, you may want to consider Bank of America as an option. Rates are dependent on many factors, including loan size, creditworthiness and location, but this lender is one of the largest banks in the country, so it has plenty of experience issuing mortgages and tons of branches, which helps make the process pretty seamless for most borrowers.
Regarding rates: as a reference, someone with a $200,000 loan and great credit in Florida can get a loan with 3.144% APR from Bank of America. Prequalification requests take about five minutes to apply for and can be done completely online. You don’t need to be a Bank of America customer to apply, though, you may qualify for additional discounts if you are an established banking customer.
PNC Bank — Best for customer support
What’s nice about PNC Bank is that their customer service is top notch and you have multiple avenues to get help or apply for refinancing. The bank has over 2,400 branch locations, online applications, local loan officers and phone support to ensure a smooth customer experience. It’s important to be aware, though, that while the customer service is excellent, the maximum loan size for a fixed refinance for a single-family is $510,400. If you’re trying to refinance a house that you owe more than $510,000, you’ll have to look elsewhere.
PNC Bank works with a range of credit scores and financial circumstances, and it offers a wide range of APRs, but for reference, 20-year refinance rates at PNC Bank start at 3.386% APR, assuming a loan of $200,000 in Florida with a 740 credit score, 80% LTV and a debt to income ratio of 36%. Your particular rate will depend on your overall financial picture and other factors this lender has in place.
U.S. Bank — Best for refinance options
U.S. Bank offers several options for refinancing: traditional refinancing, cash-out refinancing, streamline refinancing and even a no-cost closing option for refinancing. Those looking to refinance FHA loans and VA loans can also do so through U.S. Bank. Rates are competitive and start at 3.723% APR.
The bank allows applicants to apply in minutes, whether you are an existing customer or not. The application process can be completed online through the U.S. Bank Loan Portal, which makes signing and uploading documents easier for applicants. You will need to know your annual household income and annual household debt before getting started.
Suncoast Credit Union — Best for credit unions
The option for 20-year refinancing is not just available through banks — it is also available through credit unions, and one of the best options for refinancing is Suncoast Credit Union. Serving parts of the state of Florida since 1934, Suncoast Credit Union is the largest credit union in the state, with over $10 billion in assets.
Options for 20-year fixed refinancing through the credit union start at an APR of 2.812%, which is low compared to a lot of the other options. If you live within the service region of this credit union, you may be able to save a significant amount of money with a refinance through the company.
Compare 4 best 20-year refinance rates of 2020
| Lender | Rate | APR | Key Benefit |
| Bank of America | 3.000% | 3.144% | Lending specialists can offer additional support |
| PNC Bank | 3.250% | 3.386% | Top notch customer service |
| U.S. Bank | 3.625% | 3.723% | Several different refinance options |
| Suncoast Credit Union | 3.750% | 3.812% | Low interest rates |
What is a 20-year refinance?
Refinancing a mortgage is the process of taking out a home mortgage loan with a new lender to pay off your old loan in exchange for a new loan and new terms. Refinancing typically comes with more favorable terms or a lower interest rate. Once you refinance, you no longer make payments on your old loan. All of your payments now go to your new loan and new loan provider.
A 20-year refinance is a type of refinancing that is repaid over the course of 20 years. These refinanced loans operate much in the same way as a traditional mortgage because it is effectively just a new loan to replace your old loan. People often choose to refinance when their credit profile has improved, interest rates are lower or they need to find a way to get lower payments. While not as popular as a 15-year refinance or 30-year refinance — and often not publicly posted on banking websites — some lenders do offer a 20-year option for more flexibility.
20-year refinance vs. other terms
20-year refinance vs. 30-year refinance
For those looking to save on overall interest costs, a total amount of interest you’ll pay on a 20-year refinance will almost always be less than the longer 30-year option. By choosing to pay your loan more aggressively, you can limit the total interest paid on the life of the loan. You’ll also start paying down a larger percentage of your premium much sooner than you would with a longer loan.
If you’re in a tough financial spot and lower payments are the sole priority for refinancing, you may be better served by a 30-year refinance. However, you will likely pay significantly more in overall interest costs. If you’re able to afford the 20-year payments versus the 30-year, the shorter term is probably the more fiscally responsible option.
20-year refinance vs. 15-year refinance
If you have more than 20 years left on your existing mortgage and are looking to take a more aggressive approach at paying off your loan, both 20-year and 15-year refinances are options. Comparatively, the 15-year option may get you a considerably better rate, but your payments will be higher because you’re given five fewer years to pay it off.
If you have less than 20 years left on your loan but are looking for lower payments, you should be able to achieve that by extending the life of your loan with either a 20-year and 15-year refinance. Payments will be lower with the 20-year option, but the total interest costs you pay over the life of the loan will be much higher than they would with a 15-year loan. If you’re hovering around the 15-20 years left on your mortgage, you should consider both options and pick the one that helps to balance payment size and interest costs to best to fit your budget and financial plans.
20-year refinance vs. adjustable rate refinance
Adjustable-rate refinances may be your best options if you are planning on selling your home before the adjustable rates kick in. ARMs work by offering a low introductory rate followed by an adjustable interest rate that fluctuates with the economy. By choosing an ARM, you may be able to get a low introductory rate during the fixed-rate time frame. For example, a 5/1 adjustable-rate mortgage (ARM) has a lower fixed interest rate for five years than most 20- or 30-year refinances.
If you end up staying in your home for longer than five years, though, you’ll be at the mercy of the markets from year six on. If you’re unsure of your future plans or know you’ll be staying in your home over the long haul, you may want to opt for the 20-year fixed refinance. You’ll know what your payments are going to be for the entire life of the loan — regardless of what the market chooses to do.