10 Year Mortgage Interest Rates

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10 Year Home Mortgage Rates

A 10 Year Mortgage Interest Rate May Be For You

Welcome to our independent and unaffiliated site about 10 year mortgage interest rates and other short term mortgage products.  We hope to bring you information and advice that may not be other wise available and we pride ourselves on being one of he few informational mortgage sites that is truly unbiased and independent.

Ten year mortgage interest rates usually have a fixed interest rate slightly lower than the 15-year mortgage, and significantly lower than a 30-year fixed rate mortgages . The actual difference in these rates can vary, and has a lot to do with the price of different bond prices at the time. Put simply, if speculators feel that the economy’s shorter term prospects are dimmer than the longer term prospects, this may deflate shorter term rates a bit. Most mortgage brokers have 10 year rates in the portfolio of what they offer their customers.

A 10-year mortgage gives a homeowner a great opportunity to pay off a loan that only has a few more years that 10 left early at a more attractive rate, and it also allows the homeowner with fewer than 10 years left to refinance at a low rate to take money out.  Whether you are refinancing to get a lower rate or taking out a home equity loan, a 10 year rate may be for you.

No matter how it is used, the ten year interest rate mortgage leads to the fast build up in equity, since it is such a short-term loan with a relatively low rate. The low rate can be very attractive for purposes such as loan consolidation, especially if you are consolidating debts that have higher interest rates.

The 10 year mortgage loan, whether a home equity loan or original mortgage finance loan, is not popular with those who have just bought their house since the payments would be so high, as you can see from any online mortgage calculator – while the interest savings can be very attractive?with a 10-year mortgage loan, the payments can still be rather high.

One other difference that a 10 year mortgage brings is that banks may be a little bit less concerned with credit worthiness – just a little – because they only have to worry about the homeowners ability to pay their mortgage for 10, rather than 30 years.  Then again, the higher payment may balance that out and more!

Talk to your mortgage broker about a 10 year mortgage interest rate today.  Again, whether you are refinancing to get a lower rate, refinancing to pull out some of your home’s equity, refinancing to consolidate your loans, or doing your original home mortgage, a 10 year mortgage may be for you!

10 Year Mortgage Rate Terms You Should KNow

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These are some very important terms you might hear when you are looking into 10 year rate mortgages – terms that while are generally about the mortgage refinance process but more likely with a shorter term mortgage:

biweekly mortgage: Those who pursue a shorter term mortgage are often looking to pay things off quickly and get as much equity in their home as they can asap.  A mortgage that requires payments every two weeks (and therefore the equivalent of 13 payments rather than 12 each year) will help you pursue these goals.

origination fee: This fee is well known and is the one charged by the mortgage lender – the bank - to cover their own expenses.  The reason these are pertinent with 10 year rates is that they are often lower with short term mortgages where every bit helps ensure that this choice will pay off.

qualifying ratio: This calculation compares all of your expenses with your income.  This will help the bank determine whether you can handle the higher payments associated with a 10 year mortgage.

Truth in Lending: While not specific to 10 year rates and short-term mortgages we put this here because too few people review this document which details terms and conditions associated with the mortgage.

These are just some of the more important terms associated with the mortgages we cover here, but for a more complete list please see our “mortgage terms” page at The Mortgage Refinance Journal.

The Advantages of a 10 Year Rate Mortgage

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This site gives comprehensive information and advice about 10 year mortgages that are based on 10 year interest rates, and throughout this page and our Types of 10 Year Rate page we explore the plusses and minuses of these shorter term mortgages.  We thought we would take the time to summarize the advantages of a mortgage or mortgage refinance based on a 10 year interest rate:

- You get a lower rates that traditional 30 year fixed rate mortgages.  While there is no guarantee and there can be financial environments where this situation is flipped, 10 year mortgage rates also usually lower.  How much lower?  While an average would not be a meaningful number, at the time of this writing the difference between a fixed 30 year and a fixed 10 year mortgage rate is almost 1%.

- You build equity in your home much faster.  Because more of your monthly payment is going toward principle, and because you are generally paying down your mortgage 3 times faster, a 10 year mortgage gives you equity in your home much more quickly.  Soon you will find that you fully own a higher percentage of your home than you would otherwise.

- You pay less interest. A 10-year mortgage comes with far less interest paid to a bank than a 30-year mortgage loan.  Use any one of a number of online mortgage interest calculators to see this for yourself – you may be amazed by how much more is going toward paying down your home loan and how much loess is going to interest.

As we’ve said in previous posts, there are drawbacks to 10 year mortgages too.  First and foremost you have to make sure you can afford the higher payment for the full 10 years or until you sell.  But the above advantages may be highly compelling as you consider your choice.

Two step mortgages that use 10 year rates

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Two step mortgages can give you the benefits of a shorter term mortgage rate on a home purchase or refinance, while keeping your payments low like a longer term mortgage option.  Basically, a two step mortgage functions exactly as it sounds, where you get one rate for a specific period of time, often 3, 5, or 10 years, and then another rate thereafter.  With a two step mortgage you might get the equivalent of a ten year rate mortgage for a while, but take your chances after that either with a new fixed rate that is based on prevailing mortgage rates at the time or an adjustable rate.

With a two step mortgage, even though it has some of the same benefits as a 10 year rate mortgage, you have to be careful of what that second step will be; you could end up with a mortgage rate much higher thatn what you would have received with a traditional 30 year fixes rate mortgage.   Thus, two-step mortgages are not for everyone, but could be good for you if:

- Mortgage rates are high when you take out the two step mortgage and you think that the initial 10 year rate is a great solution because subsequent 30 year rates will come down.

- You think you will be selling your home during the initial mortgage period so you do not mind the possibility of the second part of the mortgage having a high rate.

- You are merely using the two step mortgage as a hedge – you didn’t want to get a traditional 10 year rate mortgage fearing that the payments would be too high if anything happened to you income, yet you think you still might be able to pay it off in the short term.

- You just could not afford the home without the lower 10 year rate combined with the lower payment afforded by the two step mortgage (This opens a bit of a can or worms that should be discussed with a financial advisor).

Two step mortgages combine low rates and lower payments, but they carry risks and are therefore not for everyone.  They do work for people in some circumstances and have some of the benefits of 1o year rate mortgages, so they may be worth looking in to.

10 Year Rates and Home Values

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Valuing your home is a complicated prospect.  The result of an appraisal only goes so far, since ultimately what is important is what a buyer will pay.  Consider that almost all home buyers will need to take out a mortgage loan, and while the overall price of the home is a starting point, what they can actually be able to afford each month is what may be most important.  This most home buyers consider the mortgage payment as much as they consider the sales price.

How do 10 year mortgage rates fit in?  If your prospective buyer is considering a shorter term rate, and rates are low for 10 year mortgages, then he or she may be able to afford a higher asking price.  At a time of low 10 year rates the payment on a higher sales price might be the same as the payment on a lower sales price during a time of higher 10 year rates.  Thus when 10 year mortgage rates are low you may be able to put a higher asking price on your home, as compared to when rates are higher.

There is one complication, however,  Sometimes 10 year rates are low because of a slow underlying economy.  And in a slow underlying economy home prices are often deflated because people do not have as much money or want to be more conservative with their mortgage loan.  Of course the opposite is true too – if 10 year rates are a little higher during a booming economy, people may not mind because they are more financially optimistic.

The relationship between 10 year mortgage interest rates and what you can sell your home for is complex, and thus the most efficient way to price your home is through carefully researched comparable sales.

10 Year Rates ans National Averages

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So you’ve decided on a 10 year mortgage or 10 year mortgage refinance based on the attractiveness of 10 year mortgage rates.  But now you want to make sure you time things perfectly and get the best and lowest rate.  One way to look into this is to go to a web site that publishes “national averages” of mortgage rates and includes 10 year rates.

A word of caution is needed about published national mortgage rate averages: They can be too low.  First, published national mortgage rate averages, including those for 10 year rates, don’t always differentiate between mortgage deals that come with certain points or closing costs.  In other words, in submitting it’s own individual published 10 year mortgage rate, a bank may include an incredibly attractive 10 year rate that is only available if the buyer pays large closing costs.

Published 10 year rate national averages may be good to find trends – since presumably all these deals stay constant and thus the trend line really does go down as 10 year rates go down – but they are not necessarily good to figure out exactly what rate you should shoot for.  Sometimes a great mortgage rate will come with poor terms, and other times a slightly higher rate will come with much more favorable terms.

Published national mortgage rates on 10 year mortgages are not a bad place to start your search for a great 10 year rate – but perhaps only to signal you when it is time to call around to local banks and brokers that offer 10 year rate products.

Two step 10 Year Mortgages

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There is a specific type of 10 year mortgage that is based on 10 year rates and therefore has all the benefits of this shorter term loan.  So-called two step mortgages give you the low 10 year rate on your purchase or refinance for the first 10 years, thereby letting you take advantage of 10 year rates at the start.  However, this low rate 10 year mortage rate is only in effect for that first 10 years.  After that the rate becomes a variable one.  Thus, two-step mortgages are not for everyone, and you should be careful about this choice.  If you can get a two step mortgage that starts with a 10 year rate (they aren’t always available), it could be worthwhile if:

  • You will be selling your home before the 10 year rate (the first of the two steps) expires.
  • If you think that current 30 year mortgage fixes rates are likely to be lower in the future
  • If you feel there is a good possibility that you can pay a lot into the mortgage principle over the 10 year mortgage term anyway.

Two step mortgages that start with a 10 year rate are not for everyone, but if they are available in your area they may be worth looking in to.

Interest-only 10 year mortgages – a good idea?

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Intererst only mortgages are usually not a great idea, especially on a 20 or 30 year mortgage.  But what about an interest only 10 year mortgage?  10 year mortgages are favorable because 10 year rates are lower, and obviously they will be paid off more quickly.  One reason that interest-only shorter term mortgages might be attractive is that the 10 year rates are actually so low that the payment will be equally low.  Don’t forget, however, that the principle payment will be coming up sooner with a ten year interest only mortgage!
What aspects of your financial situation would make you tempted to get a 10 year mortgage where you pay interest only?
  • You have very high but short term debts that you will immediately pay down in several years - the interest rates on these debts must be significantly higher than the 10 year interest rates and you must be sure you can pay them off in just a few years.
  • You are buying this house to fix-up and flip, or you otherwise know you won;t be living there long.  This the 10 year rate mortgage gives you an opportunity for low “rent” on a nice house, and perhaps you are not concerned that you will not pay down the principle.
  • Your job has uneven income (e.g. you work on commission for example), so having a 10 year mortgage that is written in a way that allows for interest onl;y payments can be favorable.  You’ve still taken advantage of 10 year rates this way.

Please note that choosing any type of mortgage is something you should always check with your own finacial advisor about your unique situation.