A 10 year fixed mortgage refers to a mortgage, with a set interest rate that remains unchanged for a period of 10 years. By the end of this term you would have fully repaid your mortgage.
Opting for a 10 year fixed mortgage means your monthly payments will remain consistent throughout the decade. However the proportion of your payment allocated to principal and interest will vary over time. Over the course of 10 years most of your payment initially goes towards interest gradually shifting towards paying off the amount as you near the end of the loan term.
Although not common as fixed rate loans 10 year fixed mortgages have gained popularity in recent times. When interest rates are low and you can manage payments opting for a 10 year fixed mortgage enables you to clear your mortgage in just a decade accumulate equity faster and save significantly on interest costs.
Benefits of opting for a 10 Year Fixed Mortgage;
- Reduced need for mortgage insurance compared to a 30 year fixed mortgage if your down payment’s, than 20 percent.
- If having ownership of your home quickly is a priority, for you it could be an idea.
- It might be beneficial if you prefer to clear your mortgage before life events like sending your child to college or retiring.
- Opting for a 10 year fixed rate mortgage typically offers rates compared to 30 year fixed rates.
- Choosing this option allows you to secure a rate especially when interest rates are favorable.
- With this loan term you can completely pay off your mortgage in a brief timeframe, which appeals to those who prefer not having debt lingering.
However there are drawbacks associated with a 10 Year Fixed Mortgage
The high monthly payments may leave you with cash reserves for unexpected expenses or financial emergencies like job loss.
Moreover the elevated monthly payments could hinder your ability to invest or diversify your investment portfolio further.
The difference in interest rates between a 15 year fixed loan and a 10 year fixed loan is not substantial enough to justify the shorter term option.
Furthermore there will be mortgage interest for deduction, on your taxes.The increasing inflation costs may lead to a rise, in your income and other expenses. Your mortgage payment will remain stable making it more cost effective to opt for a 30 year fixed loan. The equity is locked within the house requiring you to either sell the property or obtain a home equity loan to access funds from your real estate investment.
Current rates for 10 year fixed mortgages are provided below. Todays average interest rates, for a 10 year fixed loan can be found. By entering your loan details you can receive quotes from lenders anonymously.
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