Best 10-Year Mortgage Rates
March 2024
Mortgages with 10-year terms are relatively rare but there are lenders who offer them.
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Below is SuperMoney's list of top 10-year mortgage lenders. Check rates with multiple mortgage companies to see which one offers the best terms.
How do 10-year mortgages work?
Most homeowners opt for 30-year mortgages because they have lower monthly payments. However, you can save a lot of money in mortgage interest if you choose a shorter term. Mortgages with longer terms typically have higher interest rates and require you to pay interest for longer periods. Consider going with a 10-year mortgage if you can afford the higher monthly payments.
Mortgages with a 10-year term are set up so they are paid off in 10 years if you make every payment as scheduled. A mortgage is a special type of loan that people can use to purchase real estate. The real estate you purchase with the loan helps secure the debt. If you stop making your monthly payments, the lender can foreclose on the loan and take the real estate you purchased to recover its losses.
In general, the longer the term of a mortgage, the higher the interest rates and the lower the monthly payments will be. Therefore, 10-year mortgages usually have the lower interest rates and the higher monthly payments than 30-year and 20-year mortgages.
What is the difference between a fixed-rate mortgage and an adjustable-rate mortgage?
Many banks give customers the choice of loan type, offering the option of a fixed-rate mortgage or an adjustable-rate mortgage (ARM). Both have pros and cons.
Fixed-rate mortgages have an interest rate that is set in stone when you sign the paperwork and get the loan. Whether you choose a 10-year, a 15-year, or a 30-year fixed-rate mortgage, once the rate is set, the interest rate will not change over the life of the loan. Keep in mind that a loan with a shorter term will have a lower interest rate.
This can be good for people who like certainty because you know precisely how much you'll pay each and how much the loan will cost overall. However, the interest rate for fixed-rate mortgages is usually higher than the starting rate for an ARM.
With an adjustable-rate mortgage, the interest rate can change over time. You may see ARMs advertised as 5/1 or 7/1. The first number is the initial interest rate lock period. During that period, the interest rate will not change. The second number indicates how frequently the rate can change after the lock period.
For example, with a 5/1 ARM, the interest rate is fixed for the first five years of the loan. Then, the rate can change once per year.
ARMs tend to have lower starting interest rates than fixed-rate loans. That means lower monthly payments and a lower overall cost for the loan. However, once the interest rate lock period ends, the interest rate can rise or fall.
If it rises, your monthly payments will increase. If the rate rises too much, you may have trouble paying the bills. This uncertainty is a major drawback of adjustable-rate mortgages.
If you don't plan to stay in a home for the long-term or plan to pay off your mortgage very quickly, ARMs can help you save money. They can be a good idea if you're choosing a short loan like a 10-year mortgage. Those opting for longer terms will likely prefer a fixed-rate mortgage, such as a 30-year fixed-rate mortgage.
How much can you save by choosing a 10-year mortgage term?
Ten-year mortgage rates can save you big money on interest expenses and help you own your home debt-free sooner than you thought possible. The benefits of choosing a 10-year mortgage include lower rates (up to a full percentage point lower in some cases) and paying your mortgage in a third of the time.
The savings you can get from a 10-year mortgage when compared to a 30-year mortgage will vary depending on the size of the loan and the interest rates you pay. Let's use a $300K loan with a 3% APR and 30-year term as a benchmark. A loan with the same interest and a 10-year term will save you $107,713 over the life of the mortgage. The table below provides a variety of scenarios to help you see the potential savings of different terms.
Term | Total Cost $300K (3% interest rate) | Monthly Payments |
---|---|---|
10 years | $347,619 | $2,897 |
15 years | $372,914 | $2,072 |
20 years | $399,310 | $1,664 |
25 years | $426,790 | $1,423 |
30 years | $455,332 | $1,265 |
40 years | $515,498 | $1,074 |
Mortgages with a 10-year term will typically have lower interest rates and -- obviously -- have a lower overall cost than mortgages with longer terms, such as 15-year, 20-year, and 30-year mortgages.
Mortgages charge interest, and the rates vary with loan terms, so the difference isn't as cut and dry, but the basic idea is the same. The longer you have to repay your debt, the less you have to pay each month. This is one of the things that makes 30-year mortgages highly popular. They let people borrow large amounts and purchase expensive homes while minimizing the monthly cost.
Pros and Cons of a 10-Year Mortgage
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