10-Year Fixed Mortgage Overview
What Is A 10-Year Fixed Loan?
A 10-year fixed-rate mortgage is a mortgage that has a fixed rate of return for a specified period term.
A 10-year fixed mortgage means that your monthly payments will stay the same for ten years. However, throughout the loan's life, the breakdown of which portion of your mortgage payment goes toward principal and which goes towards interest will change. This is because your payments will spread over ten years, with the principal paying off at the end and the interest payments covering the bulk of your payments.
While 10-year fixed-rate mortgages aren't the most common, they have been growing in popularity. A 10-year fixed mortgage is a great option if you have low rates and can afford the more expensive monthly payment. It allows you to pay off your loan in just ten years, build equity quicker, and save thousands on interest.
A 10-Year Fixed Mortgage Is A Great Option
You will pay less for mortgage insurance than a 30-year fixed loan if your down payment is less than 20 percent.
This might make sense if you want to own your home immediately.
This might be an option if your goal is to get your mortgage paid off before you have a major life event, such as a child's college graduation or retirement.
Ten-year rates are less than fixed rates for 30 years.
It is great to lock into a safe, consistent, and stable rate if rates are low.
You can pay off your mortgage in a very short amount of time. Some people are uncomfortable with owing anyone money.
Equity can be built up at a quicker rate than a long loan term.
Because the loan's life span is shorter, you can save lots of money on interest.
A 10-Year Fixed Mortgage: The Disadvantages
High monthly payments mean you will have less cash in case of an emergency, such as a job loss.
A high monthly payment can prevent you from diversifying or investing more.
There is no significant difference between a fixed-rate 15-year loan and a fixed-rate ten-year loan.
Less mortgage loan interest you can deduct from your taxes.
The rising cost of inflation will mean that your income, other expenses, and mortgage payments will likely increase. It is, therefore, cheaper to obtain a 30-year fixed-rate loan.
To make money from your house investment, equity is tied to the house. You would need to sell the house or obtain a home equity loan.
