10-Year Mortgage Rates

Comparing 10-year loan term to other loan terms

Generally, the shorter the loan term, the lower the interest rate. The downside of loans with shorter terms is that the monthly payments are bigger. There are many aspects for and against 10-year loans. The pros are that you will end up paying less in interest and your mortgage will be paid off sooner than longer loans. The cons are that your monthly mortgage payment will be significantly larger than if you had a longer-term loan.

Compare current mortgage interest rates today to find out how much you can save by going with a shorter loan. Once you crunch the numbers, you might find that it’s worth it to pay more each month to save on the total loan’s interest costs.

Here are three loan scenarios that show monthly payments vs. total cost on $300,000 mortgages with interest rates that reflect loan type (remember, shorter loans have lower rates):

Advantages and disadvantages of a 10-year loan term

A 10-year mortgage isn’t for everyone. Few people have the financial resources to repay a loan so quickly. But there are decided advantages along with the disadvantages.

Advantages:

• Lower interest rates compared to loans with longer terms
• Mortgage is paid off much sooner
• Less interest paid over the life of your loan
• Build equity faster

Disadvantages:

• Much larger monthly payments compared to loans with longer terms
• Cash is tied up in your house, not readily available to you
• Can’t make lower monthly payments without refinancing

10-year fixed loan vs. ARM loan

Both the 10-year fixed mortgage and the adjustable-rate mortgage, or ARM, typically have lower interest rates than their longer-term, fixed-interest counterparts. The main difference between them is that the 10-year fixed-rate mortgage has a locked interest rate and the ARM has a floating rate. It’s important to note that ARMs have a “fixed period” when the rate does not adjust. For example, in 5/1 ARMs, the interest rate stays the same for the first five years.

If you plan on selling within five years, you can compare the 5/1 ARM with a 10-year mortgage to see which one has the lower rate. But keep in mind that the typical ARM amortizes over 30 years, which means the payments will be much lower than a 10-year loan, even if it has a lower interest rate.

And at the end of five years, and assuming identical interest rates on the two loans, you’ll have paid down about 12 percent of the balance of the 5/1 30-year ARM, while with the 10-year fixed, you’ll have paid off nearly half the balance.

There are also 7/1 ARMs, which lock the rate for the first seven years. If you intend on staying longer then you might want to consider a 10-year fixed-rate loan.

How to find the best mortgage for you

Once you’ve decided which term is right for you, you’ll want to do your due diligence to find the best mortgage. Here are five kinds of mortgages to consider. You’ll want to do some research and compare mortgage rates from several entities, which could include traditional banks, online lenders and mortgage brokers. Prepare by reviewing your credit report to confirm it’s correct and have an idea of how much you can afford to pay each month.

The good news is that any time of year can be a good time to shop for a mortgage. “Mortgage rates are tied to the bond market, so there's not a good or bad season,” Moffitt explains. He adds that fees for a 10-year mortgage will be similar to those of other mortgages.

If you choose a mortgage with a longer repayment term and decide you want to pay it off faster—say in 10 years—calculate what your monthly payment would be if you had a 10-year mortgage rate and pay that amount each month. Be sure to instruct your lender to apply the extra funds to the principal. This is a good option for borrowers who want to pay aggressively but who don’t want to be locked into higher payments.

Other useful tools:

• Current mortgage interest rates
• Compare today's 10-year refinance rates from Bankrate's comprehensive list of lenders
• Read reviews of mortgage lenders directly from our consumers