# 50 year mortgage

Interest Rate Trends

Three month, one year, three year and long-term trends of national average mortgage rates

on 30-, 15-year fixed, 1-year (CMT-indexed) and 5/1 combined adjustable rate mortgages;

One year trends of mortgage rates: 30-Year FRM, 15-Year FRM, 5/1 ARM

* Fully-Indexed Rate = index (1-year CMT) + margin (assuming a 2.75% margin)

Three year trends of mortgage rates: 30-Year FRM, 15-Year FRM, 5/1 ARM

* Fully-Indexed Rate = index (1-year CMT) + margin (assuming a 2.75% margin)

# 5-Year Variable Mortgage Rates

### Update results

• Mortgage rate fluctuates with the market interest rate, known as the prime lending rate or simple prime rate
• Typically stated as prime plus or minus a percentage
• 66% of Canadians have 5-year mortgage terms
• 5-year mortgage rates are driven by 5-year government bond yields

## 5-year variable mortgage rate defined

A variable mortgage rate fluctuates with the market interest rate, known as the ‘prime rate’, and is usually stated as prime plus or minus a percentage amount. For example, a variable rate could be quoted as prime – 0.8%. So, when the prime rate is, say, 5%, you would pay 4.2% (5% – 0.8%) interest.

The term, which is five years in the case of a 5-year variable mortgage, is the length of time you are committed to a variable type rate and, sometimes, the mortgage payments. With a variable rate, your mortgage payments can be set up one of two ways: a set payment, with the interest portion fluctuating; or, a fixed sum applied to the principal with the fluctuating interest portion changing the overall mortgage payment. For example, in the case of the former, if interest rates go down, more of the mortgage payment is applied to reduce the principal, but the total outlay remains the same.

The term of the mortgage should not be confused with the amortization period, which is the amount of time it takes to pay off your mortgage. So, in the example above, if the principal is reduced more quickly when interest rates fall, then the amortization period is reduced as well.

## Popularity of 5-year variable mortgage rates

Although fixed rate mortgages are more popular (66%), 29% of mortgages, a significant minority, have variable and adjustable rates. Fixed rates are also slightly more common for the youngest age groups, while older age groups are more likely to opt for variable rates.

The 5-year term, conversely, is the most common duration. This is logical given that five years is the median between the available term lengths between one and ten years.

# The building society that will now let you take a 40-year mortgage – but is taking out a long loan to get lower payments really a good idea?

Published: 10:06 GMT, 9 September 2017 | Updated: 10:26 GMT, 11 September 2017

National mortgage lender Teachers Building Society has extended its maximum mortgage term from 35 years to 40 years to help those on lower incomes afford to buy.

Historically, borrowers typically took a mortgage over a 25-year term but as house prices have risen steadily and wage growth has failed to keep pace, more and more borrowers are opting to spread their repayments over a longer time frame.

This has the advantage of reducing monthly repayments, even on bigger mortgages, but it does mean that borrowers pay far more interest on the principal balance as it takes years longer to pay off.

Increasing the maximum term to 40 years will help bring down the monthly mortgage costs

Andy Yates from Teachers Building Society said: ‘Increasing the maximum term to 40 years will help bring down the monthly mortgage costs for people buying a home.

‘With high house prices and an increasing cost of living, saving money on monthly mortgage payments remains important to people buying a home.’

## HOW THIS IS MONEY CAN HELP

What is Teachers BS offering?

First things first, Teachers Building Society restricts who it will lend to – you’re only eligible for a mortgage from it if you’re a teacher or you work in education in England or Wales.

They will consider newly qualified teachers, teachers on supply, contract teachers and those teaching or working in further education.

Because the lender is based in the South West, it will also lend to local residents in Dorset, Hampshire and Wiltshire – even where they don’t work in education.

The 40-year term is applicable on all of the society’s mortgages and borrowers must earn a minimum annual salary of £13,000 or, if self-employed, have two years or more of tax years’ accounts or SA302s to be considered.

The lender’s best buy rate is 2.39 per cent on a two-year fixed rate up to 80 per cent loan-to-value with a £899 fee plus a £99 application fee.

Taken over 25 years, a £150,000 on these terms would have monthly repayments of £665 and a total repayment of £200,293.

If borrowers opt to take the same deal over the full 40-year term, monthly repayments drop to £486 but the overall repayment total rises to £233,991.

How does it compare?

Teachers is not the only lender to go up to a maximum term of 40 years – both Halifax and Nationwide will let borrowers extend their mortgage over this period within their normal criteria rules.

Borrowers aren’t charged more for the longer term, so rates from Teachers should be compared to these.

Halifax currently offers a two-year fixed rate at 1.46 per cent with a £995 fee for borrowers with between 15 and 25 per cent equity or deposit to put in.

Over 25 years on the same mortgage as above, monthly repayments would be £597 and the overall repayment £180,122.

Taken over 40 years, monthly repayments are £413 and the total repayment over the full term is £199,123. That’s almost £35,000 less than the Teachers deal.

Nationwide’s most comparable deal is a two-year fixed rate at 1.44 per cent with a £999 fee. On the same mortgage as above, over 25 years monthly repayments would be £596 and the total repayable would be £179,705.

Over 40 years, monthly repayments would be £411 and the total repayable would be £198,411 – again, a saving around £35,000 on the Teachers deal.

This is Money verdict

The Teachers deal is not the cheapest on the market but it is a building society that specifically deals with those in the education profession – meaning it has a very specialised grip on the quirks in income that teachers deal with.

It’s much more likely to take a lenient view of teachers on contract work and those on lower incomes who need to spread their mortgage over the longer term.

That said, other lenders might also consider your application even if you fall into this category, so it’s worth comparing what’s on offer.

A fully qualified independent mortgage broker can help you do this with little hassle.

Whether you should borrow for longer will depend on your circumstances and preferences.

For many trying to get a step up on the ladder, it might make sense to take a longer term to start off with, but then switch to a shorter term later in life when you remortgage or move and when your salary has improved.

David Hollingworth, of mortgage broker London Country, explains: ‘More and more first-time buyers are looking at taking a longer term to begin with which can be revised down at a later date. This means they are at least repaying from the start of the loan and can afford to buy sooner.’

While there is only a handful of lenders that will go up to 40 year terms – within the usual maximum age at the end of the mortgage limits – nearly all lenders now go up to 35 years.

Andrew Montlake, of mortgage broker Coreco, said: ‘The thing to remember with longer terms is that you’re going to pay a lot more in interest.

‘With interest rates and mortgage rates so low at the moment, borrowers might actually be surprised by what they can afford over a shorter term – so it’s worth checking out the alternatives or seeking independent advice from a mortgage broker.’

### True cost mortgage calculator

This mortgage payment calculator will allow you to see the effect of sneaky arrangement fees on your repayments. Use the second part of the calculator to compare deals.

# How easy is it to get a 40-year mortgage?

8:02AM BST 18 Aug 2015

Rising house prices and tough affordability requirements are forcing borrowers to take on mortgages with terms of up to 40 years. But how easy is it to get a very long loan and which lenders offer them?

Some 20pc of property buyers searched for very long-term loans between April and July this year, according to brokerage Mortgage Advice Bureau. This was up from 8pc during the same period in 2014.

The trend is mainly a result of rapidly rising house prices and lacklustre wage growth. By taking a longer term loan borrowers can reduce their monthly repayments, which helps meet affordability requirements.

While 25 years is the standard mortgage term, most lenders will extend this to 35 or even 40 years.

### Which lenders offer longer terms?

Natwest and Virgin will agree to 35-year terms, while Halifax and Nationwide, plus some of the smaller building societies such as Ipswich and Nottingham, will offer 40-year terms.

HSBC on the other hand will only lend for up to 30 years.

Securing a very long loan is not difficult. Borrowers can simply request a longer term when they apply for a specific mortgage deal.

There are limitations. David Hollingworth, of mortgage broker London and Country, said lenders maximum age caps mean that few people aged in their mid to late thirties or older will be able to take out longer deals. This limits the market mainly to first and second-time buyers.

The natural limitation here is the maximum lending age, he said. This varies across lenders but most will typically require the mortgage to finish by age 65. This is slowly changing though and some lenders will accept borrowers who say they plan to work to age 70 for example.

While some may be able to borrow into retirement, in most cases lenders will require proof of retirement income, which can be very difficult to produce.

While longer-term loans will bring down monthly costs, the additional interest that builds up over time is substantial.

Take a £200,000 repayment mortgage with a rate of 3pc. Over 25 years, the monthly repayments would be £948 and the total interest payable over the life of the loan would be £84,526.

The same mortgage taken over 35 years would have lower monthly repayments of £770, but the overall interest would reach £123,274 some £38,748 more.

# Fixed Rate Mortgages

A fixed-rate mortgage is the most ordinary and uncomplicated mortgage available to homeowners today. It is also far and away the most popular choice for borrowers.

As the name suggests, the interest rate on a fixed mortgage does not change at all during the entire duration of the loan, which is typically 30 years.

### Fixed Mortgages Are Easy to Understand and Surprise-Free

For that reason, fixed-rate mortgages do not have associated mortgage indexes, margins, or caps because they are not variable-rate loans. It s basically a set-it-and-forget-it loan program that s easy to understand.

Another key characteristic of the fixed-rate mortgage is that monthly principal and interest mortgage payments remain constant throughout the life of the loan, to the very last month when the loan is finally paid off.

In other words, there aren t too many surprises with a fixed-rate loan, making it easier for the homeowner to sleep at night. Of course, that certainty does come at a cost, namely, a higher mortgage rate relative to adjustable-rate options.

However, a 30-year fixed might not cost much more than a 5/1 ARM, depending on the rate environment at the time you re shopping for a loan.

For example, a 30-year fixed today might be offered at around 3.75%, while a 5/1 ARM might be available for 3%.

This 0.75% spread is the cost of securing that fixed rate. Or the discount of going with the ARM instead.

On a \$200,000 loan amount, we re talking a difference of about \$125 per month in mortgage payment. For some folks, that s a small price to pay for a surprise-free mortgage. For others, it means leaving money on the table and paying more than necessary.

That higher rate also means your mortgage balance is paid off slightly slower than the low-rate option, which could be important if you re trying to build equity and eventually refinance.

It s very important to determine what type of loan is right for you early on in the loan process, instead of having your loan officer influence that decision.

While the 30-year fixed is definitely the most popular choice among homeowners, it s not necessarily the right fit for all borrowers. So do your research beforehand!

### Types of Fixed-Rate Mortgages

The most common type of fixed-rate mortgage is the 30-year fixed, which amortizes over thirty years, with the majority of early payments going toward interest, and the bulk of later payments going toward principal.

The next most popular term for a fixed mortgage is the 15-year fixed loan, which amortizes over fifteen years, bumping up monthly mortgage payments significantly, but reducing the amount of interest paid throughout the duration of the loan considerably.

Many banks and mortgage lenders also offer 10, 20, 25, 40, and 50-year fixed loans as well, though they are far less popular and widespread.

You may also be able to choose your own term, via programs like Quicken s Yourgage, and through similar programs offered by other lenders.

If you want a certain term, just let them know and they might be able to accommodate you. A shorter fixed term means a higher payment, but it also equates to a lot less interest and a home that is free and clear that much faster.

### Fixed Mortgages with Interest-Only Options

Some fixed-rate mortgages also feature interest-only periods, which allow homeowners to make interest-only payments during the first five to ten years of the loan term, though the loan will recast once the interest-only period is up to account for any reduced payments made during that period.

In other words, payments after the interest-only period expires will be higher to compensate for lower payments made early on. However, the mortgage is still considered fixed. It is simply recalculated to reflect the remaining number of months and the remaining mortgage balance.

### Fixed-Rate Mortgage Benefits

Fixed-rate mortgages are beneficial for a number of reasons, though the fact that your mortgage payment will never change is clearly paramount.

If interest rates rise, homeowners with adjustable-rate mortgages will suffer the consequences of higher monthly mortgage payments, while fixed-rate borrowers can rest assured that their payments will not change under any circumstances.

Fixed mortgage borrowers won’t need to worry too much about where the market is headed either, though it’s wise to monitor interest rates in case a sizable interest rate drop makes it favorable to refinance.

But generally, it’s a pretty stress-free loan choice, and one that’s favored by many government programs (FHA loans, VA loans) for its stability and clear-cut nature.

Put simply, the fixed mortgage is a good choice for the borrower that actually wants to pay off their mortgage, and plans to stay in the home (and with the mortgage) for the foreseeable future.

### One Downside of a Fixed Mortgage

The only real negative aspect of a fixed-rate mortgage is the higher interest rate, although these days many fixed mortgages price fairly closely to adjustable-rate mortgages.

Typically, homeowners pay a premium to lock in a fixed mortgage rate, whereas adjustable-rate mortgages may be discounted, especially early on.

So a 30-year fixed mortgage rate may be one percentage point higher than say a 5/1 ARM, but the borrower who goes with the fixed loan is banking on payment stability in exchange for a higher upfront cost. The borrower with the ARM is essentially taking a risk that rates won t rise in the future.

Another small negative associated with a fixed-rate mortgage is the idea that many homeowners will fail to refinance when a good opportunity comes around because they re so obsessed with holding onto their low fixed rate.

Basically a homeowner with a fixed mortgage may avoid refinancing in fear of losing that fixed-rate, whereas an ARM-borrower is always keen to shop around in order to save money.

A homeowner can also lose the advantage of a fixed mortgage if they sell or refinance within a few short years. In that case, they could have just taken out an ARM that was fixed for the first five or seven years and enjoyed a stable rate at a lower price.

But all in all, fixed mortgages are a good choice for a wide range of borrowers because of the relative low risk and lack of surprise. And with fixed mortgage rates at historic lows, there couldn t be a better time to obtain one for the long term.

Check out the chart below, which illustrates the interest rate movement of the popular 30-year fixed-rate mortgage over the course of 2010:

# 40 year mortgage

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# 30 Year Mortgages

In the current mortgage loan market, which is certainly reflective of the national and global economy as a whole, any potential homeowner seeking to acquire a 30 year fixed mortgage will prove to be not only a wise choice, but a logical one from a purely financial standpoint. At the outset of 2012, the national mortgage interest rate average for a typical 30 year fixed home loan stands at 4.18 %, with no points applied, for any borrower with a credit score of 720 or higher and who plans on putting at least 20% down toward the financing package. Major regional lenders are reporting some rates as low as 3.75%, depending on the particular market criteria, making the prospect of any prospective 30 year mortgage loan acquisition very attractive in the present lending environment.

Naturally, this current interest rate being so low is one of the major benefits for any borrower to consider regarding a fixed 30 year mortgage. However, there are a number of additional benefits to ‘locking-in’ to a long-term interest rate. All across the country there are in increasing number of families and individuals struggling to manage an already overburdened budget. Quite a few are facing job layoffs or reduced work weeks, while others are having to contemplate decreased pay rates just to keep the jobs they are lucky enough to still have. As a result of these troubling economic scenarios, the 30 year fixed mortgage can obviously provide some needed stability in an otherwise less-than-positive financial outlook for any potential home buyer. Another primary benefit aside from the attractive low interest rates is the far more affordable monthly payment, which makes the 30 year fixed loan a definite plus when compared to a lesser term loan of say a 15 year mortgage, simply by virtue of the mathematics – the shorter the term, the higher the monthly payment.

The benefits to a 30 year fixed mortgage don’t stop there either, especially when comparisons are analyzed further when a borrower examines the variable or adjustable rate mortgages, commonly referred to as an ARM. The adjustable interest rate mortgage is designed to do exactly that. Depending on the loan structure, the interest rate will be adjusted by the lending institution’s policy as set forth in the loan agreement to fluctuate, which can be every six months, every three, or every five years. With a fixed rate, a 30 year loan can provide a borrower with the security of having not only the constancy of monthly payments being the same month after month for the life of the loan, but the peace of mind and ease of maintaining a budget over the long-term as well. In addition, potential borrowers who have recently become subject to incurring less-than-favorable credit scores can also greatly benefit by a fixed rate and payment loan structure. This form of repayment stability and interest rate lock can have a remarkable affect on improving a borrower’s credit standings by permitting an easier financial management environment in which, over a period of time, refinancing an existing loan will become entirely feasible.

Choosing a 30 year fixed mortgage is a sensible option in today’s financial climate, especially when the interest rates are standing at record low levels. The old adage of being in the right place at the right time is certainly appropriate for any prospective home buyer considering making this all-important decision. It doesn’t take a degree in financial planning or economics to know when the numbers point to a good or safe bet, and a 30 year fixed mortgage, in the current market, may be the best choice a home buyer can count on with a solid measure of confidence.

# Today’s Twenty Year Mortgage Rates

The continually changing mortgage market often creates a confusing spectrum of choices for borrowers. By acquiring a general understanding of the types of mortgage products available and the advantages found in each, the consumer gains the ability to choose the best option. The 20 year fixed mortgage is available from a wide variety of financial institutions, though it is not marketed anywhere near as aggressively as 30-year fixed-rate mortgages.. The 20-year loan option provides distinct advantages over other products.

As with other fixed term loans, the interest rates on this plan will remain constant for the life of the loan. Once a payment amount is established and the loan granted, the borrower is assured that each monthly payment is identical for 20 years. On longer term loans such as a 20 year and 30 year fixed, payments during the first few years go primarily toward paying the interest. Very little of the principle is actually paid until later in the term. In many cases, additional payments early in the loan period may be applied to the principle or the entire loan may be prepaid before the end of the loan period.

The normal rule when comparing mortgage plans is that a longer term loan will typically have a higher interest rate than a shorter term. For example, a 30 year fixed loan may be available at 4%, a 20 year at 3.75%, a 15 year at 3.50% and a 10 year at 3.25%. These rates continually fluctuate but they often follow this pattern. The reason for this is that with a longer term loan the lender has the ability to collect more revenue over time, but in guaranteeing the loan for a longer period of time the lender is taking a greater interest rate shift risk. If interest rates fall the homeowner can refinance into a lower cost loan. If inflation picks up and broader financial market rates rise, the lender is stuck with the same rate they got when the loan was originated.

A borrower may save thousands of dollars in the long run by choosing a shorter term loan. The disadvantage to the borrower, however, is that the monthly payments are higher and qualifying may be more difficult. A 20 year fixed mortgage may be a good compromise for borrowers who desire a lower monthly payment than a 15 year loan offers but want the flexibility of completing the payments in a shorter time than the 30 year plans. Equity buildup from a 20 year fixed mortgage rises faster than a 30 year loan.

When interest rates are relatively low most consumers opt for the certainty of fixed-rate mortgages (FRMs). When interest rates are relatively high people are more inclined to opt for adjustable-rate mortgages which have a lower introductory rate.

Other financing options for home or real property loans include adjustable rate loans. In this case, the borrower assumes the risk of a higher payment at some point depending on market conditions. Homebuyers who do not plan to stay in the home for a long period or plan to pay off a loan quickly may decide to take the risk of an adjustable rate mortgage. Most ARM loans are hybrid ARMs, which offer a fixed initial rate for the first 3 to 7 years then after the introductory period the rate regularly adjusts every 6-months to year based upon a reference rate like the London Interbank Offered Rate (LIBOR) or the 11th district Cost of Funds Index (COFI).

Most homeowners across the United States tend to either move or refinance their home about once every 5 to 7 years. Those who are likely to move in a short period of time may want to opt for the lower adjustable-rate, whereas those who are certain of their job stability and want to settle down for life may want to lock in low loan rates on their home. Buyers who need to have a secure certain payment schedule, however, will select a fixed mortgage plan.

Several important features to remember about a 20 year fixed mortgage:

• Payments are consistent for the entire 20 year term.
• Interest rates typically lie between a 15 yr. and 30 yr. loan.
• Payments to the principle increase more rapidly than a longer term loan.

## When to Apply

Although rates fluctuate to some degree on a weekly basis, watching general trends and economic conditions allows consumers to make the right choice for financing. Selecting a fixed term loan over a variable interest rate mortgage may depend on forecasting how interest rates are expected to change. For example, during inflationary periods when interest rates jump quickly and may be unpredictable, variable rate loans could create a financial hardship for some borrowers. They may find that the lender increased the mortgage payment because the prime rate jumped. The mortgage payment may continue to rise at the discretion of the financial institution. However, variable loans may be attractive with low starting rates enabling first time homebuyers to get into a starter home. If the loan applicant realizes the risks and has plans to either refinance, move or pay off the loan before an increase they may be a valid choice.

In contrast, those borrowers holding a fixed rate are protected from an increase during economic inflation. When interest rates are at a current low trend and forecasted to increase, securing a fixed mortgage becomes an attractive option. The disadvantage is that it may be more difficult to qualify for a 20 year fixed loan than a longer term such as a 30 year fixed because of higher payments and more stringent requirements. This type of loan is a good fit for borrowers who desire low risk and can comfortably meet the qualifications.

The most ideal time to finance is obviously when the rates are lowest; however other factors such as new home purchases, refinancing due to change of job or other lifestyle upsets may make the decision immediate. Borrowers interested in refinancing hold the best possibilities of ideal timing for a new loan. If the homeowner already has accrued some equity in the property, a refinance could lower the monthly payment significantly if the interest rates have dropped since the initial sale. Although additional fees are involved in refinancing, the advantage of a shorter term loan such as a 20 year fixed over a variable or longer term may offset those costs.

## Loan Costs and Fees

Estimate your payments with this free calculator, or compare loans side by side.

Every mortgage includes some upfront closing costs for processing and to pay the expenses of writing the loan policy. When moneys are fluid, for example during an economic upturn where financial institutions have abundant resources, some loans may be advertised as free to the borrower. These loans may seem attractive to the borrower but often come at a higher interest rate than other mortgage plans. One way or another you still end up covering the bank’s costs profit margin. Typically a new loan will include a series of fees including points which are 1% of the loan amount and paid at the time of funding to secure a lower interest rate. Some lenders allow points to be amortized over the life of the loan.

The cost of obtaining a mortgage varies due to differences in financial institutions, unique regions such as states in the U.S., the amount of the loan and several other factors. The borrower’s credit history will often have a significant impact on the cost of the loan and the interest rate being offered. Larger loans such as jumbo loans often carry higher initial fees. A large down payment may reduce the mortgage cost in some cases. Refinancing costs may be slightly less than for an original loan if the same lender is used and agrees to a reduction in their fees, particularly if the borrower has maintained a good credit rating.

Fees to be considered when financing a 20 year fixed mortgage:

• Credit rating report fees: Loans are only granted after a thorough credit report has been issued and the cost of obtaining these reports is passed on to the borrower.
• Title search: Most areas require a full title search to be completed before the deed is issued even in a refinancing situation.
• Loan origination fee: These charges cover the costs of loan processing and administration.
• Prepaid interest: The borrower often needs to set aside extra cash to pay for the gap between the time the loan is granted and the first payment due date.
• Property Mortgage Insurance – PMI is an insurance policy which protects the lender in case of default. Home buyers who put less than 20% down on their home are typically required to pay PMI until the loan to value (LTV) falls below 80%.

Fees for financing a new mortgage will vary between lenders and often depend on the current economic conditions. An advantage of securing a 20 year fixed mortgage versus shorter term loans or variable plans is that the costs may be amortized over a longer period making this loan the most practical and affordable option.

# 20-Year vs. 30-Year Mortgages

It’s time for a new mortgage match-up, and because paying down the mortgage early seems to be so en vogue these days, let’s take a look at “20-year mortgages vs. 30-year mortgages.”

The most common type of mortgage is the 30-year fixed. It amortizes over 30-years, and the mortgage rate never changes during that time.

Each mortgage payment is the same every month, so there isn’t any fear of interest rates resetting higher and pushing a homeowner toward foreclosure. Pretty basic, right?

This relative simplicity and safety explains their popularity, but they aren’t the end all, be all solution for every homeowner out there. There are other options.

### 30-Year Mortgages Have Drawbacks

When it comes down it, 30-year mortgages have some drawbacks, with the most obvious one being the long amortization period. They also come with the highest interest rates relative to other loan programs.

And since the mortgage takes so very long to be paid off, more interest is paid. Think of it this way. If you borrowed money from a friend and asked to pay it back over 30 years, they would probably say no.

If by chance they agreed, they’d want to charge you a higher rate of interest. And because you’d be paying it back so slowly, you’d pay a lot more interest over that time.

Assuming your loan amount is large, it could be the difference of many thousands of dollars versus a mortgage with a shorter term.

### Look to a Shorter-Term Mortgage Like a 20-Year Fixed

So what are homeowners to do? Well, the most common solution to this ”problem” is to look at a shorter-term mortgage instead.

And while the 15-year fixed is the most common alternative, it comes with its own drawback, namely a much higher monthly mortgage payment.

In other words, not every homeowner can just say, I want to pay my mortgage off faster and switch to a 15-year fixed. It gets real expensive.

Fortunately, there are options in between, with the most common being the 20-year fixed mortgage.

A 20-year mortgage sheds 10 years off the typical loan term, and results in much less interest paid throughout its duration. The payments are also relatively manageable.

Let’s look at an example to illustrate the savings:

Loan amount: \$200,000

Monthly mortgage payment: \$954.83

Total interest paid: \$143,738.80

20-year fixed @3.75%

Monthly mortgage payment: \$1,185.78

Total interest paid: \$84,587.20

### 20-Year Mortgage Rates Are Cheaper

As you can see, the interest rates aren’t much different, though the 20-year mortgage does price a little bit lower than the 30-year fixed.

Overall, I d say that 20-year mortgage rates price about a .25% below a comparable 30-year fixed. So 3.75% instead of 4%, or 3.5% instead of 3.75%. You get the idea.

They re definitely higher than rates on a 15-year fixed.

Anyway, in our example above the homeowner with the 30-year mortgage pays about \$230 less each month, despite the higher mortgage rate.

But the 20-year mortgage results in interest savings of nearly \$60,000 over the life of the loan! This borrower would also own their home free and clear an entire decade earlier.

Doesn t 20 years sound a lot more reasonable than 30? You can actually see the light at the end of the tunnel.

This shorter term can be pretty beneficial, especially if you plan to retire soon and anticipate being on a fixed income.

The 20-year fixed is also a good alternative because you won’t break the bank making your mortgage payment each month. It s a nice middle ground between 30 years and 15 years.

But again, the monthly payment will be higher than the 30-year payment, which could stretch you thin or limit what you can afford if you’re buying a home.

### Go With a 20-Year Fixed Mortgage to Stay on Course

If you’re currently in a 30-year fixed, and don’t want to reset the mortgage clock when you refinance, consider a move to a 20-year fixed to stay on course without even paying more each month.

Because mortgage rates are so low at the moment, you may be able to refinance from a 30-year to a 20-year fixed mortgage and even lower your monthly payment.

Also keep in mind that there are other alternatives outside the 15, 20, and 30-year options.

And some banks even allow you to choose your own mortgage term, whether it’s a 17-year fixed or a 24-year fixed.

So be sure to look at all available options to determine which makes the most sense financially for your unique situation.

Also ask yourself why you want to pay the mortgage off sooner rather than later. There may be a better place for your money.

# Today’s Ten Year Mortgage Rates

A fixed mortgage rate is advantageous to a homeowner because the rate of interest for the home loan taken will not vary throughout the loan period. If interest rates fall significantly the homeowner can choose to refinance their loan. If interest rates rise their low rate is locked in for the duration of the loan.

It is a fact that most people prefer an interest rate that doesn’t change through out the entire loan period. It is also true that fixed rates are initially higher than adjustable rates. But whatever the market is subjected to, those fluctuations will not affect your fixed rate.

As inflation tends to drive up wages and asset prices the cost of the fixed monthly payment goes down in relative terms even if the nominal number does not change.

There are different kinds of fixed loans depending upon the requirement of the homeowner and how much they can afford are willing to pay. The vast majority of homeowners finance home purchases with a 30-year fixed rate. The reason most homeowners choose a 30-year term is it offers the lowest monthly payment.

Homes are typically the largest consumer lifetime purchase. Building equity faster is a great way to offset periods of poor savings or get ahead for retirement. Those who have relatively high incomes or who live in low-cost areas may choose to try to build equity and pay off their home loan quicker by choosing a shorter duration loan.

When interest rates are relatively low most consumers opt for the certainty of fixed-rate mortgages (FRMs). When interest rates are relatively high people are more inclined to opt for adjustable-rate mortgages which have a lower introductory rate.

Adjustable-rate mortgages (ARMs) offer an initial teaser rate which lasts for the first 3, 5 or 7 years then resets annually based on broader financial market reference rate like the London Interbank Offered Rate (LIBOR) or the 11th district Cost of Funds Index (COFI).

Most homeowners across the United States tend to either move or refinance their home about once every 5 to 7 years. Those who are likely to move in a short period of time may want to opt for the lower adjustable-rate, whereas those who are certain of their job stability and want to settle down for life may want to lock in low loan rates on their home.

No matter which choice a homeowner makes, provided they keep up with payments have a strong credit profile they can choose to refinance their loan at a later date if interest rates fall significantly.

### Loan Duration Options

For most people owning a house is a dream. They are ready to make any sacrifices to make this come true. Once they have made the decision to buy a house, they need to finance it. People generally prefer the lowest payment possible, but have they really thought about taking a loan for a longer period of time or have they tried to calculate the total cost of their loan? What happens if they lose their job 20 years from today? If they get laid off in a couple years, do they have enough of a financial cushion to cover payments until they find another job? Financially, you have to make some adjustments before taking such loans. Some people go for short term loans because of the lower interest rates. But they are not aware of the threat of foreclosure if they can’t keep up with the higher monthly loan payments.

Foreclosure is any homeowner’s nightmare can happen when they fail to save for emergencies. If a few loan payments are missed the bank which granted the loan can move to seize the property when the homeowners are either late or unable to pay off the loan.

The types of fixed loans available in the market are 10 year fixed rates as well as 15, 20 and 30 year fixed rates. Unlike ARM loans which can have widely swinging rates monthly payments, there is no tension for the homeowner who uses a FRM because he knows exactly what amount constitutes the interest and also the principal payments. This is why it is best to go for a fixed 10 year. Fixed rates being predictable have led to their popularity. With adjustable loans you never know what is going to happen next.

## Ten Year Mortgages

Before choosing a 10 year loan, check your assets and see if you have enough income or other assets to save yourself from the threat of foreclosure. 10 year rates are typically the lowest of all fixed rate programs. You can save a huge amount of money which you would have paid for interests of other types of loans.

### Comparing The Ten Year

Just like a 10 year takes ten years to pay off, a 15 year would take 15 years, a 20 year fixed would take 20 years and a 30 year would take 30 years to finish off. Why opt for a 10 year fixed rate when you can choose the other types? After all, you have more time to pay the amount and complete the loan. With a ten year the main advantage is the cost. The interest rate is lower when compared to a 20 year or a 30 year note, and since you are paying off the loan far quicker interest has far less time to compound – yielding additional savings.

### Hidden Costs

There are no hidden costs when you go for this type of loan. It also depends upon the organization from which you acquire your loan. Some organizations tend to ask fees for application forms and similar things. They may not mention it earlier because they want to make their costs look cheaper when compared to other organizations offering the same service. The best way to avoid this is by becoming shrewd, by reading all the fine print and checking if there are any loopholes. You will get a detailed idea of this when you go online and check the various companies and how they have maintained their rates. By checking interest rates of different companies through their websites, the possibility of hidden costs has dropped considerably. It is the duty of the customer to make sure that there are no additional costs dampening the benefits of the low interest rates.

Not all costs can be avoided, however. Closing costs can include an appraisal, an origination fee, title services, government recording fees transfer taxes and other fees. Home buyers can also purchase points upfront to pay a lower interest rate for the duration of the loan. Buyers who put less than 20% down on the home are typically required to purchase property mortgage insurance (PMI) until they have at least 20% equity in the home.

### Benefits

In times of financial crisis, you can sleep well because at least your interest rates will not skyrocket. The fluctuations in the market which impact adjustable mortgage rate loans will not affect your interest rates. Knowing that your principal and interest rates never change will facilitate the homeowner to make an easier budget schedule. Go for a fixed rate, namely the ten year one if you want the security that it provides or if you are in a hurry to pay off your home. If you can afford it, you should definitely go for it.

### Shopping for the Best Fixed Rate

There are so many websites that provide online quotes and advise you on the current rates. Since the rates vary regularly, it is better to check them regularly and go for the one that you can afford. Currently the interest rates have come down to historically low levels, encouraging homeowner’s to choose various fixed rate options.

Estimate your payments with this free calculator, or compare loans side by side.

## Disadvantages of Ten year Mortgage rates

When compared to other options, the higher monthly payments might turn off some people. But if you can afford the monthly payments there are not many disadvantages to a ten year. If you are not able to pay off within the 10 year time period, you are stuck. If you are sure you can make it within ten years, then don’t hesitate, just go for it. If you fear a turn for the worse in your financial condition within the next few years take the 20 year or even the 30 year loan, so you can be on the safe side. You could always choose to pay extra on a longer term loan to pay it off quicker.

Many people who have spare money lying around find uses for it. Opting for a shorter duration home loan is one way of forcing yourself to have the discipline to make the payments needed to quickly pay off the house.

There is no significant change in the interest rates when you compare a 10 year to a 15 year. But there is one more thing to remember when you choose a 10 year fixed rate: what happens when you take a 10 year note and are not able to pay for it? If the payment is close to maxing out your budget, to be on the safe side try to choose a 15 year and try to pay it off in 10 years by making extra payments. That way if you are not able to pay it off in 10 years you still have five years to finish off the payment. Such moves will put you in an advantageous position in cases of recession or job loss. When you approach a loan company, ask them to give amortization schedules for 10, 15, 20, 25 and 30 years. You can run any loan on this calculator click the amortization button to create a printable amortization schedule of the monthly principal interest payments. The loan companies allow you to pay off the loan amount earlier than usual. This works as a safety net for you in case you encounter problems.