Mortgage - Home Mortgage

Mortgage Rate
10 Year Home Mortgage Rate

The rate of interest on a home mortgage is usually determined by the amount of time it will take the homeowner to pay off the mortgage. If it will take ten years to pay off the mortgage, the interest rate is called the 10 year home mortgage rate.

The longer it will take the person to pay off the mortgage the lower interest rate they will pay. The shorter the length of time required to pay off the mortgage the higher interest rate that will be charged.

The interest rate determines what the mortgage payments on a home will be. This means that the mortgage payments on a home with a ten year mortgage are usually much higher than those on a home with a twenty or thirty year mortgage.

Ten Year Mortgages

Mortgages with a ten year rate are not very common because the payments on such a mortgage usually exceed the average homeowner’s ability to pay. The majority of mortgages have twenty or thirty year terms because they are what the average home owner can afford.

Sometimes, ten year mortgages are issued to those with less credit or those buying property for investment purposes. The mortgage industry charges such buyers higher interest because it takes a greater risk when lending to such persons.

How a Mortgage Rate is Determined

The mortgage rate is usually determined by the homeowner when they first take out a mortgage. Online mortgage lenders usually make a mortgage calculator available to borrowers on their website. This calculator shows the borrower what payments they will make with different interest rates. The borrower then chooses the interest rate that they want.

Advantages of a Ten Year Mortgage

The biggest advantage to a ten year mortgage is a very obvious one: it will be paid off in a much shorter time. This means that the buyer will own the house in about ten years. That could give a person with enough money to pay off such a mortgage clear title to their home in less than ten years.

Another advantage to a ten year mortgage is that the borrower will have more equity in their home available to borrow against in a very short period of time. Equity determines the amount of money that a person can borrow against their home in addition to the mortgage. The amount of equity is usually calculated by subtracting the amount owed on the mortgage from the value of the home. If a home is worth $500,000 and the amount owed on the mortgage is $300,000, the amount of equity is available is $200,000.

This means that a person with a ten year mortgage will be able to take out additional mortgages on the home sooner than under normal circumstances. Ten year home mortgage rates are often advantageous to those with the financial resources to pay off a ten year mortgage.