Benefits of a 10 Year Mortgage
10 Year Fixed Rate Mortgage
$200,000 Loan Amount
Note Rate of 4.000%
Monthly Principal and Interest Payment: $2,024.90
Estimated Interest Paid Over 30 Years: $42,988.33
Interest Saved Vs. 30 Year Fixed Mortgage = $143,232.24
Interest Saved Vs. 20 Year Fixed Mortgage = $70,485.29
Interest Saved Vs. 15 Year Fixed Mortgage = $27,831.90
30 Year Fixed Rate Mortgage
$200,000 Loan Amount
Note Rate of 5.000%
Monthly Principal and Interest Payment: $1,073.64
Estimated Interest Paid Over 30 Years: $186,511.57
20 Year Fixed Rate Mortgage
$200,000 Loan Amount
Note Rate of 4.875%
Monthly Principal and Interest Payment: $1,306.14
Estimated Interest Paid Over 30 Years: $113,473.62
15 Year Fixed Rate Mortgage
$200,000 Loan Amount
Note Rate of 4.250%
Monthly Principal and Interest Payment: $1,504.56
Estimated Interest Paid Over 30 Years: $70,820.23
The examples above show the potential for interest savings over the life of the various loan programs when compared to a 10 year fixed rate mortgage. It also illustrates how much higher the monthly principal and interest payments are with each product. Rates and terms may vary by lender so be sure to speak with a licensed mortgage professional to verify the accuracy of the aforementioned example and to request current rate information. Another way to knock years of your mortgage and save interest is to make additional principal reduction payments periodically thus paying off your principal balance in a shorter window of time. Making an extra principal payment every year could knock years off the life of your mortgage. Borrowers do need to consider that some mortgages have prepayment penalties and that they should ask their mortgage professional if there are any prepayment penalties associated with their mortgage products before making a decision. Certain states do not allow prepayment penalties on first mortgage programs.
While a ten year mortgage may not be realistic for many homeowners, those who can qualify and afford the higher payments will likely see large savings in the long run. Contact your mortgage professional for a rate quote and debt-to-income analysis to see if a 10 year mortgage is the right fit for you.
Benefits of a 10 Year Mortgage
By: Nat Criss
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