Can You Refinance To A 10 Year Mortgage

To Take Advantage Of A No

A “no-cost” mortgage loan does not exist, so be careful when you see such an offer. There are several ways to pay for closing costs and fees when refinancing, but in every case, the fees are paid in one way or another. In other words, homeowners can pay cash from their bank account for a refinance, or they can wrap the costs into their loan and increase the size of their principal.

Another option is for the lender to pay the costs by charging a slightly higher interest rate or including closing points. You can calculate the best way for you to pay the costs by comparing the monthly payments and loan terms for each scenario before choosing the loan that works best for your finances.

To Take Cash Out For Investing

Even when the stock market isn’t rocky, this is not a generally good idea. The problem with cash is that it is too easy to spend. If you are disciplined and will truly use the extra money to investor to build your emergency fundthis can be a good option. However, paying down a mortgage at 4% per year can be a better deal than plunking your cash into a CD that earns 2% every year. Make sure you are a savvy investor who understands both the risks and potential upside before playing with the equity in your home.

Refinance To Access Home Equity As Cash

As you pay off your mortgage, you’ll gradually build up equity in your home. Your home equity is calculated by taking the current value of your home, then subtracting from that your outstanding mortgage amount. Many lenders will allow you to borrow from them, using your home equity as security for the loan – this is what accessing your equity is all about.

If youâre considering a refinance to access your home equity, youâre not alone. According to the Canadian Association of Mortgage Professionals, last year 10% of Canadian mortgage holders accessed an average $49,000 of equity from their homes. The large majority of this equity was used for debt consolidation or home renovation.

If refinancing for equity, the first thing you want to determine is the maximum amount of equity you can access. In Canada, mortgage holders can access a maximum of 80% of their home’s value, less any outstanding mortgage balance. Unfortunately, accessing this equity comes at a cost â your lender will change you a penalty for breaking your mortgage early. Use Ratehub.caâs refinance calculator to determine your maximum equity and the corresponding penalty. If youâre refinancing in a falling interest rate environment, you may be able to take advantage of interest savings as a bonus.

Don’t Miss: How Much A Month Would A 200k Mortgage Cost

Where Can I Find A 10year Fixedrate Mortgage

Most lenders dont offer 10year fixed mortgages. A whole lot of them only give you a choice between 15year and 30year loans.

But that doesnt mean these are hard to find.

To give just a few examples, the following major lenders offer 10year mortgages:

• Quicken Loans offers a YOURgage product that lets you choose any term between eight years and 29 years
• New American Funding has mortgage terms ranging from 1030 years
• US Bank offers 10year fixed mortgages if you prefer a large mainstream bank
• Crestline Funding has a MyFi product that offers terms from five to 40 years. However, its licensed to lend in only 11 states: Alaska, Arizona, California, Colorado, Florida, Idaho, Montana, Oregon, Utah, Washington, and Wyoming

This is just a shortlist. There are plenty of other lenders offering 10year mortgages you just might have to do a little extra research to find them.

If you dont want to tackle the job on your own, consider enlisting the help of a mortgage broker who can find 10year loans and compare lenders on your behalf.

Can You Refinance A Jumbo Loan

A jumbo loan is also called a non-conforming loan, since it doesnt conform to the loan limits established by Fannie Mae and Freddie Mac. For 2021, thats $548,250 for a single-family home. Jumbo loan rates are typically higher than refinances for conforming loans.

It is possible to refinance a jumbo loan, but youll likely have to meet higher qualification standards than you would to refinance a conventional loan. Requirements may include …

• A good to excellent credit score and clean credit history
• A debt-to-income ratio much lower than ones required for conventional loans
• Six months to a year of cash reserves

You may need to provide extra documentation to verify your income and overall financial situation. And, as with any refinance, youll have to pay closing costs, which can be significantly higher for a jumbo loan.

Credible also has a partnership with a home insurance broker. You can compare free home insurance quotes through Credible’s partner here. It’s fast, easy, and the whole process can be completed entirely online.

Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at and your question might be answered by Credible in our Money Expert column.

Also Check: Are Mortgage Rates Going Down Again

Compare Rates From Our Lenders

How it works

Checking rates wont affect credit score

What Credit Score Is Needed To Refinance

Borrowers with credit scores of 620 or greater may be eligible to refinance their home, but credit scores of 740 or higher receive the most favorable refinance interest rates. The higher your credit score the lower your refinance interest rate, so it’s beneficial to have a healthy credit score.Calculate your estimated savings at varying interest rates to see if it’s worthwhile to wait and improve your credit score before refinancing.

Read Also: What Is Mortgage Rate Vs Apr

Refinancing To A Fixed

Refinancing can be done for many reasons, but switching from an adjustable-rate mortgage to a fixed-rate mortgage is one of the most common.

The general rule of thumb is that refinancing to a fixed-rate loan makes the most sense when interest rates are low. While no one can predict whether rates will go up or down in the future, many homeowners are currently taking advantage of todays low rates to refinance from their adjustable-rate mortgage to a new fixed-rate mortgage. If youre among those who are considering this move, here are some points to be aware of.

To Move Into A Longer

While refinancing into a mortgage with a lower interest rate can save you money each month, be sure to look at the overall cost of the loan. For instance, if you have 10 years left to pay on your current loan and you then stretch out the payments into a new 30-year loan, you will end up paying more in interest overall to borrow the money and be stuck with 20 extra years of mortgage payments.

Recommended Reading: Is A Timeshare Considered A Mortgage

How To Get Your Lowest Mortgage Refinance Rate

If youre interested in refinancing your mortgage, improving your credit score and paying down any other debt could secure you a lower rate. Its also a good idea to compare rates from different lenders if you’re hoping to refinance, so you can find the best rate for your situation.

Borrowers can save $1,500 on average over the life of their loan by shopping for just one additional rate quote, and an average of $3,000 by comparing five rate quotes, according to research from Freddie Mac.

Be sure to shop around and compare rates from multiple mortgage lenders if you decide to refinance your mortgage. You can do this easily with Credibles free online tool and see your prequalified rates in only three minutes.

Dont Forget About Retirement

Hows your retirement fund? Check on this and see if youre currently contributing enough. Instead of refinancing to a 15-year mortgage, you may be better off putting more money toward a 401 plan or an IRA account.

You also want to make sure youre maximizing your tax benefits in these and other types of programs, like health savings accounts and 529 college savings accounts. Compared to these plans, paying down a low-rate, potentially tax-deductible debt like a mortgage is a low financial priority.

Read Also: How Can You Have Two Mortgages

Alternatives To A 10year Fixedrate Loan

Lets say youre sold on the idea of being mortgagefree within 10 years.

New home buyers have little choice but to go for a 10year term on a new mortgage.

Or, if youre already a homeowner, you have the option to refinance your current mortgage to a new 10year loan with a lower rate.

But there are other ways to pay off your mortgage quickly that dont involve the hassle and costs of a new mortgage or refinance.

Pay extra on your mortgage to pay it off early

This is easy. All you do is pay extra on your mortgage above the required payment each month.

To make this strategy worthwhile, youll need to pay substantially more as much as you can afford each month, probably.

This strategy is less risky than committing to the 10year mortgage.

The extra payments are optional. If circumstances change, you simply stop paying extra. With a 10year loan, youre obligated to make the full payment, or suffer damaged credit and the potential loss of your home.

Plus, paying extra is easy. Most lenders understand that any extra funds received should be applied to principal. But its worth checking how they will apply extra funds just in case.

While youre chatting with your lender, make sure your mortgage doesnt have prepayment penalties.

These are fines for paying down your mortgage early. True, most lenders no longer charge them. But its worth making sure your lender wont ding you before you start making extra payments.

Make one extra mortgage payment per year

Nerdwallets Mortgage Rate Insight

On Thursday, November 25th, 2021, the average APR on a 30-year fixed-rate mortgagefell 1 basis point to 3.119%. The average APR on a 15-year fixed-rate mortgagefell 1 basis point to 2.408% and the average APR for a 5/1 adjustable-rate mortgage rose 4 basis points to 2.821%, according to rates provided to NerdWallet by Zillow. The 30-year fixed-rate mortgage is8 basis points higher than one week ago and9 basis points higher than one year ago.

A basis point is one one-hundredth of one percent. Rates are expressed as annual percentage rate, or APR.

Recommended Reading: What Do I Need To Become A Mortgage Broker

Taking A Lower Interest Rate

Have interest rates lowered since you got your refinance? You may want to refinance again to take advantage. You can almost always save money if youre able to lower your interest rate without changing the term of your loan.

Just a small change in your interest rate can save you hundreds, or even thousands, of dollars. For example, lets say you currently have a 20-year mortgage loan with $150,000 left on your principal and you pay an interest rate of 4.5%.

You have the chance to refinance your loan with the same terms and an interest rate of 4% APR. If you dont refinance, you pay $77,753.84 in interest by the time your loan matures. If you take the refinance, you pay $68,152.95 total in interest. Lowering your rate just 0.5% means youll save over $9,601 in interest.

Sage Mortgage Best Broker

Established in 2020, Sage Mortgage is an online mortgage broker licensed in 20 states, able to connect you with the best rates and loan terms based on your situation. The broker is owned by Red Ventures, parent company of Bankrate.

Strengths: As a mortgage broker that works with several wholesale lenders, Sage Mortgage is able to offer competitive rates, and you can get a custom quote in less than a minute online.

Weaknesses: Sage Mortgage isnt licensed everywhere, so youll need to confirm availability, or potentially work with another broker.

Read Bankrate’s full Sage Mortgage review

Also Check: Can You Refinance A Usda Mortgage

What Are The Benefits Of A 10

The major benefit of taking out a 10-year fixed-rate mortgage is that homeowners can pay off their loan much faster than other loan terms. Since rates may be lower than a 20- or 30-year term and because homeowners are making fewer payments, borrowers will save the most money on interest with a 10-year term. Plus, homeowners will be able to build equity much faster.

For instance, a $300,000 30-year mortgage with a 20% down payment and an interest rate of 3.5% will end up paying $147,974.61 in interest. If you take out a 10-year loan with the same interest rate and the same loan amount, youll end up paying $44,791.30 in interest, a $103,183.31 difference. However, the monthly payment for the 30-year term is $1,077.71, compared to $2,373.26 for the 10-year loan. These financial considerations need to be carefully thought out before making such a major decision.

What Is The Average Cost Of A Refinance

Refinancing a mortgage can yield significant interest savings over the life of a loan. But all those savings dont come for free. Generally, youll encounter costs $5,000 on average, according to Freddie Mac when refinancing your mortgage.

Your exact refinancing costs will depend on multiple factors, including the size of your loan and where you live. Typical refinancing costs include:

• The cost of recording your new mortgage
• Appraisal fees
• Lender fees, such as origination or underwriting
• Title service fees
• Mortgage points
• Prepaid interest charges

Keep in mind theres no such thing as a truly no-cost refinance. Lenders who market “no-cost loans” typically charge a higher interest rate and roll the costs into the loan which means youll pay more interest over the life of the loan.

Credible is also partnered with a home insurance broker. If you’re looking for a better rate on home insurance and are considering switching providers, consider using an online broker. You can compare quotes from top-rated insurance carriers in your area it’s fast, easy, and the whole process can be completed entirely online.

Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at and your question might be answered by Credible in our Money Expert column.

Recommended Reading: How To Shorten Your Mortgage Term

How Low Are 10year Mortgage Rates

10year fixed mortgage rates tend to be significantly lower than 30year fixed rates .

A survey of multiple lenders1 at the time of writing showed 10year rates ranging from 0.3% to 0.7% lower than 30year rates. On average, 10year mortgage rates were about 0.50% lower than 30year mortgage rates.

For example, say 30year rates are averaging around 3.25%. Average interest rates for a 10year loan might be 2.75%. But theyd likely range from 2.5% to 3.0% and could vary more depending on the borrower.

On average, 10year mortgage rates were about 0.50% lower than 30year mortgage rates.

Of course, interest rates vary a lot from one borrower to the next.

Your own rate could be higher or lower depending on your credit score, loan amount, down payment, and more.

Thats why its always important to shop for the lowest rate. With a 10year mortgage, shopping around is doubly important because not all mortgage lenders offer these loans.

Youll have to search out a few that do in order to compare interest rates and find the best 10year mortgage rate for you.

How To Decide If Refinancing To A 15

Should you refinance to a 15-year mortgage? Again, that depends on your situation. If youre trying to save money right now, youll want to compare costs and do the math to make sure youre actually going to accomplish that especially if you dont plan on staying in the home for a long time. If youre looking to save money in the future and plan on living in your home for many years to come, refinancing to a 15-year may be a good option for you.

Here are a few ways decide.

Recommended Reading: How Much Would My Mortgage Payment Be

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.