What is a fixed mortgage rate and why go for it?

A fixed mortgage rate is very advantageous to a homeowner because the rate of interest for the home loan taken will not vary throughout the loan period. There are different kinds of fixed mortgage rates depending upon the requirement of the homeowner and how much he is willing to pay. 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 a fixed mortgage rate, in the beginning gives off higher interest rates when compared to the average type of mortgage loan. But whatever the market is subjected to, those fluctuations will not affect your fixed rate. This fact was comforting for those people who had to take out a mortgage during the last two years. The higher rates of unemployment, lack of timely payment for services done and price rises all carried a heavy weight on the shoulders of the homeowner. Thankfully, he doesn't have the added worry of raised home payment during those critical years.

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 take a mortgage loan. 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 mortgage loan? 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 when they get into a hurry to pay off home loans faster. Foreclosure happens when they fail to bring up funds for emergencies. Foreclosure is any homeowner's nightmare. It happens when the bank which granted you the loan moves and seizes your property when the homeowners are either late or unable to pay off the mortgage rates.

The types of fixed mortgage loans available in the market are 10 year fixed rates as well as 15, 20, 25 and 30 year fixed rates. There is no tension for the homeowner 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 mortgage. Because of this feature, fixed mortgage rates have not only become popular, they are also predictable. With adjustable home loans you never know what is going to happen next. Even though the rates are high, the homeowner can be satisfied that this wont change, no matter what happens.

Ten Year Mortgages

Before choosing a 10 year mortgage loan, check your assets and see if you have enough income or other assets to save yourself from the threat of foreclosure. This mortgage rate is 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. Sometimes, the interest rate could be double when your go for the adjustable loan rates.
Ten year Mortgage rates when compared to other rates.

Just like a 10 year Mortgage payment takes ten years to pay up, a 20 year fixed rate would take 20 years and a 30 year mortgage rate 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 mortgage the main advantage is the cost. The interest rate is lower when compared to a 20 year or a 30 year note. But this is not the deciding factor. The highlight is that if you pay off your mortgage in these few years you end up saving a lot of money.

Hidden costs of a 10 year mortgage loan

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.

The benefits of a 10 year mortgage rate and when to choose one

In times of financial crisis, you can sleep well because at least your interest rates will not skyrocket. The fluctuations in the market 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 mortgage loan, 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.

How do you select the various Fixed mortgage options?

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 an all time low encouraging homeowner's to choose various fixed rate options. Before deciding on a particular fixed rate program, get an idea of the other types of loans the loan companies provide. This is called a Two step or Premium mortgage, it gives the homeowner the best of both worlds. That is, it gives the home owner the predictability of a fixed rate as well as the interest rate for an adjustable mortgage. This adjustable mortgage rate will be fixed for a seven to ten year period and the interest rate is subjected to market conditions at the end of that period. When you compare it to a 10 year fixed mortgage rate, the interest rate of this new loan will be a bit lower than the market rate. But at the end of 7 or 10 years, you will be subjected to market fluctuations and you will have to pay interest according to market conditions, whether it is higher or lower. This type of loan is given to people who are sure to stay in their house for 7 to 10 years.

Disadvantages of Ten year Mortgage rates

When compared to other mortgage options, the interest rate will be a bit higher which might turn off some people. But there are not many disadvantages to a ten year mortgage rate. The downside factor is that the payment amount will be significantly higher than a 20 year or a 30 year mortgage. 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 nest few years take the 20 year or 25 year or even the 30 year mortgage, so you can be on the safe side.

There is no significant change in the interest rates when you compare a 10 year mortgage loan to all other types. 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. So to be on the safe side, try to choose a 15 year or 20 year fixed rate and try to pay it off in 10 years. 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. 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. The current rate for a 10 year mortgage is 4.50, an all time low.