Refinancing with 10 Year Mortgage Rates

by Stacy
(Galloway, New Jersey, USA)

Ask Kate about refinancing with 10 year mortgage rates: Kate, I've learned more from you in minutes than I have in years about mortgage loans. I have $81,000 left on a 15 year fixed rate mortgage at 5.5 percent.
Stacy continues... We don't plan on moving and have waited out for rates to drop. We want lower payments with a better rate and I think we can get both. Should we go with a 10 year fixed? That is what we are thinking.

Kate Answers: Refinancing with 10 Year Mortgage Rates

***zz-portrait-left.shtml*** Dear Stacy, Thanks for the kind words.

My website is a labor of love so it's fulfilling to hear from Readers that it is of assistance. Thanks!

Cutting 5 years from the pay-off of your mortgage seems like a good deal but let's examine it further. Refinancing is a big-ticket purchase so you should compare a refinance with 10 year mortgage rates to your existing 15 year fixed rate mortgage.

You'll be using my mortgage payment calculator in just a moment to make a comparison. It will open in a new window so you can toggle back and forth.

As I do not have all of the details to your current home loan, I'll give you some pointers. Play around with the numbers and see what you come up with.

Comparing Mortgage Amortization Schedules

How many years are you into your current 15 year mortgage? I ask because if a good portion of your monthly house payments are going toward principal instead of interest, you will want to compare that to a 10 year amortization schedule.

You will use my mortgage payment calculator to do this in a moment.

Now if you stick with the 10 year mortgage until it's paid off, this isn't much of a factor. But we all know life throws curve balls. Even with the best intention or well thought out plans, you may need to refinance or buy another house in the future.

If so, starting over on the pay-off, even with a shorter 10 year term, may not be in your best interest if you are already into the stage of rapidly paying off principal on your 15 year home loan.

You will find my instructions to using the calculator and amortization schedule here and my actual mortgage rate calculator here.

Comparing Monthly House Payments

Secondly, although it might seem a simple comparison, are you sure your monthly house payments will decrease? I realize lower interest rates can offset a shorter term. But when you are using my calculator to determine a payment, don't forget two things.
  1. Add mortgage closing costs to your current pay-off, not your principal balance. Your mortgage professional should be able to estimate a pay-off for you.

  2. Secondly, don't forget to add property tax and homeowner's insurance to the 10 year mortgage payment if they are paid monthly now.

Celebrate 10 Year Mortgage Rates

Good luck. If the 10 year mortgage works out for you to own your home free and clear in one more decade, CELEBRATE! I'm excited just thinking about it.

Here are the links to my tutorial on using the calculator and amortization schedule again and the actual mortgage rate calculator.

Comment and Link To This Page

Stacy, one more thing. Is this page is helpful to you? I'd like to hear back from you.

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Best wishes,

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