If you are looking to pay off your loan as fast as possible with the security of a fixed rate, a 10 year fixed rate mortgage might be the best mortgage option for you. These loans have a shorter term than the 15 or 30 year mortgage, and tend to have the lowest interest rates of all the fixed rate mortgage products. Also, since the duration of the mortgage is shorter, you are likely to save thousands of dollars in interest over the life of the loan. Why don’t more people take out a ten year loan, you ask? Often, it’s because the shorter duration of the loan also means a higher monthly payment, which means more money out of pocket to repay the loan on a monthly basis.

For example, let’s say you borrow $100,000 at a rate of 5.5%, at a 15 year term. Assuming that your monthly principal and interest payment would be $817.08, the total interest paid over the life of your loan would be around $47,000.00.

Now let’s say you borrow that same amount of money on a 10 year fixed term. Your interest rate would be lower – somewhere around 5.36%. Your monthly payment would be $1,079.33, which is higher. But the total interest paid over the life of the loan would be around $29,500.00. That’s a substantial savings in interest over the term of the mortgage.

Alternative to Line Of Credit

One popular use of the 10 year home loan is as an alternative to taking out a line of credit against your house. This type of loan is called a cash-out refinance. If you have paid of most or all of your first mortgage, it may be worthwhile to consider the benefits of a second mortgage like this one. For instance, the ten year fixed mortgage will most likely have a lower rate of interest than a line of credit or an adjustable rate loan (ARM). If you are considering applying for a line of credit or a second mortgage, ask your mortgage broker to run some numbers and see if this option is right for you.

“Mortgage meltdown” not affecting the availability of mortgages today.

You hear the term “mortgage meltdown” almost every day and assume it will be tough to get a mortgage. In reality, mortgage loans are abundant with most mortgage products relatively unaffected by the recent troubles in the subprime segment. According to Tim Burke, CEO of Nationwide Lending Corporation, “mortgage money is plentiful, just the products and underwriting that allowed people to buy homes they couldn’t afford have disappeared.”

Burke goes on to say “interest rates for a 30 year fixed-rate mortgage remain close to 6% for borrowers with reasonably good credit; it doesn’t need to be perfect. Internet lending has allowed Nationwide to offer wholesale rates and fees and not compromise service”. Other than subprime, 100% loan-to-value and stated-income, there is mortgage money available to anyone with the capacity to repay the loan and ability to document their income.

More affordable home prices, combined with historically-low interest rates and a large surplus of houses, presents a great opportunity to buy. The current housing market is particularly advantageous for first-time home buyers who can benefit from a temporary $7,500 tax credit that Congress put in place and that will expire after June 30, 2009.