10 year fixed refinance rates

Freddie Mac doesn’t track 10-year refinance rates specifically. In general, though, 10-year refinance rates are slightly lower than refinance rates for 15-year loans.

The average rate for a 15-year loan has run below 3% since the beginning of the COVID-19 pandemic, and 10-year refinance rates have naturally remained just below that threshold.

While 10-year refinance rates are currently in an uptrend, they still remain below their pre-pandemic average.

Assuming you have an excellent credit score (usually 740 or higher) and can qualify for the lowest rates, a good 10-year refinance rate might be around 2.5%. For fair to good credit (600s to low 700s), your rate might be closer to 3%.

Mortgage rates remain near record lows, though, so while you might not receive the best rate with a lower credit score, a 10-year refinance rate at around 3% is still a relatively good rate.

As 10-year refinance rate trends are shifting higher, it’s vital to compare rates from multiple lenders to ensure you’re getting the best possible rate. You can quickly compare personalized rates, monthly payments, and fees with Credible in just a few minutes. Checking your refinance rates and terms with us is free and won’t affect your credit score.

Several economic and personal factors influence your mortgage rates. The 10-year Treasury bond yield is one of the most significant variables as rising yields tend to indicate higher refinance rates.

Other economic factors that can also cause mortgage rates to increase, decrease, or stay the same include the unemployment rate, inflation rate, and general mortgage demand.

While you cannot control every factor that determines current mortgage rates, you can take several steps to qualify for a lower rate:

• Credit score: Lenders usually require you to have an excellent credit score — 740 or higher in most cases — to be eligible for the best rates. You can still qualify for a competitive rate if your score is in the upper 600s to lower 700s. Find out ways to improve your credit score before applying.

• Debt-to-income ratio (DTI): An ideal DTI is 36% or less, but you might be able to refinance into a conventional loan with a DTI of 50%.

• Repayment term: Shorter repayment terms usually have the lowest interest rates. A 10-year loan may offer the best fixed interest rates, while a 30-year loan will usually have the highest.

• Closing costs: Rolling some of your origination fees into the refinance loan can increase your annual percentage rate (APR).

• Down payment: Similar to a home purchase, mortgage lenders require a loan-to-value ratio (LTV) below 80% to waive private mortgage insurance (PMI). A lender will typically require you to order a home appraisal to determine that your home value is sufficient.

• No cash out: A conventional refinance typically has lower rates than a cash-out refinance — but you won’t be able to tap your equity and receive a lump sum of cash.

• Adjustable rates: You might qualify for a lower rate if you apply for an adjustable rate mortgage (ARM). These typically offer lower initial rates than fixed-rate loans. However, if the rate rises following the fixed introductory period, you’ll still be expected to make those higher payments.

A 10-year and 20-year mortgage can both offer favorable rates and terms. However, you’ll need to consider your own circumstances to come to the best decision.

For example, a 20-year refinance loan will have smaller monthly payments as you’ll have an extra decade to repay the loan. But you’ll also pay a higher interest rate and, in turn, more interest over the life of the loan.

Compare that to a 10-year refinance loan. These loans are lower but require a more substantial monthly payment due to its aggressive repayment schedule. Your lender may require a lower debt-to-income ratio as well to ensure you can afford the higher payments.

Here’s an estimate of what your new monthly payment and total interest savings might look like on a $200,000 loan for a 10-year term vs. a 20-year term.

This table shows how 10-year refinance rates compare to shorter and longer terms with a $200,000 loan balance ($600,000 for jumbo mortgages).

In addition to looking for the lowest interest rate, you should also compare your monthly payments. You may want to choose the highest payment that you can comfortably afford to minimize your lifetime interest costs.

However, it’s also important to weigh your other financial priorities. Refinancing to get a lower rate and monthly payment but keeping the same repayment term can be sufficient if you simply want to free up more cash for other expenses.

A 10-year fixed-rate loan differs from a 10/1 ARM. Essentially, you’re comparing a 10-year loan vs. a 30-year loan with different repayment terms.

If you refinance into a 10-year fixed-rate loan, you’ll enjoy the same monthly payment for 10 years and pay off your loan after 120 monthly payments.

Refinancing into a 10/1 ARM, on the other hand, provides a fixed interest rate for the first 120 monthly payments (10 years), before the rate adjusts annually for the remainder of the term (usually 20 years).

10-year fixed-rate loan pros and cons

If you can comfortably afford the higher monthly mortgage payment, refinancing into a 10-year fixed-rate loan might be your best option as a homeowner.

Pros

• Typically have the lowest rates among all fixed-rate mortgages

• Lower lifetime interest costs

Cons

• Higher monthly payment

• You cannot extend the repayment term

10/1 ARM pros and cons

Refinancing into an ARM can be an excellent option if you intend on selling your house within the first 10 years but want to take advantage of current low rates while you own the property.

Pros

• Potentially lower initial interest rate (compared to a 30-year fixed-rate loan)

• Longer fixed-rate period

Cons

• Interest rates adjust annually after 10 years

• Your plans to sell or refinance the home may change