20 September 2010
And that’s $6,900 for every $100,000 in mortgage. It means if your mortgage is $300,000, then during the first 60 months you’ll overpay $20,700 just to feel secure.
The fact is that there are not so many cases when this kind of term is really necessary. Moreover, 10-year terms turn out to be more profitable than two consecutive 5-year terms only one out of 10 times.
And the only thing that can change this situation is a 3.55% increase of 5-year rates. Of course, it will imply a roughly 3.55% leap in bond yields and it’s really unlikely.