Understanding Fixed- Rate Mortgages

Understanding Fixed- Rate Mortgages

Fixed-rate mortgages from NYFTY Lending give new and experienced borrowers competitive interest rates and consistent monthly payments that make budgeting for a new home a breeze. 

Understanding Fixed- Rate Mortgages

What Is a Fixed-Rate Mortgage?

A fixed-rate mortgage is a home loan with an interest rate that stays the same. With a fixed-rate mortgage, you get:

Predictable monthly payments

To determine your payment amount, your loan total is divided by the number of months in your term, so your payment is the same each month.  

Protection from future interest rate increases

You’ll pay the same amount at the end of your loan that you did at the beginning. You never have to worry about your interest rate getting higher, even when the market changes 

Flexible term lengths

Term lengths for fixed-rate mortgages can range between 10 to 30 years, and you can choose which best fits your financial circumstances.

What Can a Fixed-Rate Mortgage Be Used For?

Primary residence

Fixed-rate mortgages are great for people who are buying their first home or are looking to move to a new area.  

Second home

Since your payment amount never changes, using a fixed-rate mortgage to purchase a second home makes keeping up with double loan payments easier. 

Rental properties

Buying a rental property with a fixed-rate mortgage makes it simple to calculate the exact amount of rent to charge tenants each month.

NYFTY Lending Loan Pros

Pros

  • Stable monthly payments
  • Interest rate stays the same
  • Multiple term lengths available
  • Straightforward qualification criteria
  • Good for long-term financial planning
NYFTY Lending Loan Cons

Cons

  • Your repayment plan is a long-term commitment
  • You may have higher initial payments than with an adjustable-rate mortgage
  • Your interest stays the same even if market rates go down

Talk to our mortgage experts today about finding the right loan for you.

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Alternatives to a Fixed-Rate Mortgage

Interest Only Mortgages

  • Interest-only mortgages let you pay only the interest at the beginning of the loan
  • Principal payments start later
  • These may also be refinanced after the payment amount goes up
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Adjustable-Rate Mortgages (ARMs)

  • ARMs have an initial 5 to 10 year fixed-rate period
  • Then, the interest rate can be adjusted to reflect market conditions
  • You may be able to refinance to a different loan later on
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FHA Loans

  • FHA loans backed by the Federal Housing Administration
  • They offer competitive interest rates and flexible down payment requirements
  • They can be used to buy multi-family homes with up to 4 units if the borrower lives in one of the units
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How Do I Know If Down Payment Assistance Is Right for Me? 

You want stability and predictability in your mortgage payments. 

With a fixed-rate mortgage, your payment amount stays the same throughout the entire loan term.  

You don't want to worry about whether interest rates will go up in the future. 

Regardless of future economic conditions, a fixed-rate mortgage protects you from payment increases that could strain your budget.   

You plan to stay in your home for an extended period of time.

Fixed-rate mortgages are great for owners who plan to stay in their homes long enough to accumulate equity.

When Is the Best Time to Use a Fixed-Rate Mortgage? 

The best time to use a fixed-rate mortgage is when interest rates are favorable and you want to lock in a consistent monthly payment for the life of your loan. Whether your mortgage term is 10, 15, or 30 years, the amount of principal and interest you pay remains consistent the entire time. This type of loan provides protection against potential market fluctuations in the future, which can be a significant advantage for people with fixed incomes and those who plan to stay in their home for a long time.

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FAQ

Fixed-rate mortgages are typically available to borrowers with traditional income, good credit history, and a manageable debt-to-income ratio. Employment history and other credit obligations may also affect eligibility.
How much you can expect to pay in interest for your fixed-rate mortgage depends on several factors, including some that are specific to your circumstances, like:
  • Your credit score and history
  • The current interest rate
  • The amount of your loan
  • How long your loan term is
  • Your down payment amount
  • Your overall financial profile
If the market interest rate decreases after you get a fixed-rate mortgage, your interest rate will still stay the same as when you signed for your loan. If you want to change your interest rate at any point, you’ll need to refinance.
FHA loans require a special appraisal that evaluates the condition of the property you want to purchase. This confirms the property value and makes sure it meets federal guidelines. While this is similar to a property inspection, it’s not the same and borrowers generally need to have both.
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