To choose the right mortgage loan, it’s important to understand the “fixed rate mortgage” definition. This type of loan has several advantages, including predictable monthly payments and long repayment terms. However, a fixed rate mortgage might not be right for everyone.
Here is a quick guide to understanding this type of mortgage:
When comparing mortgages, you’ll encounter fixed rate mortgages and adjustable rate mortgages. As the name suggests, the interest rate of an ARM adjusts with market fluctuations, but the loans are offered at low introductory rates for a limited time period.
ARMs usually have introductory rates lasting anywhere from one to five years. Once the introductory period ends, your interest rate will increase with a cap of to 2% per year, or 5% over the lifetime of the loan.
Compared to fixed rate mortgages, ARMs are more complex loan programs and typically better for borrowers who have less intention of staying in the same home for an extended period of time.
Fixed-rate loans are incredibly affordable because of the predictable nature of their repayments. While the homeowners coverage and taxes may vary, your mortgage payment will remain the same. This affects your budget for the rest of your month, and plays a major part in your financial planning.
Besides reducing the risk of default on fixed-rate loans, your loan rate remains constant. Whatever your rate is, the amount you paid will remain unchanged when you took the loan. Often, these rates are higher than they would be for an ARM.
Fixed-rate mortgages can be repaid during a predetermined amount of time. They are usually offered as 30-year home loans, giving you a maximum of 30 years to pay the full amount.
This may seem like a long time, but the extended timeline is one thing that ensures a lower monthly mortgage payment.
There are other options available, such as a 15-year mortgage. These can work well if the borrower has sufficient cash to pay the loan more quickly while still taking advantage of the fixed interest rate.
Nicolette is a full-time licensed real estate agent working with residential and commercial buyers, sellers, and renters. Growing up in Eastchester, graduating from Marist College and branching out to Manhattan before returning to her roots has created deep ties to Westchester while understanding what a NYC buyer wants when relocating to the suburbs.
Bringing nearly a decade of extensive experience in sales, interior design, marketing, and customer service from her Manhattan career while working with esteemed companies such as Elle Décor Magazine and various companies under the Herman Miller brand, Nicolette encompasses an effective fusion of suburban warmth and city tenacity. Her enthusiasm for helping others combined with her determination to close deals helps her simultaneously connect her with clients on a personal level while conducting business in the most professional of ways. It’s this connection that leads to a seamless and successful Real Estate transaction.
When not working, Nicolette enjoys spending time with her family, friends, and puppy. Professionally, she prides herself using those same personal values of loyalty, honesty, attentiveness, and being detail-oriented. She values all client relationships and makes it her goal to provide exceptional service and guaranteed satisfaction. Her intimate knowledge of the area, having lived in Westchester all her life, gives her enthusiasm and a desire to make her home, your home.
In July 2015, Berkshire Hathaway Home Services (BHHS) acquired Tri-Crest Realty and Prudential Centennial Realty and has been one of the most successful offices in lower Westchester County since 2000. With over 1,800 Realtors in 55 offices in the Northeast and 51,600 agents in 1,600 offices in 47 states nationally, BHHS is the #2 company in Barron’s ranking of the world’s most respected companies; ranking #3 in Fortune Magazine’s 50 Most Admired Companies survey.