What is a Fixed-Rate Mortgage Loan?

A fixed-rate mortgage loan is a loan with the same interest rate throughout the entire life of the loan, which is usually 15 or 30 years. It can be FHA, Conventional or VA loans. Your monthly P&I payment – your principal plus your interest – stays the same. Each month, you pay off some of the principal balance. This means, next month, your principal balance is lower. More of your monthly payment is being paid towards the principal, and less is being paid towards the interest.

Although the interest rate stays the same, it tends to be a little higher than those for adjustable-rate loans. A term for 30 years is most common, because the monthly payment is lowest.

Who Should Consider a Fixed Rate Loan?

Because your monthly P&I payment is constant, this loan works well for those who plan to stay in their home for an extended period of time.

If You Own or Finance Numerous Properties…

Don’t worry. You can own a total of four financed, 1 – 4 unit, residential properties, including your subject property – no matter the occupancy.

However, any financed properties aside from the subject property require six months of principal interest, taxes and insurance (PITI) or reserves for each property.

You can own, but not finance, an unlimited number of properties.

Note:

Financed properties held in the name of an LLC or other corporation can be excluded from the number of properties financed only in cases where the borrower is not personally obligated for the mortgage.

Your Property is Ineligible for a Refinance or Cash-Out Refinance If…

…it was listed for sale within the previous six months of the date you apply.
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