Comparing a 3.98% two-year fixed mortgage quote in New York

[noor_taxes]

3.98% only lasts for two years, which is the part making this $305,000 New York purchase difficult to assess. The quote looks manageable over 24 months, but I am not comfortable treating a future refinance as the plan.

A broker expects refinancing to be possible. The counterexample I keep coming back to is a lower property value or changed finances leaving me in a worse loan-to-value bracket when the fixed period ends. In that case I would face the reset terms rather than the replacement loan I had expected.

Should I compare the payments and lender charges over the first two years, then run a separate case in which refinancing is unavailable? I’m also checking the balance remaining at month 24, early-payment costs and whether any portability wording has practical value.

 

[noor_taxes]

My main difficulty is choosing the comparison period. Two years makes the quote look attractive, but a longer horizon requires assumptions about the reset rate, refinancing costs and whether I would qualify again. I am leaning toward comparing both a 24-month case and a no-refinance case. Is there a better way to stress-test it?

 

[yuki_hope]

Use both. For the first 24 months, add the payments and every lender fee, then note the remaining principal balance. Separately, model what happens if refinancing is unavailable and the rate resets. APR is useful for an initial screen, but it may not represent your actual holding period or the risk after the fixed period.

 

[RealHorizon]

Before comparing anything, ask exactly what “fixed for two years” means here. What determines the rate afterward, when can it first change, and are there limits on later changes? Also ask the lender to explain “portability” in writing rather than assuming it works as it might in another mortgage market. Those details could matter more than a small difference in fees.

 

[photosAndThread]

I would not dismiss APR quite so quickly. A custom spreadsheet can accidentally favor whichever future assumptions you choose, while APR at least gives a standardized comparison point. I would shortlist on APR, then compare total cash cost over 24 months and monthly affordability under a higher post-fix payment. A loan that is cheapest on paper is not necessarily comfortable after the reset.

 

[kai_rents]

Get each lender to provide the same inputs: rate, all upfront lender charges, loan amount at your actual loan-to-value tier, payment during the fixed period, balance after two years, reset method, and any early-repayment restriction. Then run three columns: keep the loan, refinance after two years, and sell or repay early. Treat refinancing as an option, not the base case.