What type of mortgage has a constant interest rate and payment amount throughout the loan term?

What type of mortgage has a constant interest rate and payment amount throughout the loan term?

• A. Adjustable-Rate Mortgage
• B. Fixed-Rate Mortgage
• C. Interest-Only Mortgage
• D. Graduated Payment Mortgage

Answer: (B)

A fixed-rate mortgage is characterized by a constant interest rate and a consistent payment amount throughout the entire term of the loan. This means that the borrower can predict their monthly payments without concern for fluctuations in interest rates or payment amounts, which provides financial stability and easier budgeting. In a fixed-rate mortgage, the interest rate is locked in at the time of closing, ensuring that regardless of market changes or inflation trends, the payments remain stable. This structure is particularly appealing to homeowners who value predictability in their housing costs. Other mortgage types, such as adjustable-rate mortgages, feature rates that can change at specified intervals, leading to variable monthly payments. Interest-only mortgages allow the borrower to pay only the interest for a certain period, resulting in changing principal balances and payment amounts later. Graduated payment mortgages start with lower payments that increase at set intervals, which implies variability in payment amounts rather than a constant payment structure. Thus, the fixed-rate mortgage is distinct in offering stability throughout the loan's life.

A fixed-rate mortgage is characterized by a constant interest rate and a consistent payment amount throughout the entire term of the loan. This means that the borrower can predict their monthly payments without concern for fluctuations in interest rates or payment amounts, which provides financial stability and easier budgeting.

In a fixed-rate mortgage, the interest rate is locked in at the time of closing, ensuring that regardless of market changes or inflation trends, the payments remain stable. This structure is particularly appealing to homeowners who value predictability in their housing costs.

Other mortgage types, such as adjustable-rate mortgages, feature rates that can change at specified intervals, leading to variable monthly payments. Interest-only mortgages allow the borrower to pay only the interest for a certain period, resulting in changing principal balances and payment amounts later. Graduated payment mortgages start with lower payments that increase at set intervals, which implies variability in payment amounts rather than a constant payment structure. Thus, the fixed-rate mortgage is distinct in offering stability throughout the loan's life.