What is a fixed-rate mortgage?

A fixed-rate mortgage is defined as a loan where the interest rate remains constant throughout the life of the loan, resulting in stable monthly payments. This stability is a significant characteristic that attracts borrowers, as they can predict their mortgage expenses without concern for fluctuations in interest rates that might occur in the future. With a fixed-rate mortgage, the borrower benefits from the predictability of knowing exactly how much they will pay each month, making it easier to budget over time.

The structure of a fixed-rate mortgage typically includes a loan term, commonly 15 or 30 years, during which the interest rate and payment amount do not change, even if market rates fluctuate. This contrasts with other types of mortgages, such as adjustable-rate mortgages, where the rates can vary over time based on market conditions.

The other choices describe characteristics that do not apply to fixed-rate mortgages, highlighting the unique nature of this type of loan. For example, an option mentioning varying interest rates is inconsistent with the fundamental principle of a fixed-rate mortgage, which is defined by its unwavering rate.