Which of the following is a common characteristic of a 30-year fixed mortgage?

Which of the following is a common characteristic of a 30-year fixed mortgage?

• A. Monthly payments can vary
• B. The rate can change after several years
• C. The interest rate remains constant throughout the loan term
• D. It has a shorter repayment schedule than an ARM

Answer: (C)

A common characteristic of a 30-year fixed mortgage is that the interest rate remains constant throughout the loan term. This means that the borrower will pay the same rate of interest on their mortgage for the full 30 years, providing stability and predictability in monthly payments. This is particularly advantageous for budgeting, as borrowers can plan their finances without the worry of fluctuating interest rates impacting their payments over time. In contrast, other types of mortgages, such as adjustable-rate mortgages (ARMs), have interest rates that can change periodically based on market conditions, leading to varying monthly payments. The consistency of a fixed-rate mortgage allows homeowners to avoid the risks associated with changing rates and potential increases in payment amounts.

A common characteristic of a 30-year fixed mortgage is that the interest rate remains constant throughout the loan term. This means that the borrower will pay the same rate of interest on their mortgage for the full 30 years, providing stability and predictability in monthly payments. This is particularly advantageous for budgeting, as borrowers can plan their finances without the worry of fluctuating interest rates impacting their payments over time.

In contrast, other types of mortgages, such as adjustable-rate mortgages (ARMs), have interest rates that can change periodically based on market conditions, leading to varying monthly payments. The consistency of a fixed-rate mortgage allows homeowners to avoid the risks associated with changing rates and potential increases in payment amounts.