How is a fixed-rate mortgage defined?

A fixed-rate mortgage is defined as a mortgage that has a constant interest rate and unchanging monthly payments throughout the life of the loan. This means that the borrower will pay the same amount every month, which can make budgeting easier and provides stability against interest rate fluctuations in the market.

With a fixed-rate mortgage, borrowers benefit from knowing exactly what their monthly payment will be, enabling them to plan their finances without worrying about increases in their payments due to market changes. This type of mortgage typically lasts for a predetermined period, such as 15, 20, or 30 years, during which the interest rate remains fixed.

The other definitions do not align with the key characteristics of a fixed-rate mortgage. Variability in interest rates and payments is not a feature of fixed-rate mortgages, which distinguishes them from adjustable-rate mortgages, where interest rates can change. Additionally, fixed-rate mortgages are generally not meant exclusively for short-term loans, as they are commonly used for long-term financing.