Final answer:
The answer lies in identifying the type of mortgage. Option 4, which is a fixed-rate mortgage, will provide fixed payments for at least the first 6 years, as it maintains the same interest rate over the life of the loan, unlike adjustable-rate mortgages.
Step-by-step explanation:
The question relates to which mortgages would have fixed payments for at least the first 6 years. A fixed-rate mortgage maintains the same interest rate over the entire life of the loan, which can be either 15 or 30 years. In contrast, an adjustable-rate mortgage (ARM) has an interest rate that changes with market interest rates over the life of the mortgage.
If inflation falls unexpectedly by 3%, homeowners with an adjustable-rate mortgage could likely expect a decrease in their interest rates, which could lead to lower monthly payments, assuming other market conditions remain constant. This is because ARMs are typically influenced by market trends, including inflation rates. Whereas, homeowners with a fixed-rate mortgage would not see any change in their monthly payments, as they are locked into their rate regardless of changes in inflation or market interest rates.
When considering whether a mortgage will have fixed payments for a period, the key is in identifying the type of mortgage. Since only mortgages with a fixed interest rate will have unchanging payments, any mortgage termed as 'fixed-rate' will meet this criterion. Therefore, Option 4, which specifies a fixed-rate mortgage, would have fixed payments for at least the first 6 years and throughout the life of the mortgage.