Question

What is one difference between fixed-rate mortgages and variable-rate mortgages?"

Options:
A. Fixed-rate mortgages have a consistent interest rate throughout the loan term, while variable-rate mortgages can fluctuate based on market conditions.
B. Fixed-rate mortgages typically have lower initial interest rates compared to variable-rate mortgages.
C. Variable-rate mortgages have a set interest rate that remains unchanged, while fixed-rate mortgages can vary over time.
D. Fixed-rate mortgages offer more flexibility in adjusting monthly payments than variable-rate mortgages.

Answer 1

A fixed-rate mortgage has a consistent interest rate throughout the loan term, while a variable-rate mortgage can fluctuate based on market conditions.

Step-by-step explanation:

A fixed-rate mortgage has a consistent interest rate throughout the loan term, while a variable-rate mortgage can fluctuate based on market conditions. This is the main difference between the two types of mortgages. With a fixed-rate mortgage, the interest rate remains the same for the entire duration of the loan, providing borrowers with stability and predictable monthly payments. On the other hand, a variable-rate mortgage has an interest rate that can change over time, typically tied to an index such as the prime rate or LIBOR, which means the monthly payments can vary.