Prepare for the Loan Officer Exam. Study with flashcards and multiple choice questions, each question has hints and explanations. Get ready for your exam!

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In a fixed-rate mortgage, the interest rate is:

  1. subject to change based on market conditions

  2. consistent throughout the life of the loan

  3. only adjusted once per year

  4. calculated quarterly

The correct answer is: consistent throughout the life of the loan

In a fixed-rate mortgage, the defining characteristic is that the interest rate remains consistent throughout the life of the loan. This means that the borrower will pay the same interest rate from the beginning to the end of the loan term, regardless of fluctuations in the market or changes in economic conditions. This stability provides borrowers with predictable monthly payments and simplifies budgeting, as they do not have to worry about rising interest rates affecting their mortgage payments over time. Other options suggest variability in the interest rate, which does not apply to fixed-rate mortgages. For instance, some loans may have adjustable rates that change based on market conditions or are recalibrated annually, but none of this applies in the context of a fixed-rate mortgage.