What is a "fixed-rate mortgage"?

A "fixed-rate mortgage" is defined as a mortgage that has a constant interest rate throughout the life of the loan. This means that the interest charged on the loan does not change over time, providing homeowners with predictable monthly payments. This predictability helps borrowers budget more effectively since they know exactly how much they will pay each month over the course of the loan, which can typically range from 15 to 30 years.

In contrast, a mortgage with a fluctuating interest rate would not provide this consistency, as the monthly payments could vary depending on market conditions. Similarly, a loan that is paid off over 10 years specifies a loan term but does not indicate whether the interest rate is fixed or adjustable; thus, it doesn't encapsulate the essence of a fixed-rate mortgage. Lastly, a loan tied to the current prime rate typically refers to an adjustable-rate mortgage, where the interest rate can change based on fluctuations in the prime rate, which again would not align with the definition of a fixed-rate mortgage.