Which term describes the interest rate that remains the same throughout the life of the loan?

The term that describes the interest rate that remains the same throughout the life of the loan is known as a fixed-rate mortgage. This type of mortgage ensures that the borrower’s interest rate does not change over time, providing stability in monthly payments. This predictability helps borrowers plan and budget their finances since they can expect consistent payments without fluctuations in interest costs.

In contrast, variable-rate loans have interest rates that can change at specified times, leading to potential increases in monthly payments. Adjusted-rate loans usually refer to a type of variable-rate loan where the rate adjusts after an initial fixed-rate period. Promotional rates are often temporary and might increase after an initial promotional period, making them different from fixed-rate loans. Therefore, a fixed-rate mortgage offers the certainty and stability that many borrowers seek when securing long-term financing.