What is the primary difference between "fixed-rate" and "adjustable-rate" mortgages?

A fixed-rate mortgage is characterized by having a constant interest rate throughout the life of the loan. This means that the monthly payment remains the same, providing borrowers with stability and predictability in their budgeting. Homeowners can plan their long-term finances without worrying about fluctuations in interest rates, which can be particularly beneficial in a rising rate environment.

Other options present definitions that do not accurately reflect the characteristics of the mortgage types. For example, a fixed-rate mortgage does not have a variable interest rate, and an adjustable-rate mortgage does not maintain a constant rate but instead varies based on a set index over time. Moreover, while adjustable-rate mortgages often have initial fixed-rate periods, they are not exclusively short-term. Thus, the clarity in defining the characteristics of fixed-rate versus adjustable-rate mortgages is essential in understanding their primary differences.