What does the monthly payment for a fixed rate mortgage ensure?

The monthly payment for a fixed-rate mortgage ensures that the loan is paid off in full with interest at the end of its term. This structure involves consistently scheduled payments that remain the same over the life of the loan, which allows borrowers to plan their budget effectively without worrying about fluctuations in their payment amount.

Every monthly payment consists of two components: principal and interest. Over time, as the borrower makes these payments, the portion that goes toward the principal— the amount borrowed— increases, while the portion that goes toward interest decreases. This payment structure helps borrowers know exactly when their mortgage will be fully repaid, assuming all payments are made as scheduled.

The other options present scenarios that do not align with how a fixed-rate mortgage functions:

• Allowing borrowers to change payment terms at any time would imply flexibility that is not typically part of a fixed-rate mortgage.

• The idea that interest rates will decrease over time contradicts the nature of fixed-rate loans, which lock in the interest rate for the term of the mortgage.

• While principal payments do increase over the term of the mortgage, this only describes a characteristic of the amortization process rather than addressing the implications of the monthly payment structure itself.

Therefore, recognizing that the guaranteed structure of repayment in