Which of the following is not a benefit associated with a fixed rate mortgage?
A)They lock in a rate of interest that will be unaffected by a rise in market rates.
B)The borrower received a lower rate to compensate for assuming the risk of interest rate fluctuations.
C)They provide the opportunity to refinance should market rates decline.
D)All of the above are benefits associated with a fixed rate mortgage.
E)None of the above is a benefit associated with a fixed rate mortgage.

Question

Quizplus · Accepted Answer

A fixed rate mortgage does provide the benefit of locking in a rate of interest that will be unaffected by a rise in market rates. It also eliminates the risk of fluctuating monthly payments associated with adjustable rate mortgages. However, borrowers typically do not receive a lower rate for assuming the risk of interest rate fluctuations. Instead, they pay a slightly higher rate than they would for an adjustable rate mortgage in exchange for the stability and predictability of fixed monthly payments. The opportunity to refinance should market rates decline is also typically associated with both fixed and adjustable rate mortgages.

Which of the Following Is Not a Benefit Associated with a Fixed