Which type of loan is often characterized by fixed payments over a long term?

The fixed-rate mortgage is often characterized by fixed payments over a long term, usually ranging from 15 to 30 years. This type of loan features a consistent interest rate throughout the life of the loan, which means that the borrower’s monthly payments for both the principal and interest remain stable and predictable. This stability makes budgeting easier for homeowners, as they can be certain about their monthly housing costs without worrying about fluctuations in interest rates.

In contrast, adjustable-rate mortgages can have varying payments based on changes in interest rates, potentially leading to increases in monthly costs. Balloon mortgages involve lower initial payments that attempt to keep them affordable, but they ultimately require a large final payment that can strain a borrower’s financial situation. Subprime mortgages are aimed at borrowers with poor credit histories, often featuring higher interest rates and less predictable payment structures.