Certified Residential Appraiser Practice Exam

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Study for the Certified Residential Appraiser Exam. Use flashcards and multiple choice questions with hints and explanations. Ensure you're ready for your certification!

Practice this question and more.

What is a key feature of a Fixed Rate Mortgage?

The interest rate fluctuates over time
The interest rate remains the same throughout the loan term
The loan is payable in one lump sum at maturity
The loan requires annual refinancing

The correct answer is: The interest rate remains the same throughout the loan term

A Fixed Rate Mortgage is characterized by an interest rate that remains constant throughout the life of the loan. This stability is a significant advantage for borrowers, as it allows for predictable monthly payments, making financial planning easier. Since the interest does not fluctuate, borrowers are protected from market volatility and can budget accordingly without worrying about changes in their mortgage payments due to rising interest rates. This feature contrasts with adjustable-rate mortgages, where the interest can change at specified intervals based on market conditions. The other options describe characteristics not associated with a Fixed Rate Mortgage. For instance, fluctuating interest rates pertain to adjustable-rate loans, while lump-sum payments and refinancing requirements do not reflect the nature of a standard fixed-rate mortgage, where payments are typically made monthly over the term of the loan.