Which of the following best describes the primary advantage of a FRM?

The primary advantage of a fixed-rate mortgage (FRM) is that it provides stability in payment amounts. This means that the borrower can count on their monthly mortgage payments remaining consistent throughout the life of the loan. This predictability enables better budgeting and financial planning, as homeowners are not subject to fluctuations in interest rates that could increase their monthly payments, which is a risk associated with variable rate mortgages.

Stability is particularly beneficial in a fluctuating interest rate environment, where variable rate loans might lead to uncertainty about future payment amounts. With a fixed-rate mortgage, the borrower locks in an interest rate at the time of the loan origination, ensuring they know their payment obligations for the entire loan term.

While the other options touch on features that might be beneficial, such as the potential for lower interest rates with some variable options or the ability to prepay without penalties, these do not encapsulate the central, overarching benefit that comes from the certainty and reliability in monthly payment amounts that a fixed-rate mortgage offers.