When purchasing your new home, it is important to have all the facts that you will need readily available for the lender. Choosing which type of mortgage that you will be paying for the next 30 years is a big decision. There are two primary types of mortgages, a fixed-rate mortgage and an adjustable-rate mortgage (ARM).

A fixed-rate mortgage includes a fixed interest rate into the montly mortgage payment. This interest rate will not change during the life of the loan, the amount of interest and principal may vary from month to month, but the monthly payment is the same. The advantage to a fixed-rate mortgage, is that the borrower is protected from any interest rate changes that could raise your monthly payments.

Adjustable-rate mortgages sets the interest rate below the current market rate at the beginning of the loan but consistantly changes throughout the life of the loan. The advantage to an ARM is the lower monthly payments in the beginning of the loan, allowing the borrower to enjoy low interest rates without the need to refinance.

Choosing which type of mortgage that is right for you could take some time and effort on your part, however, it will pay off in the long run by helping you to avoid any costly mistakes.

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