homeowners-choosing-loan types - impact on monthly -payment

As a first time homebuyer you might be faced with the decision of choosing between mortgage types.  Two common types are the fixed rate and the ARM (adjustable-rate mortgage).   An ARM is a loan that begins with a low fixed interest rate for an initial period of time.  This period of time can range from 1 to 10 years.  After this period ends the rate adjusts periodically to reflect changes in market interest rates. As a result, your monthly payment could either increase or decrease depending on interest rates when your loan adjusts. On the other hand with a fixed-rate mortgage, the interest rate remains the same throughout the life of the loan, and your monthly principal and interest payments won't vary. As a compromise for the security of knowing that your monthly payment won't rise, fixed-rate mortgages normally have a somewhat higher initial interest rate than adjustable-rate mortgages. Homeowners who plan to continue in their homes for a lengthier time or desire steady rates and monthly payments may select a fixed rate. A knowledgeable mortgage banker can assist you in comparing mortgages and choosing the one that works best with your individual needs and goals.