Fixed Rate or Adjustable?

One of your first decisions should be between a fixed rate  and an adjustable rate mortgage.  Fixed rate mortgages have an interest rate that remains constant through the life of the mortgage. With an adjustable rate mortgage, the interest rate is adjusted--either up or down--at specified times during the mortgage term.

Adjustable Rate Mortgages (ARMs) will have an initial interest rate lower than fixed rates but will adjust upward unless rates really fall. They may be a good choice if you are sure that you will not own the home for an extended period (more than 5-7 years) of time.

Advantages and Disadvantages of Fixed and ARM Mortgages