http://HubShout.com If you intend to live in the home for a long time and you anticipate an increase in interest rates in the future, the increased expense that you pay today can result in considerable savings in the future. Adjustable rate mortgages (ARMs) Adjustable rate mortgages attend to provide a homeowner with a lower initial interest rate but more uncertainty about interest rate and payment changes in the future. With adjustable rate mortgages, the interest rates are dependent on general interest rates or what is known as an index. Many adjustable rate mortgages are considered 'hybrid mortgages' and have a fixed introductory period of 1, 3, 5 or 7 years during which time the interest rate does not change. Many other types of ARMs typically have shorter interest rate adjustment periods however http://www.mixx.com/stories/2309935/mortgage_loans It benefits you to show that you have been working at the same company for a number of years or have made a career in the same field of specialization. Another factor that will come into play is your income and how it compares to your current debts, including your planned mortgage payments every month. This is called your debt-to-income ratio. To qualify for a home loan, you must show that you can handle all of these obligations. If the lender feels that your debts may be too high compared to your monthly income, you may still qualify for a home loan, but you may have to increase your down payment to lower to the total amount borrowed http://hubpages.com/hub/Mortgage-Loans- Two main factors that lending institutions take into consideration when deciding whether or to approve you for a home loan: your ability to pay off the home loan and your credit history. To assess your ability to pay off the loan, lenders look at your employment status. They will examine your employment record to determine if you have been working consistently for a reasonable period of time. It benefits you to show that you have been working at the same company for a number of years or have made a career in the same field of specialization. Another factor that will come into play is your income and how it compares to your current debts, including your planned mortgage payments every month http://Blogskinny.com/?What-You-Should-Know-About-Mortgage-Loans&AID=3015 There are pros and cons to singing up for a fixed rate home mortgage. While you will always be able to depend on a fixed mortgage payment (excluding property tax and insurance), you will typically have a higher interest rate than if you used an ARM. The reason for the higher rates is that the banks typically take a greater risk on fixed rate mortgages and therefore can charge a premium to lock in a rate for the entire term of the mortgage. Adjustable-Rate Home Mortgage An adjustable-rate home mortgage (ARM) "floats" or fluctuates with changes in interest rates. Typically, adjustable-rate mortgages begin with a short period in which the rate is fixed (usually 3 http://hubpages.com/hub/Mortgage-Loans- They will examine your employment record to determine if you have been working consistently for a reasonable period of time. It benefits you to show that you have been working at the same company for a number of years or have made a career in the same field of specialization. Another factor that will come into play is your income and how it compares to your current debts, including your planned mortgage payments every month. This is called your debt-to-income ratio. To qualify for a home loan, you must show that you can handle all of these obligations http://www.mixx.com/stories/2309935/mortgage_loans In the example above, if you had to pay $3,000 (roughly 2% of the total loan) to refinance then it would take 5 years ($3000 / $600 = 5) to cover the cost of refinancing. More Considerations When you start to consider mortgage refinancing for your home, there are several important factors to keep in mind. Though interest rate seems like the most important aspect of mortgage refinancing, it is not the only thing that will affect your payment. If you are considering mortgage refinancing, consider the following: 1. The term of your mortgage http://hubpages.com/hub/Mortgage-refinancing-today Before you can decide if mortgage refinancing makes sense, you have to compare the savings to the costs of refinancing. In the example above, if you had to pay $3,000 (roughly 2% of the total loan) to refinance then it would take 5 years ($3000 / $600 = 5) to cover the cost of refinancing. More Considerations When you start to consider mortgage refinancing for your home, there are several important factors to keep in mind. Though interest rate seems like the most important aspect of mortgage refinancing, it is not the only thing that will affect your payment. If you are considering mortgage refinancing, consider the following: 1 http://www.mixx.com/stories/2309935/mortgage_loans If you just cannot raise the 20% down payment required, purchasing PMI may be your next best alternative. The good news is that in most cases, you will be able to cancel the PMI insurance once you have managed to earn 22% equity on the property. If you have a good record of making payments, you may even be allowed to cancel PMI once you have managed to earn 20% equity on the home. Another option is available to you if you do not want to purchase PMI and that is to get a loan that will allow you to pay 80% of the selling price of the property with one mortgage, and half of the 20% required down payment with a second mortgage. Keep in mind though that you will still have to raise the remaining 10% of the down payment http://hubpages.com/hub/Refinance-mortgage But other type of ARMs can reset at much more frequent intervals. These types of hybrid adjustable rate mortgages may be better options for you if you only intend to stay in your home for a few years. Bear in mind however that payments for adjustable rate mortgages may rise along with the rest of your interest rates. Many ARMs however impose limits on how high interest rates can increase during an adjustment period. Choosing the right mortgage loan for you How do you make a decision on which types of mortgage loans to go for? As we mentioned at the start of this article, that decision is dependent on the risk that you are willing to incur and your present situation