Buying a home is a complicated undertaking, but it is also very exciting. An important part of the home-buying process is applying for a mortgage. Without the right financing, it can be virtually impossible to make an offer that will be accepted. Before you start looking for a home, it is therefore important to educate yourself about the types of home mortgages that are available.

The type of mortgage that you choose will affect your finances for several decades, so you need to take your time and make the right decision. Choosing the wrong type of mortgage could end up costing you tens of thousands of dollars over the long run. Be sure that you understand your options so that you do not choose a mortgage that could end up hurting you financially.

One of the most common types of mortgage, and the one that most people tend to think of first, is the 30-year fixed rate mortgage. With such a mortgage, your interest rate remains fixed over the term of the loan. This can be a great deal if you manage to lock in a low interest rate when you buy your home. If interest rates drop in the future, however, you could end up paying more than you need to.

You can, of course, refinance your home by taking out a second mortgage at a lower interest rate. However, doing so means that you will have to pay another set of closing costs, which can cost you several thousand dollars more. It is generally not worthwhile to do so unless you are going to significantly lower your interest rate.

Fixed rate mortgages are also available for shorter terms, such as 20 years or even 10 years. However, the shorter the term, the higher your monthly payments will be. Choosing a shorter term does mean that you will end up saving money in the long run, since you will not be accumulating as much interest on the principal. If you can afford the monthly payments, a shorter term can be a good choice.

An adjustable rate mortgage does not have a fixed interest rate. Instead, the rate can change depending upon the broader economic conditions. These mortgages frequently offer a very low interest rate for the first few years. The rate then rises and can be adjusted by the lender at any time.

While the initial low rates can be tempting, these mortgages do expose you to more risk. If interest rates rise in general, you can end up with a rate that is quite a lot higher than you were expecting. This means your monthly payments will also go up and that it can take you much longer to pay off your home.

The more that you know about mortgages in, the better off you will be. Keep this information in mind when you are planning for your future. Doing so will help you make the right choice and maintain your financial independence. For more information on Mortgage visit: http://www.usa.gov/shopping/realestate/mortgages/mortgages.shtml