Generally, yes, all mortgages fall into one of these two categories: interest rate paid over the life of the mortgage loan remains the same (fixed) or changes (adjusts).

The most common mortgages are 15-year and 30-year fixed rate loan programs. These programs offer a principle and interest payment that does not change for the life of the loan. However, changes in property tax or insurance may change your monthly payment.

Although a large percentage of the monthly payment will go toward paying off interest, as more of the loan is paid, more of the monthly payment is applied to principle. In other words, if you choose a 30 year fixed rate mortgage, it will typically take you 22.5 years before you have repaid half the original loan amount. During the last 7.5 years, with most of the interest costs paid, you will be paying off more principle, thus earning you more and more equity in your home.

Adjustable-Rate Mortgages or ARMs generally begin with an interest rate 2-3 percent below current fixed rates, offering a lower payment during the initial fixed period. However, after this initial period, the interest rate changes at specified intervals, usually annually. As interest rates rise or fall (depending on market conditions), your monthly mortgage payment will likewise rise or fall. Although attractive to buyers looking for low rates, its fluctuating interest rates are unpredictable and not the best choice of loan program if you plan to stay put for a while and/or not refinance.

Ask an Applied Wholesale Loan Specialist about the kind of loan program that will best fit your specific financial situation.