Buying your new home can be incredibly exciting. Unfortunately, finding a home loan isn't quite as exciting or as fun. There seem to be so many home loan options available that it can be quite confusing, especially if you've never purchased a home before. One of the most common questions is whether to use a fixed-rate or variable-rate loan.

The most common types of loan are fixed and variable rate loans. Fixed rate loans have an interest rate that stays fixed over the life of the loan. Variable rate loans, usually referred to as adjustable rate or ARMs, have an interest rate that varies according to the national index. Adjustable rate loans usually have an initial period of time where the interest rate stays fixed, and then the interest rate may vary according to national rate. Adjustable rate loans often have a limit to the number of times or amount the interest may vary over the life of the loan.

Both types of loans work great for some people and some situation, and both have some disadvantages. You should carefully weigh the pros and cons of the loan and select the one that works best for your situation.

Fixed rate loans are probably the most common type of mortgage. This type of loan is excellent when rates are fairly low, but expected to increase in the future. On the other hand, if interest rates fall, you could be paying more for your loan than necessary. Fixed rates make it easier to budget your mortgage payment because you know exactly how much you'll have to pay each month.

Variable rate loans are great because they allow you to initially get into a loan with a lower monthly payment than a fixed rate. Usually the variable rate loan has a lower initial interest rate than the fixed rate loan, so can be more affordable initially. Of course, the down side of a variable rate loan is that the interest rate can increase over time, which means ultimately you'll end up paying more for the loan. If the interest rates decrease over time, your mortgage payment may decrease as well.

Even before you begin looking at homes, sit down and talk over the options with a mortgage loan officer. Your mortgage consultant can show you exactly how each loan program works with today's current interest rates. You'll get a balanced view of which program would work best for you and what some of the long-term options can be. Your mortgage consultant is there to help you find the best home loan ? one that works with your current budget and is in your best interests in the future.