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If you are a first-time homebuyer, you are probably trying to figure out what your options are when it comes to mortgages and paying for your new home. We know that this can be confusing, so we are going to break it down for you a little bit further.

Basically, a fixed mortgage means that the interest rate is set when you take out a home loan, and it will not change for the entirety of the time you are paying the loan back. Alternatively, in an adjustable rate mortgage, the interest rate is flexible and may fluctuate with time.

Many adjustable rate mortgages will start at a lower rate than fixed mortgages. But, this rate is usually called a “introductory” period and could last up to a few years, but when it is over your interest rate will likely go up. In addition, many adjustable rate mortgages also set a cap on high your rates can go, which can be good for planning, but they will also set a cap on how low they can go.

The moral of the story is, before you commit to a mortgage, make sure you do your research and know your options. If you are interested in an adjustable rate mortgage, know how high your interest rate and monthly payments can go with each adjustment. Also make sure you know how frequently your rates can adjust, how long your introductory period is, if there are rate caps, and if you will still be able to afford the loan if the rate and payment go up to the maximum allowed under the loan contract. If the numbers do not add up for you with all of this considered, even if the initial rate is lower, it is probably better to pursue a fixed rate mortgage.