But, you cannot let these factors stand in your way of becoming a homeowner. Start simple. Figure out if you want a fixed-rate or adjustable mortgage rate, and then continue on from there. There are many different terms, points and rates associated with each, but narrowing your search to a category can really simplify the process.
Fixed-rate mortgages are usually the more traditional choice. You and a lender agree to a length of time (or term) and an interest rate. That interest rate stays the same throughout the term of the mortgage.
Adjustable Rate Mortgages (ARMs) are loans with a segment of time during which the interest rate is fixed. After that, the rate is determined by an economic indicator. If you have seen the notation "ARM 5/1," that means it is an adjustable rate mortgage with a set rate for the first five years of the loan, and then a new rate every year after that.
So, which is the right one for you? Well, this actually depends on a few factors.