Many people wishing to refinance their home mortgage are considering doing so with an adjustable rate mortgage (ARM). The incentive for selecting an adjustable rate instead of a fixed rate is that the adjustable rate mortgage almost always has a significantly lower rate of interest. But there are dangers here and you need to be aware of them.

If interest rates should increase over a period of time, then the rate of interest you pay on an adjustable rate mortgage will increase. That means your house payment may increase several times a year. If the increase in interest rates is large enough, then eventually you will be paying a larger rate of interest on the adjustable rate loan than you have paid had you elected a fixed interest rate mortgage.

The reverse is also true. If interest rates fall, then your house payment may actually decline several times a year. If the rate declines continue, you will have a significant advantage over the fixed loan. However, things can always change and rates can increase.

If you have decided to refinance your mortgage, remember to compare different web sites to find the best terms and conditions for you. And don't forget to shop locally. Your home town bank may have better rates than you can find on the Internet.