There are so many decisions when buying a home. Where do I want to live? Do I want a single family home or a condominium? Do I want to live in a gated community? These types of questions can be answered rather easily, but when it comes to the mountains of paperwork, the questions then become a little more complex. Do I want a fixed rate mortgage or an adjustable-rate mortgage? Do I want a 30-year mortgage or a 15-year mortgage?

Pros and Cons of an Adjustable Rate Mortgage (ARM)

• With an adjustable rate mortgage you will have lower rates and smaller payments early on in the loan. Over the life of the loan, however, your rates and payments can rise. You may be enjoying a 6% mortgage rate at the beginning of your loan term, but if the rates see a quick incline, it is possible to have a 11% mortgage rate in only a few years.
• If the rates drop, so does your monthly payment. Instead of having to refinance and pay your closing costs and fees all over again to lower your mortgage rates, you can just kick back and watch as the rates and your monthly payment drop. But some ARM's, negative amortization loans, only cover part of the interest due. This occurs when the monthly payments are set too low. The remainder of the loan gets thrown in to the principal and voila, you owe more money than you did at closing.

Pros and Cons of a Fixed-Rate Mortgage

• The rates and the payments never change. You will always know what your payment will be, no surprises! You will want to make sure that you have a low rate when you purchase your home. If the rates plummet and you want a piece of the action, you will have to refinance and pay the closing costs and fees all over again.
• A fixed rate mortgage is easier to understand. ARM's can be quite confusing with all the talk of margins, caps, adjustment indexes, blah, blah, blah. A fixed rate mortgage can be pretty easy to wrap your head around.

Advantages and Disadvantages of a 30-year fixed rate mortgage

• The interest is amortized over a longer period of time, which allows for smaller monthly payments. This will increase the interest because of the long term on the loan. In other words, you will pay more interest in the long run, but your monthly payments will be smaller.
• The higher interest bill increases the amount that you can deduct a tax time. This can reduce or even eliminate your federal income tax liabilities.
• Building equity takes a bit longer, as the first several years of payments will go largely to the interest of the mortgage rather than the principal.

Advantages and Disadvantages of a 15-year fixed rate mortgage

• You will build equity quickly as the amortization schedule is much shorter. Due to this fact, you will pay higher monthly mortgage payments.
• The interest bill is low, but again the payments are high.
• The interest rates are lower than on a 30-year mortgage.

Today's Mortgage Rates

As was predicted the mortgage rates began to inch up this week according bankrate.com. Part of this rise is due to the stock market, Nasdaq hit the highest level seen since 2000 closing at well above 5,000 on March 2, 2015. According to Bob Moulton, president of Americana Mortgage Group in Manhasset, New York, "We are definitely seeing upward pressure on rates."

The rates on a 30-year fixed rate mortgage rose from 3.9 to 3.93 last week while a 15-year fixed rate mortgage went from 3.15 to 3.16 percent last week. Freddie Mac collects mortgage rates from lenders across the nation weekly, Monday through Wednesday and as the rates tend to follow long-term Treasury bonds, they are subject to fluctuate significantly, even on a given day. The rates don't include add-on fees, also known as points. One point is the equivalent of 1% of the total amount of the loan.