Life has never been easy for borrowers, especially ones who have little finance background and who want to avail of mortgage for their homes. With so many jargons and financial terms floating in the market, it is really tough to have a grip over the subject. It is always good to learn the basic of mortgage and mortgage rates before making your decisions. Let us begin by trying to understand all that you always wanted to know about your mortgage payments and rates.
The process of obtaining a home loan is easy but the process of obtaining the right loan with lowest rates come with a lot of hard work and getting your facts correct. 

Fixed Rate Mortgage vs. Adjustable Rate Mortgage
When you want to avail of home loan, there are several types of options available in the market. While it is true that no option is good or bad as it all depends upon your financial requirements, the interest rate regime and your repayment capacity, it is also true that you have to decide about the option keeping in view these factors. There are two basic packages available in the home loan market and they are fixed rate mortgages and adjustable rate mortgages.

Fixed Rate Mortgage
Fixed Rate Mortgage is a home loan where mortgage interest rates are fixed irrespective of the way interest rates move up and down in the market. In other words, your monthly equated installment and interest outgo is predetermined. This allows borrowers to plan their finances well in advance and budget the same accordingly. Generally fixed rate mortgages are a tad more expensive than the adjustable ones as they allow the borrowers to manage their risks more effectively in terms of payment schedule and amount over a period of time. The loan duration in these cases may range from 15 years to 30 years. In case of a 15 years loan, your mortgage rate is less but the monthly outgo is more while in case of a 30 year loan, mortgage rates are higher but the amount of outgo is quite less comparatively.

Adjustable Rate Mortgages (ARM)
Adjustable Rate Mortgages (ARM) are home loans where mortgage rates vary depending upon market conditions and interest rate movements. The rates here are lower than the fixed mortgage rates but are more risky especially if borrowers have availed loan during low interest rate regime. In case of rise in interest rates, your loan tenure is generally increased without increasing your monthly installment and thus you may end up repaying the loan over a longer period of time than you had bargained for initially at the time of obtaining the loan. 

Interest Only Mortgage Rates vs. Amortizing Mortgage Rates
Interest Only Mortgages
Interest Only Mortgages are loans where only interest is paid during the initial phases of the loan tenure and thereafter the payment may include both principal and interest or te entire mortgage amount may be repaid depending upon the financial condition. This is appropriate for those who have an irregular stream of income and want to avail of interest deduction for the purpose of tax.

Amortized Mortgages
Amortized Mortgages are home loans where the monthly installment that borrowers pat comprises of both principal and interest. This is generally the most common of mortgages and affords a steady outflow of cash. Here also the interest portion on the mortgage is tax deductible. 

Are you in urgent need of some extra cash to meet your requirements, do you want to save money and do you want to pay off your high cost debts and reduce the interest liability? Do you wish to rethink your existing mortgage with a new mortgage having much better terms and conditions for you? If you have any of these needs then refinance is the strategy for you to adopt. Refinance gives you an opportunity to pay back the existing high cost home loans from the money obtained by way of a new loan meeting your requirements in a much better way and against the same property as the collateral. Well it seems a bit complicated and not leading us anywhere. Let us take an example. Suppose Mr. A and Mr. B both took a mortgage loan amounting to $200,000. After 5 years, both of them have paid off $100,000. Mr. A then takes a fresh loan worth $100,000 so as to be able to repay the existing balance on the loan, which may be a high cost loan because of the higher mortgage rates. On the other hand, Mr. Y opts for a second home loan worth $200,000 to meet his twin objectives. First he wants to repay the unpaid loan balance which is $100,000. Then he wants to use the balance amount to fulfill his other financial requirements.In the first case, the financial arrangement is known as the mortgage refinancing and the second where the new loan amount arranged is higher than the balance of the current loan, the financial arrangement is known as a cash-out refinancing.Refinancing can be a prudent financial jugglery for many a borrower especially who is servicing a high cost loan and is in need to arrange for more finances to meet requirements and obligations. 
How Refinance will help you?

• Refinance will allow you to save more and reduce your monthly payments by obtaining a much favorable mortgage rate or a longer loan term. In case of longer tenure of loan, your installments being paid monthly will be smaller but you will end up paying larger amount of interest during the loan tenure.
• You can also reduce the tenure of your mortgage by negotiating reduction in the period of repayment. In this case your monthly outgo will increase no but you will be able to save more in interest payment. It will also allow you to get ownership of home much earlier.
• You require more money for meeting obligations and new purchases such as buying a new car or making improvements in your home and so on. With refinance, you can arrange for that extra cash for all your needs.
• You have to fulfill multiple debt obligations. You want to lower your tax payments. Mortgage interest is tax deductible unlike other interest payment like credit card revolving amount or personal loan. It is wise to repay your high cost loans with refinance and avail of great benefits in terms of lower tax liability and reduction in interest outgo.
• You can also use refinance your second high cost mortgage convert your two mortgages into a single loan. This will reduce your overall cost.
• You can also use refinance to convert your existing adjustable mortgage rate into fixed rates.