Buying a home involves a lot, especially in this crazy housing market. First, you get pre-approved for a mortgage and determine what mortgages you qualify for. Then you'll need to browse the few listings available and find something you're interested in. Then you narrow the list down to those that best meet your needs and price range.

Once you have settled on something, you negotiate until you find a price agreeable to you and the seller.

The thoughts of getting a mortgage make many people cower in fear. That's because if this is your first time going through the process, there is much that you probably need to learn or understand. One of the most common questions is whether one should get a fixed or adjustable-rate mortgage.

A fixed-rate mortgage has an interest rate that remains constant for the life of the loan. That means that your payment is the same every month. This type of mortgage is easy to understand and makes budgeting more predictable. The downside to fixed-rate mortgages is that if interest rates are high when you get your mortgage, your interest will remain high as long as you keep the original loan. If you wish to take advantage of lower interest rates in the future, you will have to refinance. That means more paperwork and additional costs.

Adjustable-rate mortgages, or ARMs, feature rates that start low and are adjusted according to current interest rates after a specified time. The initial rate can be good for anywhere from a month to 10 years, after which it may be adjusted monthly, yearly, or any other frequency specified in the mortgage agreement. The most significant advantage of adjustable-rate mortgages is the low initial interest rate. This generally means one can get a larger loan due to the lower payments. ARMs also allow you to take advantage of falling interest rates without refinancing. The bad thing about ARMs is their unpredictability. Depending on the mortgage's terms, the interest rate (and your payment) could nearly double in just a few years. This would leave you with a much higher payment than you started with and a higher payment than you would have had with a fixed-rate mortgage.

Which type of mortgage you should get depends largely on your situation. Two important things to consider are how long you plan to keep the home and whether your income will likely stay the same or increase over the coming years. An adjustable-rate might work to your advantage if you only plan to keep the home for a few years. And if you need low initial payments, an ARM may be the way to go.

If you're looking for a regular payment from month to month, a fixed-rate mortgage would be your best bet. In addition, getting one when interest rates are low could save you money compared to an adjustable rate in the long run.

If you find a home to put an offer on, you might run across a seller offering a buydown on your loan. This is when they prepay the lender to give you, the buyer, an initial lowered rate for the first year. So that you know, you will still have to be approved at the full interest rate of the loan. You will get an initial discounted monthly payment, but this is temporary. Make sure you plan for the shocking increase in your mortgage payment that will come a few years later. If you budget accordingly, you will be fine.