These loans generally begin with an interest rate that is 2-3 percent below a comparable fixed rate mortgage, and could allow you to buy a more expensive home because the payment for which you must qualify would be lower.

Because the interest rate changes at specified intervals (for example, every year) depending on changing market conditions, if interest rates go up, your monthly mortgage payment will go up, too.  However, if rates go down, your mortgage payment will drop, also.

There are mortgages that combine some of the benefits of both fixed and adjustable rate mortgages - starting at a low fixed-rate for seven to ten years, for example, then adjusting to market conditions. Ask your mortgage professional about these and other special kinds of mortgages that fit your specific financial situation.