(ARA) - One of the primary questions most homeowners face is whether a long-term, fixed-rate or an adjustable-rate mortgage is the best choice for refinancing their home loan.

While there is no way to predict exactly when and how much interest rates will increase or decrease over time, a fixed-rate loan is a generally a smart option for many qualified homebuyers. If you anticipate living in your new home for some time, and desire the certainty of a monthly mortgage payment that does not fluctuate or adjust (except if property taxes, which can fluctuate from year to year, are escrowed as part of the monthly payment), start by looking at a fixed-rate loan when you go mortgage shopping.

Consider the Hernandez family. Three years ago, they purchased a three-bedroom home. Like most families, the Hernandez’s dreamed of being homeowners and with interest rates at an all-time low, they took advantage of a low money down program and secured an adjustable rate mortgage with a five-year introductory interest rate of 4.875 percent.

Knowing that at the end of their five-year term their interest rate could increase to over 7 percent, the Hernandez’s recently opted to refinance their mortgage and locked into a 30-year fixed rate of 6.75 percent. Though they pay a slightly higher interest rate for the remainder of their five-year term, they can rest assured that they have locked in at a historically low rate and will have predictable monthly payments for the life of their mortgage.

"Making a change in your mortgage could mean saving thousands of dollars and keeping your monthly mortgage payment low," says Ennio Garcia-Miera, a vice president at GMAC Mortgage. "Your decision to refinance should include how long you plan to stay in your house, the rate on your current mortgage, when that rate will begin to adjust, how high the rate can go and whether your loan carries a prepayment penalty (for paying it off early). Before changing any terms on your mortgage, be sure to consult with your financial advisor because although the amount you pay on a monthly basis may decrease, you may increase the overall number of monthly payments you have to make over the term of the loan."

GMAC Mortgage offers an ARM versus fixed-rate mortgage calculator on its Web site at www.gmacmortgage.com to help homeowners compare monthly payments, loan amounts and more. In addition, Latino homeowners can be referred to a bilingual GMAC Mortgage loan officer in their community by calling (888) 330-4622, or they can speak directly to a bilingual loan officer by telephone from the convenience of their home.

Many homebuyers, such as the Hernandez’s, took advantage of securing a home with a low adjustable interest rate. Now that homebuyers are facing higher interest rates in the near future, they are deciding whether to refinance. Review your options and find out if a fixed-rate is right for you.

Mortgage Glossary

To help familiarize yourself with the refinance process, consider the following vocabulary terms and then speak with your home mortgage advisor to research your choices.

* Annual Percentage Rate (APR)
The APR is an expression, in percentage terms, of a loan’s interest rate plus the added cost of obtaining the loan, such as points, origination fees and mortgage insurance premiums (if applicable). If there were no costs involved in obtaining a loan other than the interest rate the APR would equal the interest rate.

* Adjustable Rate Mortgage (ARM)
A mortgage that permits the lender to adjust its interest rate periodically based on changes in a specified index. It’s common to receive a low introductory mortgage rate for the first few years of an adjustable rate loan.

* Fixed-Rate Mortgage
A mortgage with an interest rate that remains the same for the life of the loan. The loan amortizes principal and interest over a set period and offers steady monthly payments of principal and interest over the life of the loan. Common loan terms are 15 and 30 years. Some lenders are now offering 40-year fixed rates.