If you bought your house recently with an adjustable rate mortgage (ARM), then you may want to think about exchanging it quickly for something more stable. Initially, you may have been attracted to an ARM because it enabled you to get a larger house, or it may have helped you to get a house in the first place. Before long, however, the advantages of an ARM may totally disappear. Here are some reasons why you may consider obtaining a fixed rate mortgage to substitute for the ARM.

One reason that is obvious is the fact that your payments will change suddenly when you start the adjustable rate portion of the ARM. This amount could result in a monthly increase of several hundred dollars each month - and it could keep on getting higher after that. Although there is a ceiling on the rate, you do not want it to get that high. A substantial adjustment to the ARM could put your house at risk if you cannot meet the payments, or you could be forced to refinance quickly when the interest rates are not as low as you would hope.

One option is to switch to a fixed rate mortgage so that you can get a rate that will give you some peace of mind. A fixed rate mortgage will give you a rate that you can count on never to change. This means you always know what your mortgage will be in advance. One difficulty, though, will be that you can expect your monthly payment on a fixed rate mortgage to be higher than what you were initially paying on your ARM. This is because ARM's typically start out a little lower than a fixed rate mortgage.

Another good reason to leave that ARM would be to get some cash out of your equity. The amount available would depend on how much equity you have built up on the house. A cash out mortgage enables you to get some of your cash out of your home's equity, refinance your first mortgage, and hopefully gives you a lower interest rate.

By watching the market, you may be able to get the interest rate you need. You should wait until you can get at least 1%-2% lower than what you have right now. It is possible, however, that you are just about out of time and the adjustable portion may be ready to start on your mortgage. An alternative to waiting until it does increase, is to simply refinance and get a stable mortgage now with a fixed rate mortgage, and then wait until you may be able to get a better interest rate later. This may be better for you rather than to risk going to a payment higher than what you can afford.

Before you do any refinancing, though, you will need to plan on staying in that home for at least another five to seven years. It will take about this long to recover the cost of refinancing, depending on the interest rate, points and lender fees. Look at various mortgage types and be sure to do some careful analysis using mortgage calculators in order to come up with some good solutions. Then, once you believe you found something that will work for you, get several fixed rate mortgage quotes. Compare them carefully and apply for the one with the terms that match your specific needs.