An adjustable rate mortgage can be enticing to any new homeowner. After all of the other expenses that go along with buying a home, why not try to save some extra cash every month? ARM, also sometimes called variable rate mortgage, can be beneficial but you must know the pros and cons, and how to make it work for you and not against you.

ARM offers lower monthly mortgage payments for a period of usually three to five years. Most likely you have seen this as "3/1" or "5/1." This means you have a lower rate for those first few years, but then it can adjust every year thereafter depending on certain economic indicators. The adjustable rate mortgage is good for those homeowners who are sure their monthly income will increase within the introductory period or those who could greatly benefit from the up front savings.

But with the good come the bad. Once your three or five year rate expires, the increase could be detrimental if you