The purchasing of a home and the mortgage financing that is part of this purchase, is for many people, the most important financial obligation that they will sign up for, ever. This would imply quite strongly that whatever time that you devote to pursuing the purchase of a home and the financing that comes with it, should be extensive, comprehensive, and the terms of the deal should be carefully read, noted, and looked at. The bottom line is when you are making a financial commitment for thirty years, for a home to which its value is often greater than your current net worth; you should really want to make sure that you know what you are doing.
The first issue, that many people have in buying a house, is that often the people that you are dealing with, don't actually have your best interests in mind, this doesn't necessarily mean that they are trying to rip you off, deceive you, or make for an overall miserable experience, but typically it is more that their interest is in seeing that the deal is done so that they can make their commission, or fee, or quota, and that pretty much this trumps all. This means, that despite whatever sweet words that are spoken, ultimately the only person that really cares about your decision and commitment is you, because at the end of the day, you are the one that will have to live with the debt obligation, that could have severe negative consequences if things end up going horribly wrong.
In today's market while there are very straightforward loan packages, such as the 30-year fixed mortgage, and 15-year fixed mortgage, there are also many Adjustable Rate Mortgages (ARMs) that are offered too. The good thing about a fixed mortgage is as the name implies, the rate is fixed for the duration of the mortgage, and therefore the payment amount each month is fixed for the duration of the loan, which is probably the best way to go for most people, especially with today's low rates. However, banks like to offer ARMs, for a lot of reasons, one being that banks are in the business of making money, and if they guess wrong about mortgage rates, to which those rates go up appreciably, but have previously issued a lot of mortgages that are fixed and are now below current interest rates, than their portfolio will be devalued and they will lose money and perhaps be in significant financial difficulties. One way, for banks to protect themselves from this is to offer an ARM mortgage, which typically readjusts once a year, after a set period of time, which allows the bank to raise your interest rate on your mortgage, if the index the mortgage is tied to, goes up.
The real reason, though, that banks offer hybrid ARMs (a blending of fixed and adjustable) and ARMs and anything else which is "adjustable" or a "hybrid" is two-fold, one is that for some applicants it is the only way that they will be able to financially qualify to buy their house, meaning, that without a "below market" interest rate to begin with, you as a buyer, aren't qualified to purchase the home, which normally might be seen as a prudent warning flag. Instead, banks are good at easing any concern you might have of future payments, by trying to convince you that everything will be just fine, especially if you are only going to occupy the home for a few years, or, if not, that your income will surely go up over time, and so forth. The second reason which really trumps all, is that an ARM is more profitable for a bank, particularly in regards to its fees, closing costs, loan origination, and points, to which the banks' overarching objective is to encourage you to ignore all the numbers that you see, except for that first initial payment, as if, that payment amount is permanently low and fixed, which it most assuredly is not.