With mortgage interest rates inching toward the record lows of two years ago, area home buyers and refinancing candidates once again are coming to grips with an array of financing options.

And whether it’s a fixed-rate, adjustable-rate or interest-only mortgage, the bottom line is simple, experts say: Do your research, consider your financial situation and make a decision that balances financial advantages with long-term comfort.

“There’s a time and a place for everything,” said Tom Koenig, vice president for home lending at Central National Bank in Lawrence. “And that’s true for mortgages.”

Lenders throughout the area and across the country these days are busy offering a plethora of home loans and refinancing products, working to satisfy the needs and desires of consumers.

The latest interest-rate environment only has made the activity all the more prevalent and urgent.

Rates on 30-year, fixed-rate mortgages averaged 5.62 percent last week, according to Freddie Mac. That was the lowest level in four months, and the eighth weekly decline in the past nine weeks.

While the rates decline has flummoxed many analysts – the Federal Reserve’s campaign of boosting interest rates has not translated to the mortgage market – area Realtors and mortgage lenders are continuing to stay ahead of a hungry market.

The business lends itself to many questions.

“Most consumers don’t know what they really need,” said Lance Ford, branch manager for Countrywide Home Loans in Lawrence. “You need to sit down with a lender and say, ‘These are my plans over the next five years.’ :”

Most mortgages written these days generally can be heaped into two categories.

Fixed-rate mortgages

Fixed-rate mortgages are the most traditional form of mortgages, and often appeal to people looking for long-term security, Koenig said. That’s because the rates are just that – fixed – for the term of the loan, often 15 or 30 years.

But with rates continuing to drop on the long-term, fixed-rate products, such loans are becoming an even more attractive option for even more borrowers, he said.

Central National last week was offering 30-year, fixed-rate mortgages with an interest rate of 5.375 percent. Some of the bank’s adjustable-rate mortgages – loans that are fixed for say, seven years before adjusting to reflect the future market – were carrying interest rates of 5.25 percent.

On a $160,000 loan, the difference for paying principal and interest would be only $10.13 a month, he said.

No wonder 90 percent of his clients are opting for fixed-rate loans these days.

“Three years ago, half of everything I did were adjustables, because I was doing adjustables at under 4 percent,” said Koenig, who’s been writing mortgages for 30 years. “It’s all relative. Right now, the way the market is falling, fixed rates are definitely in favor.”

Koenig’s office offers a handful of different fixed- and adjustable-rate products.

“I’m pretty vanilla,” he said.

Adjustable-rate mortgages

At Countrywide, Ford oversees the Lawrence branch of an operation that offers more than 100 different products, many of which have their own variations.

“It’s overwhelming,” Ford said of the number of options available to borrowers.

A little more than half of the loans written in the Lawrence office qualify as adjustable-rate loans, he said. Such products typically offer lower interest rates than fixed-rate options.

Adjustables can offer the lower rates because borrowers are accepting less risk. A rate that adjusts to the market after a year, two years or 10 years gives the lender, or owner of the mortgage, a better change to protect his investment.

For consumers, adjustables have been particularly attractive because of peoples’ life situations, Ford said. If someone plans to sell a house within five years, he explained, why not get an adjustable-rate mortgage that converts to fixed after five years?

Another form of adjustable-rate mortgage that has gained popularity in the area, after building momentum on the east and west coasts, he said, is the “interest-only” mortgage.

Such a loan allows the borrower to pay only on the interest of the loan for a defined period, without having to tackle any of the principal. One of Countrywide’s most popular products, Ford said, is a “10-20” interest-only loan, which allows payments to be based on interest for the first 10 years before switching to pay principal and interest for the remaining 20 years.

The plan can shave more than $100 off a monthly payment in the short term, with the idea that rising property values could help cover the increase in payments during the final 20 years.

The savings then could be pumped into other investments, purchases or other needs, he said.

“It offers a much lower payment,” Ford said, of the interest-only products, which account for about 5 percent to 10 percent of the loans written in his office. “As long as they’re educated on it, that’s fine. : Really, it’s a cash-management issue in our market.”