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Avoiding Mortgage Rate Woes with Vigilance

As any real estate agent knows, home sales heat up with rising temperatures every summer. Now, with mortgage interest rates more than a full point higher than at this time last year, fuel costs riding high, higher minimum credit card payments and consumer debt still raging, many U.S. homeowners risk foreclosure on their homes ? but they don?t have to lose their slice of the American dream. But other factors are also playing a role in high mortgages and interest rates - homes priced too high to sell.

"Last year, 31 percent of home loans issued were adjustable-rate mortgages also known as `ARMs`, which could spell big trouble as fixed mortgage rates hover around 6.83 percent and ARMs are poised to go much higher," said Brad Stroh, an observer of the home loan industry. "Holders of ARMs will be paying an additional $14 billion each year for every 1 percent increase in mortgage rates. People who bought homes at the edge of their spending ability with an ARM could face dire consequences as their mortgage payments increase."

"However," Stroh went on, "people can take steps to keep their financial situations in check. Overall debt problems will continue to escalate unless people rein in their spending to live within their means. Unfortunately, for some people, that may mean losing their home to resolve their financial situation."