In the last few years the adjustable rate mortgage (ARM) has become a very popular type of home loan. But they are risky, very risky, and you should know the risks before accepting one.

Adjustable rate mortgages change their interest rate depending on the movement of interest rates in general. By mid 2008 inflation in the United States was raging at a 26 year high. This is likely to mean that the Federal Reserve Board may raise interest rates to hold inflation in check. If the Fed raises interest rates it means that adjustable rate mortgage rates are going to be increasing. Whether the increase is small or large isn't certain. But they are going up.

So, think twice about getting an adjustable rate mortgage. You may be exposing yourself to such high monthly house payments that you can't afford them.