But what's that got

to do with the price of eggs?

"From a

homeowner's standpoint, a higher federal funds

rate means higher borrowing costs for home equity

loans, credit cards and some personal

loans," says Richard Roll, president of

American Homeowners Association. "That's not

good news for home buyers or consumers when

combined with higher mortgage rates." For

information, go to https://www.ahahome.com

The Federal Funds

Rate does not directly affect mortgage rates

- mortgages are more closely tied to U.S.

Treasury notes. But monthly payments on home

equity lines of credit, credit cards and some

personal loans will go up. The only possible

bright side for consumers could be slightly

higher returns for certificates of deposit, money

market accounts and interest-bearing checking

accounts.

Mortgage rates have

crept up around the 8-percent mark. Freddie Mac

reported that the average interest rate for a

30-year, fixed-rate mortgage edged down to 7.93

percent for the week ending Aug. 20.

That's down from

the previous week's average of 8.15 percent. A

year ago, however, the 30-year rate averaged a

full percentage point less at only 6.92 percent.

Home buyers can

counteract higher rates by taking out an

Adjustable Rate Mortgage. Why is the interest

rate so important to the first-time home buyer?

Because generally speaking, you'll be paying more

interest than principal during the early years of

owning your home.

Your monthly ARM

payments will be lower to start off with because

these loans generally begin with an interest rate

that is 2 to 3 percent below a comparable fixed

rate mortgage. You could use the lower rate to

buy a more expensive home, or use the savings for

other needs.

What's the catch?

The interest rate changes at specified intervals

(for example, every year) depending on changing

market conditions and the particular

"index" your rate is tied to. If

interest rates go up, so does your monthly

mortgage payment. However, if rates go down, your

mortgage payment will go down, too.

For information on

any aspect of buying a home, go to https://www.ahahome.com . the web site for American

Homeowners Association.