For example, if your interest-only payments on a $150,000 mortgage at 5 percent are about $625 a month, after five years, you would have paid close to $37,000 and would still owe $150,000. You could see your monthly payments jump to around $875 after the fifth year.

Adjustable-rate mortgages can be just as risky - the mortgage payment on that same $150,000 loan at 5 percent for the first year would be about $805 a month. If interest rates go up, your payment will rise as well. If the rate goes to 7 percent, your monthly mortgage payment would be $994.

Shopping around for a home loan can help you to get the best financing deal. A mortgage is a product, just like a car, so the price and terms may be negotiable.

The experts at the Federal Reserve offer these tips:

- Be realistic about what you can afford, both now and in the future.

- Compare all the costs involved for a mortgage-interest rates, points, fees and other charges.

- Contact several lenders - banks, thrift institutions, credit unions and mortgage companies - to make sure you're getting the best price.

- Take the time to shop around and negotiate the best deal that you can.

It's also a good idea to review your credit report for accuracy and completeness before you apply for a loan.

To order a copy of your credit report, visit www.annualcreditreport.com or contact Equifax (800-685-1111), TransUnion (800-888-4213) and Experian (888-397-3742).

To learn more about this and other personal finance issues, visit www.federalreserve.gov .

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