Federal banking regulators have revised a consumer handbook on adjustable-rate mortgages to heighten awareness of the "payment-shock" risks that prospective borrowers face if they take out an interest-only or payment-option ARM.The consumer handbook has examples indicating that the monthly payments on a $200,000 5/1 interest-only ARM can jump from $666 in the first year to $1,288 in the sixth year and $1,536 in the seventh year. On a $200,000 option ARM, borrowers making the minimum $739 monthly payment for the first five years can see their payment jump to $1,603 in the sixth year and $1,708 in the seventh year. "The main point is that, depending on the terms and conditions of your mortgage and changes in interest rates, ARM payments can change quite a bit over the life of a loan -- so while you could save money in the first few years of an ARM, you could also face much higher payments in the future," says the section on payment shock. Lenders can order 100 free copies of the newly revised handbook from the Federal Reserve Board.

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