Although things will turn bad before they turn good, if you just sign up for 3-year or 5-year adjustable rate mortgage, you may want to wait out the storm. After all, the interest rate may have peaked, and in 3 years time it will be a much better time to refinance.

The jump in payments could be even bigger for some people. They could have a loan balance that's larger today than it was when they got their mortgage - a situation called negative amortization. And it's common with what are called "payment option" ARMs.

That's because the initial teaser rate is a "payment rate," not an interest rate. That means the market-rate interest on the loan starts to accrue from the get-go and monthly payments aren't enough to cover it, let alone pay down any of your principal.

There may also be a trigger ceiling, meaning when the balance reaches a certain level - say 120 percent of the original balance - the introductory terms will end and the rate will reset upward, according to Christopher Cagan, director of research at First American Real Estate Solutions, a mortgage information provider.

End result: A much higher interest rate on a bigger loan than the homeowner ever intended.

In the past two years, homeowners took out 1.3 million ARMs with teaser rates below 2 percent, according to Cagan's research.

Of those, 21.5 percent have negative equity, where the market value of the home is less than the amount owed. The number of people in that spot could go up significantly if home prices fall as forecast or if homeowners with teaser-rate-ARMs experience job loss, illness, divorce or a death in the family, which are the main causes of mortgage default.