Just as consumers have overspent their credit cards, many homeowners are now taking on more mortgage than they can handle. Interest only and other alternative mortgages have become so prevalent that the federal Office of the Comptroller of Currency is considering issuing a warning about such products. The office is concerned that consumers don’t fully understand the risks of these mortgages.

Even without OCC guidance, good advice from a former mortgage underwriter is that if you can’t qualify for a conventional mortgage to buy a home, you probably can’t afford that home. Interest-only and adjustable-rate mortgages have advantages for affluent home buyers or those buying property in areas where values are increasing rapidly.

Interest-only mortgages allow buyers to get into a home while making low monthly payments for a few years. However, the payments can double after the first five years. Some who finance a home this way do so with the hopes that their financial situation will improve before the larger payments are due. This is a risky gamble.

Adjustable rate mortgages (ARM) have many of the same shortcomings. They have the attraction of allowing borrowers to make low monthly payments. In fact, 70 percent of ARM borrowers made only the minimum payments in the first three months of 2005, according to UBS, a large financial group. Again, they have to pay much more later.

According to an analysis by Deutsche Bank recently published by The New York Times, about $80 billion, or 1 percent of mortgage debt, will switch to an adjustable rate this year. Next year, $300 billion of mortgage debt will be adjusted. Then, in 2007, $1 trillion of the country’s mortgage debt will switch to adjustable rates, according to the analysis.

This trend worries Federal Reserve Chairman Alan Greenspan. “The dramatic increase in the prevalence of interest-only loans, as well as the introduction of other relatively exotic forms of adjustable rate mortgages, are development of particular concern,” he told Congress earlier this month.

In areas of rising home prices, like California and Atlanta, nearly half of mortgage loans are either ARMs or interest-only. Mortgages with changing payments generally have higher default rates than mortgages with fixed payments, according to Fannie Mae, the country’s largest home finance company.

The Office of the Comptroller of the Currency plans to look at these loans to ensure they are being marketed properly. Such loans pose little risk to borrowers with substantial assets, but the office wants to ensure that others aren’t exposed to too much risk by assuming such debts. The office does not expect to release guidance until this fall.

In the meantime, the average homebuyer should read the fine print. Small monthly payments may be attractive now, but they can come at a big price later.