It may have seemed like a perfect solution to many homeowners and buyers. Refinancing or purchasing with an attractive low-cost option mortgage seemed a perfect financial solution.

But now that interest rates are adjusting on many mortgages, homeowners are getting a not-so-perfect surprise.

In the last five years, millions of Americans purchased homes and refinanced properties using risky mortgages with adjustable rates and low initial payments. The once appealing teaser rate has ended, and some monthly payments have more than doubled.

With interest rates climbing over a percentage point since 2003, homeowners are lured into non-traditional loans with low teaser rates such as 2%. But when the teaser period ends, monthly payments can increase by 50% say industry experts.

Christopher Cagan, director of research for First American Real Estate Solutions, estimates that payment shock will result in approximately $110 billion of foreclosures in the next two years.

Homeowners are facing a double-trouble situation. Not only are they facing higher monthly payments, they are facing the possibility of not being able to sell their homes for what they owe.

Those who purchased or refinanced during the peak of the real estate market in their area are facing the possibility of declining real estate values. If they can't sell and can't pay their mortgage, they have few options but to default on their loan.

There are non-profit agencies out there that will help homeowners refinance at affordable fixed rates. But homeowners must be able to afford their home on a traditional mortgage -- one of the reasons they didn't go with traditional in the first place is that they couldn't afford it.

Those that can hold on to their homes will probably come out unscathed if they just hang in there. Millions will probably have to cut their losses and start over. And hopefully, more homebuyers will exercise higher caution when choosing a mortgage product in the future.

Martin Lukac (http://www.MartinLukac.com), represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!