Do You Know Your Loan?

But that doesn't mean they can always make the best deal or even remember the loan they took, she said. "People are so busy here, they don't have time" to keep track of everything.

Others interviewed on the glorious blue-sky day in Reston also said they could understand how borrowers might not know what they've agreed to.

"I don't find it surprising that the public doesn't understand the loans," said Abhinav Jauhari of Herndon, who is getting ready to close on a single-family house, his first in the United States.

"I find it very confusing," much more confusing that the loan process in India, said Jauhari, 32, a technology professional. He and his wife, Divya, 31, own two houses in that country.

"I think I know what my mortgage will be here. It's a 7-1 ARM," meaning the interest rate is fixed for seven years and then adjusts annually, he said.

"But how much it can go up, I don't know exactly," he added. He also did not know what the rate was indexed to, or triggered by. All adjustable-rate mortgages in the United States adjust according to a publicly published number, or index, but there are a variety of indexes out there, such as those that track Treasury notes and those that track bank lending rates.

The couple, who have a 2 1/2 year-old and a 6-month-old to keep them busy, took the adjustable rate, said Jauhari, because "the prices here are much more than we thought they would be."

Farzad Shirzad, a computer consultant who works in Reston but lives in Silver Spring, also has a seven-year ARM. He and his wife, Sonya, a physician, took the 4.75 percent loan about 30 months ago because it was a way to keep up with the hot market, he said.

The couple had spent three years looking for a house but kept losing to others in the then-omnipresent bidding wars. So they had to build in room for a higher price than they had hoped, using an ARM that reduced the monthly payment.

"We didn't want to be in too risky a loan, say a three-year ARM or a five-year ARM," Shirzad said. "I think seven years at a low rate and a couple years at a high rate will be the worst-case scenario. We figured at the time we took the loan that we would refinance" to a long-term loan at a reasonable rate before the ARM could adjust.

With long-term interest rates at historic lows for the past six years, a number of people who bought with ARMs and have seen their home values catapult have refinanced into 30-year loans, according to the Mortgage Bankers Association. Those who came late to the game, however, can't count on the same kind of price appreciation, industry experts and regulators warn.

"I used to have a 7-30 mortgage," a rate that held for seven years and then adjusted to a new fixed rate for the next 30 years, said Lynn Feinberg of Arlington as she lunched by the main fountain in the Reston plaza. "But when the rates got low enough on the 30-year loans, I switched."