To save money on his vacation, an American going to England recently exchanged homes for a couple of weeks with a British family that lives in a cottage in the scenic Cotswold Hills, an area in southwestern England of much charm with a rich literary heritage.

The arrangement seemed ideal: Both parties got accommodations abroad for almost to money, a big saving in their travel budget. But there was one unfortunate problem -- and it illustrates both the advantages and the disadvantages of house swapping.

When the American returned home, he complained to the home-exchange agency that had listed the Cotswold cottage that it had turned out to be "a primitive home with a thatched roof."

David Ostroff of the Vacation Exchange Club of Youngstown, Ariz., probably the largest home-exchange agency in the United States, told that story with a certain bewilderment obvious in his voice. Many travelers, his tone suggested, would be delighted to holiday in a thatched-roof cottage, a novel experience adding a wonderful historical flavor to a trip to England.

Along with the financial benefits, house swapping can provide travelers with this kind of unusual cultural opportunity that they won't encounter staying in tourist hotels. Often foreign visitors are invited to dinner by the neighbors or relatives of the family with whom they have swapped homes. These are its biggest advantages.

On the other hand, not everyone is psychologically suited for this kind of travel; and not every home you are interested in will live up to your expectations -- disadvantages to consider carefully before you commit yourself to a house-swapping arrangement. "You have to be adventurous," said Ostroff, "and accepting of differences in the standard of living."

While the international hotel industry as yet has no cause to worry about the competition, there is what appears to be a growing number of Americans interested in vacation house swapping. In the past, the focus has been on exchanges abroad, principally in Europe. But because of terrorism fears, many house swappers are looking for exchanges within the United States this summer.

One sign of the interest in home-exchange vacations is the publication this spring of two how-to guides. One of them is excellent: "Home Exchanging, a Complete Sourcebook for Travelers at Home or Abroad," by James Dearing (East Woods Press, 192 pages, $9.95 paperback). It is full of valuable tips on how to make a good swap, using a home-exchange agency or doing it yourself.

The other guide, "Swap & Go, Home Exchanging Made Easy," by Albert C. and Verna E. Beerbower (Frommer, 246 pages, $10.95 paperback) is, by comparison, very superficial. It highlights the pluses of swapping but ignores the potential pitfalls (and how to avoid them) -- a subject dealt with at some length by Dearing.

Essentially, house swapping is an arrangement by which you seek out someone who lives in a place you want to visit -- and who wants to travel to your home town -- and you stay in each other's house at a mutually agreeable time. Neither party charges the other, and often the family car is a part of the package -- another big budget saver since you don't have to pay extra to rent a car for two or three weeks.

As Dearing describes it in his book, you can undertake the search on your own, advertising in newspapers and professional periodicals. It is a fishing exercise that may or may not get a bite.

The easiest way to house swap, however, is to make use of one of several home-exchange agencies. One type of agency simply gathers listings of people interested in house swaps and publishes them in annual catalogues for a modest fee. It is up to you to make contact about any listings that intrigue you. Some agencies suggest sending out 50 letters to make sure you get an acceptable exchange, a formidable challenge in paperwork.

An example of a catalogue agency is the Vacation Exchange Club.It publishes a catalog that comes out in February with an update in April. The booklet contains approximately 5,000 listings of interested house-swappers in 40 countries and descriptions (and some photographs) of their homes.

Founded in 1960, the club is affiliated with the Directory Group Association, one of two European organizations that have developed networks of agencies to share listings. To list your home in the international catalogue, the basic fee is $24.70 a year. There is an extra charge to include a photograph. The charge for purchasing a copy of the catalogue, without listing your home, is $16.

A second type of agency will make the house-swapping search for you, but for a fee that can amount to several hundred dollars. One such operation is Global Home Exchange and Travel Service of South Burlington, Vt."It's a personalized service. We match our customers," said Fran Kahn, who runs Global with her husband Tim.

Prospective swappers fill out a detailed application describing their home and the kind of home and location they are seeking.Among the specifics: Are you allergic to the cats that may reside in the Riviera villa that tempts you? Using the application, Global searches its international listings for a Riviera villa, or a reasonable alternative.

The agency takes care of the letter writing and phone calls -- sometimes as many as 20, said Kahn -- providing each party with photographs of the homes involved. It also inspects the homes to make sure they are suitable, a comfort to hestitant swappers. The fee is $200 for an exchange within the United States and $250 for an international one.

Regardless of the type of agency used, achieving a swap can sometimes be difficult, and it pays to begin searching as soon as possible -- preferably months in advance. And you should have alternatives if you can't get your first choice. "You have to be flexible," said Ostroff, especially "if you want to go to Monaco and all you have to offer is a large home in Indiana. There has to be a coincidence of interests."

How do you go about making a successful swap? First, assume you are a responsible home swapper and that you have not overstated your home's attractions.

To prepare for the visiting family, your duties may include cleaning the house, providing towels and bed linens, arranging for closet and drawer space, tuning up your auto, hiring a lawn and garden service, making a detailed list of how to operate appliances and leaving a welcoming supply of groceries for the first day or two.

As the guest in someone else's home, you leave the house as clean -- or cleaner -- than you found it, keep out of the wine cellar, water the lawn -- if that's part of the arrangement -- drive the host's car in a responsible manner, pay for any phone calls you make and don't invite all your American friends to join you for a wild weekend in your temporary villa. And -- very important -- you don't cancel the swap at the last moment.

That, of course, is you. But what about the family with whom you are exchanging? How can you be reasonably sure they are as delightfully reliable as you?

You have to get to know them -- usually by letter or phone -- over a period of weeks, writes Dearing in his guide. Such correspondence can be helpful even if you use one of the fee agencies to arrange the exchange, "since almost all satisfying swaps are the product of satisfying friendships."

There is no absolute guarantee against falling victim to a last-minute cancellation, although, writes Dearing, "going back on one's word is akin to sacrilege among home exchangers." You might ask for, and also submit yourself, a copy of airline tickets as anindication of each other's good intentions.

Most swappers worry about what will happen to their home, writes Dearing, "yet least likely to result in disaster is the risk to your home and property . . . The aura of friendship fostered in exchange relationships typically behooves participants to treat each other's home gingerly."

The more likely risk, he writes, "is the possibility of being disappointed or disillusioned." Among his cautionary tips, particularly if you are house hunting from a catalogue, is not to make assumptions.

If a swapper advertises that her home "includes a washer, postal service and a swimming pool," writes Dearing, "don't immediately assume that she means an automatic washer, door-to-door postal delivery and a private pool. That's not what she said. It might be a manual washer (with clothesline dryer), a mile hike to the postal box and a communal pool."

If you are fortunate to have friends living near the home you are considering, ask them to pay an inspection visit.

You may want to ask for references, and submit references of your own. Ask for color photographs, inside and out. Find out why the other party wants to visit your home -- "Will it be used as a base from which to travel, or simply as a home? Maybe as a business office to entertain clients?"

Go into some detail about what you are getting. If a car is part of the swap, how old is the car? If you are hesitant about asking, take the lead and provide similar information about yourself. This is the advice of Jennifer Morissette, who runs International Home Exchange Service of San Francisco. "You offer as much as you can and hope you get the same back in a full description. If you don't get it, ask for it."

Since the spirit of friendship plays such a big role in house swaps, try to judge the personality of the other party through your correspondence, advises Dearing. "Were letters sent with all the information you requested? Did they do what they said they would do? Were phone calls returned promptly, and preliminary promises kept?"

You are probably on the right track if you find yourself dealing with "someone who's naturally friendly, open to conversation. Choose the family you would most want to spend a vacation with, as if you were going somewhere together."

Does the person seem considerate of your needs? "Try to judge who will prepare most thoroughly for you prior to the swap and who will most likely respect your belongings as if they were their own."

To remove irritants that may wither a blossoming friendship, make sure, in advance, that each party to the swap agrees to what is each other's responsibility. Who mows the lawn? What happens if the car breaks down? How many guests are permitted? Who pays the utility bills, and how?

Most agencies recommend that the two parties to the exchange meet at one of the homes as they begin their swap, to strengthen ties of friendship.

Dearing, 27, became interested in home exchanges after he and his wife spent several months living with a family in Japan. Despite the potential difficulties of house swapping, he said in an interview, "it's an ideal way to travel." And the risks can be minimized. After all his research, "the one thing I don't understand is why there are so few complaints."

Among the home-exchange agencies: * Vacation Exchange Club: A catalogue agency (described above). 12006 111th Ave., Youngstown, Ariz. 85363, (602) 972-2186. * Global Home Exchange and Travel Service: A personalized-service agency (described above). P.O. Box 2015, South Burlington, Vt. 05401, (802) 985-3825. * Home Exchange International: Another personalized-service agency, Home Exchange charges a fee that ranges from $150 to $525. At the low end of the range are domestic exchanges; at the high end are international exchanges. Also, the longer the exchange (a half-year or more) than the better the home, the higher the fee.185 Park Row, P.O. Box 878, New York, N.Y. 10038-0272, (212) 349-5340. * International Home Exchange Service: A catalogue agency, International Home Exchange is affiliated with the second of the two international home-swapping networks, Intervac, offering about 4,000 listings annually. About one-fourth of them are in the United States; the rest are abroad. The agency publishes a catalogue three times a year. It charge $45 to list your home; to get the catalogue (without listing) is $60. The latter price, said spokeswoman Jennifer Morissette, is an incentive to list. P.O. Box 3975, San Francisco, Calif. 94119, (415) 382-0300. * WorldWide Exchange: A catalogue agency, WorldWide Exchange also is available to subscribers to the CompuServe computer network. The fee to list in the catalogue or on CompuServe is $19.95. The catalogue is updated four times a year. In addition to home swaps, the agency has listings for boat and recreational vehicle exchanges. P.O. Box 1563, San Leandro, Calif. 94577, (415) 521-7890. * InterService Home Exchange: A catalogue agency. Box 87, Glen Echo, Md. 20812.