Margaret Service retired recently, and decided to move to Fredericksburg, Va., to be near friends. She put her Wheaton home on the market and, when she found a buyer about two weeks later, she thought the way was cleared for her move.

In fact, her problems were just beginning. Before she finally was able to complete the sale of her house, the interest rate had gone up and the number of discount points, each equal to one percent of the mortgage amount, had risen to a level that ate deeply into her proceeds from the sale.

Service said the whole experience was so harrowing that she "ended up in the hospital" when she finally got to her new home in Fredericksburg. The diagnosis was a "heart condition," the first she has had, she said.

Although most home sellers may not require hospitalization, many have faced problems resulting from the fluctuating interest rates on FHA- and VA-insured mortgages and the accompany points, ranging as high as 7 and 7 1/2, being charged.

Under the law, sellers are required to pay all but one point. In Service's case, the sales contract she signed with Army Capt. Sandy Amato stated that she would pay no more than 4 1/2 points. These points would require a $4,050 cash payment at the time the sale was closed.

By the time the VA loan was approved, the interest rate had risen to 12 percent, a development that added $43 a month to Amato's monthly mortgage payments on her $90,000 loan. Points were perilously pushing 8, a level that would require Service to make a cash payment of $7,200, said Don Schiller, the real estate salesman representing her.

Schiller said he "worked very hard" in negotiations with the lender and succeeded in having the points reduced to 5 3/4. Service said she paid up and left for Virginia without clearing the amount of money she had expected.

She also was pressed on the purchase of a new home in Fredericksburg. A local bank offered a 11 1/2 percent loan but only through July 5. As a result, she had to get a bridge loan at a cost of about $700, to hold the new house until she received the proceeds from the sale of her three-bedroom home in Wheaton.

Another Montgomery County homeowner has found a buyer but cannot go to settlement because of the high number of points he would have to pay.

He and the prospective buyer have "almost an adversary relationship the way things are right now. I'm praying the rates will go up so the points will drop. He's probably praying the points will stay the same and the rate will not go up," said the seller, who asked that his name not be used for fear of jeopardizing the sale.

The homeowner bought the house a year and a half ago, with a $75,000 loan at 14 1/2 percent interest. He is selling it now because he and his wife have divorced.

"I figure I've probably gone through $25,000 or more," counting the down payment, closing costs and $1,000 monthly payments, "and right now I'll be lucky if I even break even," he said.

In many sales, both buyer and seller "end up viewing the transactions as if [each] were the loser," said Douglas Douglas of Rouse Real Estate Finance in Columbia. He said he would "like to see" the interest rates of FHA- and VA-insured loans go up half a point, which "would get the market back in the three- to four-point range."