For millions of homeowners with adjustable-rate mortgages, it’s time to rethink your risk acceptance.

Short-term interest rates have risen steadily since last spring’s record lows. If your one-year ARM is about to celebrate its first birthday, you are going to have to have to allot more money towards your monthly mortgage payment.

Though most ARMs contain caps on how much their rates will increase each year, the adjustment can still be painful. Most borrowers are looking at their rates adjusting to between 5.5% and 6%. On a $250,000 mortgage, an interest rate hike to 5.5% works out to an additional $297 a month.

Borrowers who have used short-term ARMs to purchase homes they couldn’t afford with a fixed rate may find that they are unable to make the higher payments. They could be paying as much as the fixed rate interest was when they couldn’t afford it.

Despite the large adjustments anticipated, ARMs are still popular with borrowers. Economists say that the rising rates for 30-year fixed-rate mortgages have kept ARMs popular.

If you have an ARM, or are considering one, there are things you should do to stay ahead of the rates.

Work out the worst-case scenarios before they ever happen. Even if your rate doesn’t adjust until next year, you should already look at what your payment may be. You can find mortgage calculators on the Internet that let you know what affect rate increases will have on your monthly payment.

Look at your caps. The most common caps are rate increases limited to 2% a year and 6% over the life of the loan. For example, if your initial rate was 3% and your lifetime cap is 6%, you’ll never pay more than 9% – no matter how high rates go.

Annual caps give you some breathing room; you know your rate won’t automatically go from 3% to 9%. You can adjust into higher rates.

If you took an ARM when rates were really low, your first adjustment will probably still be a lower rate than the rate for a 30-year fixed mortgage. If you think you will move in a few years, you should probably just stick it out.

If you don’t plan on moving, consider a hybrid ARM. You can convert to a hybrid ARM that offers a fixed rate for up to 10 years before adjusting. You probably won’t be able to lower your rate any, but you’ll avoid a higher rate next year. There is some security in knowing your payment will not change over the next decade.

If you are in the market for a mortgage, consider thoroughly all of the potential risks of a one-year ARM. The Federal Reserve is expected to continue raising short-term interest rates well into next year.

If you can afford a longer-term mortgage, but you need less of a monthly payment for investments or other things, a one-year ARM might fit your needs. But if a short-term ARM is the only way you can afford your home, you can’t afford the home.

Hybrid ARMs carry higher rates, but they are a safer gamble. By the time it adjusts, there is a fair chance that you will have moved or interest rates have decreased.

No matter what type of mortgage you chose, you should look at all the possible results and scenarios. Run all the numbers at all the different rates. If there is anything you can’t afford, that’s just it. Don’t want a house so badly that you risk your entire future to borrow for it.