Borrower, beware: Debt disaster looms as rates rise on easy-money mortgages

The Seattle Times reports:

It was a sweet little house, with affordable day care nearby for their 6-year-old son. Patrick Fultz and Laurel Swartz were hooked.

But when the couple — with no savings and about $20,000 in credit-card debt — shopped for a mortgage to buy their 1,200-square-foot house in Tukwila last year, they heard the same thing from lenders and in a home-buying class they attended: Forget it.

"You basically had to be Scot free, no massive credit debt, which we had, and to have money in the bank, which we didn't," said Swartz, 31. "How do people buy houses in America anymore?"

With school starting soon, the couple didn't want to wait to buy their first house. "And of course online and on the radio it's like, 'Oh, you can get a place without putting any money down.' "

An American debt story.