Homeowners with high mortgage rates are being urged to refinance now before falling home prices trap them, which is bad for anyone who waits.

• Interest rates are expected to rise over the next few months as inflation from high gas and food prices scares off bond investors.
• After rates spike, they should drop sharply once expensive debt forces people to stop borrowing and banks pull back on lending.
• Home prices have already fallen 10% from the peak, close to the 16% drop during the 2008 crash, but few outlets are reporting it.
• The trap: once prices fall further, homeowners will not have enough equity to qualify for a refinance at the new lower rates, the same thing that wrecked people in 2007.
• Three groups at risk are recent buyers stuck in high-rate or adjustable loans, people in hard money loans, and old 2007-era borrowers still paying 7%+ on Washington Mutual or Countrywide loans.

Outlook: Rates likely climb short-term then fall hard, so people with rates above 6.5% have a narrow window to refinance before falling home values lock them out.