Several years ago adjustable rate mortgages (ARMs) were among the most popular mortgage choices made. And subprime and option ARMs made up a large part of that business. These loans allowed many borrowers to get into homes they might not otherwise have been able to. Many realized their dreams of home ownership due to these products and are managing their payments with no problem. Other less fortunate borrowers may be facing a nightmare of impending foreclosure. 

Refinance Options Are Out There

With more than a trillion dollars in ARMs adjusting, sometimes substantially upward, homeowners should take a look at their balance, their equity, and what their payments are likely to adjust to. If you are having problems making your mortgage payments or believe that you will be soon, now is time to talk to a lender and look into a refinance. 

Check with lenders to see if they are willing to refinance your existing loan and improve its terms. A new hybrid ARM, a longer term fixed rate mortgage, or interest-only terms might get your head above water. Or talk to your current lender about restructuring your existing loan--these are all preferable options to foreclosure. If you are uncomfortable speaking to your lender, try a HUD housing counselor. There are HUD-sponsored services all over the country who can advise you for free or at a low cost. For a list of these offices, go to HUD online or call (800) 569-4287 for a list of counselors. 

FHA: Financing Help Available

If you have problems refinancing due to credit issues, missed payments, or lack of equity (due to negative amortization or falling property values), consider a loan backed by the Federal Housing Authority (FHA). FHA's guidelines allow refinancing to higher loan-to-value limits than conventional mortgages. And if you made your mortgage payments on time before your loan adjusted, FHA may let you refinance even if you missed payments after your rate adjusted.

It's Your Call

The bottom line is that your lender doesn't want to see you in trouble any more than you do. If there is a way to get you successfully on track and making your payments, the odds are that working with your current lender, HUD, or an FHA-approved lender will get it done. But only if you ask for help.