If you purchased or refinanced a home in 2002 or 2003, then likely you are in for a rude awakening today: higher mortgage payments as the new rate kicks in. If you were fortunate enough to lock in a low, fixed rate then good for you. However, many consumers sprung for cheap, low cost adjustable rate mortgages thinking that they could refinance at a later date. Some consumers are now successfully refinancing while others are learning that cannot get a new loan. If you are in this latter group of homeowners, then you understand what is at stake: foreclosure of your residence. Lets take a look at how you can avoid foreclosure and get out of what has become a mortgage refinancing mess for so many consumers.

Run A Credit Report Before you take the all-important step of seeking refinancing get a copy of your credit report to find out if there is anything on the report that could be used against you. Congress has authorized that the Big 3 credit reporting bureaus offer to American consumers one free copy of their credit report annually. This service is available through only one site www.annualcreditreport.com whereas other sites may charge you a fee. Youll need your credit score too, but that isnt included with the offer. For a nominal fee, typically ranging from about $4 to $7, you can obtain your credit score. You need this information as the higher your credit score is, the lower your mortgage interest rate will be.

If you notice errors on your credit report, get them fixed before refinancing. In some cases the credit reporting bureau may have to slip a note in your file explaining the mistake while in other cases you will have to write letters to get the mistakes removed. This can take time, 2 to 3 months even longer. So, if you still are many months away from when your mortgage is due to adjust, run a copy of your free credit report today and pay the fee to get your credit score.

Talk to Your Current Mortgage Company If you are seeking to convert your adjustable rate mortgage to a fixed rate mortgage, contact your current mortgage provider and ask them about switching. Since they are already familiar with you, they likely will want to keep your business and come up with a refinancing plan that is favorable to you. Ask them about streamlined refinancing as it could save you on fees and closing costs and make refinancing as easy as signing a few pieces of paper.

One more thing to consider about your mortgage provider: they may have sold your loan to a third party. In that case, you have a different lender to deal with, one who may or may not be familiar with your situation. So, in order to deal with the original company, you will have to apply all over again as you did the first time.

Shop Around Beyond your original mortgage provider there are hundreds, even thousands of mortgage companies who want to do business with you. The better your credit score, the more likely youll snag a fixed rate mortgage. If you have credit problems youll pay more if you are even eligible in the first place. Check out Lending Tree, Quicken, and Bankrate for a list of lenders.

If your credit is a wreck, then your options are very limited. Paying several hundred dollars per month more on a mortgage could put you into a financial bind, perhaps even forcing you to foreclose. Just so you know most lenders would prefer to make other arrangements with you instead of seeing you default on a loan. From a business perspective your foreclosed home becomes a burden to them as long as it is in their portfolio. Bankers are in the business of lending money, not managing property and court costs and related expenses can cost them dearly.

In all cases, if you are in a bind, contact your mortgage provider as soon as possible and come clean with them. To delay could ultimately prove to be detrimental and force your lender to take action you dont want them to take. Be proactive; it is your home until the courts rule otherwise.