Q.What is an upside-down loan? My friend told me that it's a help program for those who can't afford their adjustable-rate mortgage and that it brings your rate to a fixed 5.25%. Is this correct?

A.No, unfortunately, it's not. Being upside down on a mortgage means that you owe more on your loan than your home is worth. For instance, if you have a mortgage for $100,000 but you can only sell your home for $90,000, you are upside down.

This is a common problem now, because many people bought houses with no money down and then home prices in their neighborhoods fell. When you are in this situation, you can't refinance or sell your home without having the cash to make up the difference between the sales price and what you owe.

Before you fall behind on your payments, you should contact the National Foundation for Credit Counseling on the Web or by calling 1-800-388-2227. The foundation's fees will be modest and its counselors can help you negotiate with your lender for a new, more affordable mortgage.

Twelve states also have foreclosure prevention programs designed to help homeowners who can't afford their ARMs. We have a complete list and summary of those state foreclosure prevention programs. Most allow homeowners to refinance into fixed-rate loans, and that could be what your friend was referring to. A local credit counselor affiliated with the NFCC will know about any program in your state and whether you might qualify for help.