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The mortgage and foreclosure crisis throughout the nation is on the rise and showing no signs of stopping.  In 2005, the net of new mortgages skyrocketed to a record $1 trillion, many of them adjustable rate mortgages (ARM).  An ARM is one in which the interest rate of the loan (based on an index) is intermittently adjusted to make certain the lender has a steady margin. 

Due to federal interest rate increases, now homeowners are struggling to pay their mortgage and many are losing their homes to foreclosure.  Further more, the increases have dampened loan demand, discouraged home buyers from borrowing, and thus slowed the housing industry even more.

If you are having trouble paying your monthly mortgage payments or possibly facing foreclosure, read on…

Ignorance is NOT Bliss

Do not ignore the problem!  Much like credit card debt, the more you ignore the problem, the worse off you are.  With a mortgage, the further behind the loan you get, the more difficult it will be to reinstate the loan, making the possibility of losing your home very real.

Contact Your Lender

Keep in mind that lenders do not want your home and they would rather avoid foreclosure altogether.  They are will work with borrowers who are willing to sacrifice a little to keep their home.  Many lenders have a range of options to help you through financial difficulties.

Respond to the Mail

This advice correlates with the first one…don’t ignore and not open the mail!  First notices from lenders often include valuable information about how to prevent foreclosure and options that are available.  Later mail may consist of notices of impending legal action, so make sure your respond to all mail from your lender.

What are Your Rights?

Make sure you know what your lender is entitled to do if you do not make your payments.  Since every state is different, learn the foreclosure laws and deadlines and due dates of your particular state.  Ignorance is never a valid excuse in foreclosure court.

Keep a Budget

Many people seem to have a hard time curbing their spending despite growing financial problems.  Establishing and maintaining a budget is necessary in order to weather financial problems. Your first two financial priorities should be healthcare and then your home, followed by credit card debt.  Create a budget based on your income and figure out what areas you can cut back on.  You will be surprised to find how little purchases here and there can add up.

Contact a Credit Counseling Agency

Non-profit housing and credit agencies can provide substantial information, help, and support.  They can help you establish the aforementioned budget to pay your mortgage and other monthly expenses and refer you to other local services that can provide financial, legal, and other help.