With so many people out of work and others forced to take jobs that pay less than what they are used to making, mortgage foreclosure becomes a real fear for many. No one wants to lose his or her home especially not when you look at the impact it will have on your credit score. It’s easy enough for some people to think I can just go rent an apartment, but the reality is mortgage foreclosure follows you no more where you go and will prevent you from even renting an apartment or house! The cost to your credit history may even prevent you from obtaining the job you want or from receiving favorable insurance rates.

You know what the impact of mortgage foreclosure is on credit, but how do you prevent it from happening in the first place? The most important thing is to remain in contact with your lender. If you are faced with temporary financial difficulty, your lender may be willing to work with you by allowing you to make only interest payments until you get back on your feet. If you have longer term problems you have other options open to you.

For those who are having financial difficulty but can’t refinance their home because of having an upside down mortgage or simply not enough equity to refinance and don’t qualify for modification, a short sale may be the answer. What a short sale means is you sell the property for less than you owe on it. Keep in mind you will need to work this out with your lender; you can’t just decide you are going to sell the house for whatever you can get out of it.

Loan modification is an option for those who face long-term financial difficulties and need to reduce their mortgage payments. While there are private programs, you are likely to find federal programs more accommodating as the lender must reduce your interest rate so that you are paying no more than 38 percent of your income in payments; the government then subsidizes the loan so in the end you pay no more than 31 percent of your pay for mortgage payments. This can drop your interest rate as low as 2 percent in order to achieve the goal.

The main thing with mortgage foreclosure is saving your home and making sure your lender follows foreclosure defense regulations by not taking your home from underneath you. Many unscrupulous companies are out there; lenders are foreclosing on properties without notifying homeowners or allowing them an opportunity to salvage the home. While in the end they will have to return money to those homeowners, it doesn’t help for those who are placed out of their homes and have to seek new accommodations for their families, possibly more expensive than their mortgage payments.

Regardless of what you choose to do in terms of your mortgage, the main thing to remember is to always stay in touch when you have problems that prevent you from making your payments. Even if you are thinking about a loan modification and your lender is not participating in the program, you need to let them know you are looking into loan modification.