Most people think a home foreclosure will never happen to them - until it does.
For most people, their home is their single largest investment - and the loss of that home through foreclosure is the most serious credit problem any homeowner can face. Knowing how to deal with a foreclosure is essential.

How does a home foreclosure happen? It can happen faster than you might think. With mortgage rates at an all-time low, and more and more couples stretching their limits on how much house they can afford, there's a greater risk than ever of falling into this trap. All it takes is a month or two of missed mortgage payments and you could be at risk of losing your home.

It all sounds frightening - and rightly so - but there are steps you can take to prevent an outright disaster. Want to know how? Read on.

It's best to act swiftly, be forthright and honest - with yourself and with the lender. Otherwise, the consequences can be severe.

1. Take a cold, hard look at your finances. What is the reason for your foreclosure? Do you earn enough money but can't seem to stay organized? Have you lost a job or been out of work for a while? Gone through a medical crisis or a divorce? Or is your spending simply out of control? If your problem is chronic lateness, or disorganization, you may need counseling help from an accredited, nonprofit Consumer Credit Counseling Services (CCCS) agency, which can work with you on your money management skills and help get relief with credit card debts.

2. Contact your lender. If you're having trouble making your mortgage payments, you need to take action. Don't delay, because the longer you wait, the harder it will become to stop a foreclosure. (And a few hundred dollars can quickly turn into a few thousand dollars in debts). Explain your financial situation to the lender, and ask about forbearance options that might allow you to make interest-only payments, or no payments at all, for a period of time. Let them know you are willing to work it out at all costs. You need to know how to deal with foreclosure options.

3. Find ways to boost your income until you get back on track. If you have an investment, like a 401k account you can borrow against or cash out in an emergency, it may be worth it to save your home. Do you have an extra car or other valuable items you could sell? Consider a second job. Do whatever it takes to stay on top of your mortgage payments.

Also, if you're already behind on your mortgage payments and face foreclosure actions, contact a foreclosure counseling organization ASAP. Make sure any firm you work with has a strong Better Business Bureau (BBB) rating before you sign any papers. These groups can leverage their foreclosure expertise and relationships with lenders to find a solution that works for both you and your lender.

Communicate and be proactive when dealing with a foreclosure crisis. Doing nothing is the worst course, both for your finances and your emotional health. As scary as foreclosure sounds, there are options available that can help avoid a serious blow to your credit, your relationship, and your financial future.