In 2006, foreclosures claimed more than 1.2 million homes in the United States, a 42% increase over 2005. According to Reuters, that's about one foreclosure for every 92 households in America! And now, with the recent collapse of subprime lenders, foreclosure estimates for 2007 and beyond have gotten even worse, spanning predictions that range from optimistic to downright cataclysmic.

Some commentators blame the crisis on lax credit guidelines over the past few years; others fault Wall Street bankers and mortgage-backed securities. Either way, one thing seems abundantly clear: millions of Americans are, or soon will be, overextended and at serious risk of losing their homes. Are you, or someone you know, one of them?

If you're currently struggling to make your monthly mortgage payment, the decisions you make today could make or break your financial future. Remember, even though most lenders would much rather have the money and interest that your mortgage can generate as opposed to actually taking your home, the foreclosure process can begin immediately after a single mortgage payment is past due, and you've breached the agreement. Therefore, don't wait for this to happen. Even if you're already late on a payment, there may still be a number of options available to help you keep your home. The key to avoiding foreclosure is enlisting a mortgage specialist to help analyze your financial situation.

The following are a few possible short- and long-term options that could help you avoid foreclosure, depending upon your particular goals and needs.

Refinance
If you have an Adjustable Rate Mortgage and you're currently struggling to make the monthly payment, then ask yourself this: can you really afford an increase of up to 50% or even 100% of your current payment when your loan resets? Fixed rates are currently near historic lows, and refinancing may provide the stability you need to get through the tough end of this changing real estate market. Even if you have a prepayment penalty, you may still have attractive options that, in the long run, could save you a lot of money. The key is to act now. As more and more subprime lenders collapse and foreclosures increase, credit standards will tighten further, and, depending upon your credit, you may not qualify to refinance in the future.

If you're an ARM borrower who is not struggling with current mortgage payments, are you prepared for a potential increase when your loan resets? Do you know exactly how much your increase will be? Do you know your index and margin? One of the biggest problems ARM and Negative-Am ARM consumers will face is simply not being aware of and prepared for the changing nature of their mortgage instrument. Don't let foreclosure sneak up on you. Can you afford a $700 a month increase in your mortgage payment? If you have an ARM, look six to twelve months down the road. What if you lose your job? What if your child's tuition increases? Will you be able to handle the increased monthly mortgage payment? These are important questions and issues that should be addressed by an expert who has your best interests in mind.

Sell Your Home
If you do have some equity built up, selling your home could be the quick fix you need. Ask a real estate agent for a comparative market analysis to see if your home can be sold before your payment resets at a higher rate. Sure, you may not get the price you could've gotten for your home a few years ago, but you may be able to avoid foreclosure and even walk away with some profit.

For many borrowers, however, an increased mortgage payment is not their biggest problem right now. In parts of the country where home values have significantly decreased, some borrowers actually owe more on their mortgage than their house is currently worth. And while this is a terrible position to be in, it does not mean that a house can't be sold or that foreclosure can't be averted. Ask your mortgage specialist about the possibility of a short sale, a common strategy that allows you to sell your home at a loss.

Some consumers may want to consider a hard-money refinance. A last resort, this is a more expensive "private money" loan that is not advisable for all borrowers. When it comes to private-money loans, however, be careful. There are scammers out there who prey on people trying desperately to save their homes. Always seek professional advice before taking on any mortgage or refinance. Remember, your goal in refinancing is not to put yourself in a worse position than you're already in.

Communicate with your Lender
If you don't have a lot of equity built up, and homes all over your neighborhood are up for sale, foreclosure is not necessarily inevitable. If you simply can't afford your mortgage and you seem to have no other options, talk to your lender before you get behind. To avoid the expense of a foreclosure, some lenders may be willing to work with you.

If you do get behind in your payments, your lender may provide a forbearance agreement, but lines of communication must be kept open. This type of arrangement will allow you to make back payments and avoid foreclosure. If, however, you run out of options and there seems to be no hope, you could always offer to give up the deed in lieu of foreclosure. To avoid legal costs, some lenders may accept this gesture without initiating foreclosure proceedings.

The subprime collapse is in full swing and, one way or another, millions of borrowers are going to be negatively affected. With the enormous wave of foreclosures expected in the coming years, it's important to know exactly where you stand with the biggest investment you'll likely ever make: your home. If you are concerned about possible increases in your monthly payment, get a mortgage check-up today. You'll be glad that you did.