Whether you live in Seattle, San Francisco or Miami you most likely have heard of the recent skyrocket in the number of foreclosures. The statistics are jaw dropping in housing markets across the United States. California filings have increased by 221% when comparing October of 2007 and October of 2006.

Most markets are also in decline on new home sales as lenders, whom many believe to be the culprit in the cause of the housing market woes, are now scrambling to undo some of the mess caused by the adjustable rate loans given to many unqualified buyers just a few years ago. Many of these adjustable rate loans are either at or near the end of their initial terms and are set to increase meaning more buyers will face the prospect of having their payments increase to more than what they can afford.

Undoubtedly many foreclosures will be inevitable however there are some early warning signs you can look into to help avoid foreclosure altogether.

Are you having trouble paying your current obligations such as car payments, credit cards and utilities? If you are beginning to juggle your payments it's time to review your budget. Find areas in which you can trim your spending. Perhaps you have a cable package that has more channels than you can watch. Trim the package to save, or cut out the cable altogether. Having cable is a luxury, having a home is a necessity. Smoking, excessive dining out or entertainment such as going to the movies can all be cut as they are unnecessary expenses. Avoid further credit card purchases other than for absolutely necessary items. Rely on your cash at hand. If you don't have the money perhaps the purchase can wait until you do?

Is your house payment about to increase? If you are a recent homeowner and signed an adjustable rate mortgage perhaps it is time to review your paperwork again. Find out when your rates will change and to what degree. Keep your credit healthy. Make all of your payments on time. The better your credit score, the better your interest rate will be when you attempt to refinance.

Is your house larger than your needs? Even though the housing market is in a lull and buyers are scarce it may be possible to sell your home and break even. Downsizing can be a way in which you can avoid the foreclosure catastrophe altogether. Your house is not guaranteed to sell. You will still want to take other actions such as creating a lean budget that allows you to pay more towards your unsecured debt.

The worst thing that you can do is to do nothing. It's important to face the issue head on. Make sacrifices as needed. Prepare today for tomorrow and remember to keep an open line of communication with your lender.

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