Foreclosure is never an option you think about when purchasing a home. However, sometimes circumstances come around where foreclosure could be a possibility. Foreclosure happens when you no longer make payments on your mortgage - for whatever reason and the lending institution takes your home from you as payment for the outstanding debt. Having a foreclosure on your record will seriously damage your credit score for a long time and may prevent you from being able to purchase another house in the future. How can you avoid foreclosure?

Talk to your lender. Don't be afraid or embarrassed about speaking with your lender about your financial difficulties. The lender does not want to take your property; they are not in the business of selling houses, which is what they have to do with properties after they are foreclosed upon. The longer you wait to talk to your lender, the harder it will be to work out a solution.

If you are behind on payments because of a temporary problem, such as a short period of unemployment, or illness - then you might ask for one of the following solutions: forbearance, repayment plan, or reinstatement plan. Forbearance is a temporary halt to your payments. Interest will still accrue, which will be added to the remaining balance of the loan and you will then shortly begin making full payments on the mortgage when the forbearance period ends. Repayment plan is best if you can continue to make your regular payments on time and set up a payment schedule to pay a bit more each month so that you can work off the late payments over time. A reinstatement plan is best for you if you can resume regular payments and are able to pay off the late payments in one lump sum.

If you foresee that your income will be reduced for a long period, you might want to consider these options. Refinancing your existing mortgage. If you have enough equity and have held your mortgage long enough - you might be eligible for refinancing and rolling the past due amount into your new mortgage. You can give your property back to the lender by way of Deed in Lieu of foreclosure. The bank then accepts your house as payment of your mortgage in full. Deed in Lieu will leave you without a home, but will not affect your credit score as much as a full foreclosure. Sell your house on your own. If you are in pre-foreclosure proceedings, you may be able to get the bank to stop proceedings if you agree to sell your home. You must follow through on the sale and the lender may put a time limit on it, so that may mean taking a lower price for the home than you might otherwise to get a fast closing.

Depending on the type of mortgage you have, your lender may have other programs available to help stop the foreclosure. Time is of the essence here, the sooner you speak with your lender, the more choices you will have to avoid foreclosure.

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