Foreclosures are at an all time high, real estate markets are slowing down, interest rates are going up, and homeowners are starting to panic about not being able to make their mortgage payments.

Nearly a quarter of the Country's mortgages have interest rates scheduled to reset this year or next year which means higher payments for millions of homeowners.

If you're falling behind on your mortgage, or if you're already delinquent, it's important to know what your options are. Usually, the faster you move, the more choices you'll have.

Your troubles start as soon as you miss a single payment. Lenders may not contact you until you've skipped a second payment, but most will report the first late payment to the credit bureaus. Even one late payment can damage your credit score. Every late payment decreases your score, making it difficult to get a loan or refinance that might help your situation. Lenders usually tack on late fees for each missed payment.

Eventually, if the payments aren't made, the lender will file a "notice of default" with a local courthouse and send you a letter saying that the foreclosure process will start unless you make-up the missing payments.

How quickly the notice is filed depends on the individual lender. Some hold off if you contact them to work out a payment plan and explain your situation. Others are more aggressive and start the process as soon as possible.

They may do it as early as 90 days, or as late as a year. It really depends on how the lender feels.
Usually this notice means that the amount you owe has increased as well, since the lender typically adds substantial fees to cover its legal costs.

The notice of default is when it becomes serious. Once you get into that state, it's a whole different world. You have fewer options.

The notice of default is usually picked up by the credit bureaus, affecting your credit score and making refinancing the loan extremely difficult.

Borrowers usually have 90 days from the notice of default to make up the payments before the lender sends out a "notice of sale," which sets a sale date for the house.

Some lenders will allow you to keep your original loan if you can make up the missing payments plus any late fees and legal charges. Others will insist you refinance with another lender. You can also halt the foreclosure, at least temporarily, by filing a lawsuit or filing for bankruptcy.

You have a few options:

Lenders today offer a variety of solutions for people who have fallen behind on their mortgages like
temporarily reducing or waiving payments.

One option is adding the unpaid balance to the principal of your loan and increasing your payments slightly to cover the extra amount.

If you have certain types of loans, you may have even more options. If you have a mortgage insured by the FHA you may qualify for an interest-free loan to get your mortgage current. The money doesn't need to be paid back until you pay off the mortgage or sell the house.

If you can work out a solution with the lender quickly enough you can avoid serious damage to your credit. That's the reason most experts suggest you to call your lender as soon as you know you'll have trouble making a payment.

This is good advice, but can be difficult for a couple of reasons:

Lenders can make it tough for you to get to the right department. The people you want to talk to are in the "loss mitigation" department. But many lenders don't route borrowers to that department until they've missed several payments. Until then, you might be dealing with the lender's collections department, which offers one option: Pay up now. If you're serious about keeping your home, you may have to really push to get to right people.

You have to be able to make the payments. If you agree to a lender's solution and then fail to make the agreed-upon payments, you'll be in real trouble.

This can be a big problem if the financial crisis that caused you to fall behind isn't over. If you don't know where you're going to get the money to make the payments, trying to work out a solution with your lender will be tough.

Even if you can't work out an agreement be sure to keep in contact with them to let them know where you stand."

So what to do? First, you'll need to take a hard look at your financial situation.

Make a budget. Sketch out a spending plan for the next several months, including expected income and expenses. See what costs you can trim to free up as much money as possible for home payments. You may need to pay the minimums, or even less, on other debts.

Check your refinance options. If you have equity in your home, your credit rating is relatively good and your lender hasn't filed a notice of default, you may be able to get another loan with more affordable payments. An experienced mortgage broker can let you know your options. Be cautious about jumping into another risky loan, though: adjustable, interest-only or "option" mortgages might just cause higher payments down the road.

Be realistic. Many times people struggle to hang on to a house that they simply can't afford when they'd be far better off selling it. That may seem difficult, but it's better to sell a home while you still have a decent credit score than to have it taken away in foreclosure.

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