Head off foreclosure. As soon as you think you will miss a mortgage payment, call your lender to discuss your options. Besides refinancing, these may include a forbearance (you temporarily pay nothing or only a minimum amount, making up the payments either over time or at the end of the loan) or a loan modification (the lender temporarily adjusts the interest rate). The better your credit score and employment history, the more receptive the lender will be. But note that some lenders may not be able to change the terms of your loan until you're at least 30 days delinquent, and sometimes as many as 120 days past due.
If all else fails, you could try to negotiate a short sale. In that case, the lender agrees to cancel your debt in exchange for the proceeds from the sale of your home. As long as you're an owner-occupant, not an unhappy investor, lenders are likely to be receptive. Plus, they want to avoid the hassle and expense of foreclosure.
A real-estate agent can help you negotiate the deal. (Call local agencies and ask for an agent with experience or training in short sales.) You have a limited window of opportunity: Most lenders allow only three months' delinquency before they issue a formal notice of foreclosure, and state law mandates how quickly the process moves after that.
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