As we all probably witnessed, the 2007 Real Estate Word of the Year, had to have been 'Foreclosure'.

Even though the 2008 year's predictions show the market may stabilize, statistics show that one out of 95 home owners here in Florida will have to come to terms that the possibility of foreclosure is creeping up and something will have to be done to avoid it.

For those of you who bought a home in the last few years and are a part of the subprime lending category receiving an adjustable rate (ARM), your loan terms will be up soon. What is the cause and effect of this? Higher interest rates yields higher payments yields stress about being able to afford the new payments.

The prime target for this cause and effect will be the home owners that still have credit issues and think that they do not or will not qualify to refinance their home.

So what can you do to avoid the possibility of foreclosure?

Be proactive!

If you are proactive about your potential situation, the less likely you will have to deal with the torment and embarrassment of the foreclosure process.

How can you be proactive?

Talk to your lender:

First talk to your lender to see what options are available to you. You never know what they will be willing to do to keep your business. Essentially, they want people, not homes. It cost them more money to follow through with the legal process of taking your home than working with you to try to avoid the foreclosure.

Some of the options that lenders may give you are:

* Partial Reinstatement - lenders will allow you to make monthly installments of your past due amount on top of your regular mortgage payment.

* Short-term Forbearance - lender may suspend your payments for a few months or reduce for payment for a period of time and then set something up like what was is stated above to pay the amount owed.

* Long-term Forbearance - lender may suspend payments for up to 12 months and then set up a repayment plan like what is stated above.

* Loan Modification - lender may modify the terms of the loan by either cutting the interest rate or extend the payment period.

* Refinance - lender may give you the option to refinance your loan if you have equity built up and a descent credit score.

* Deed-in-lieu of Foreclosure - (this will affect your credit score) lender may be willing to let you sign the deed of the property to the bank giving up your home and them forgiving the money you owe them.

* Short Sale - (this will affect your credit score) lender may allow you to perform a short sale if the situation and conditions are right. Short Sales are an intensive process that should be handled by a Realtor who has experience in dealing with the Banks and Lenders.

Short sales have become more financially manageable these days with the new law that has been passed called the Mortgage Forgiveness Debt Relief Act. This law eases the tax burden for home owners who had debt forgiven on a mortgage due to a short sale. Now, any debt that has been forgiven from a mortgage company will not be taxed.

Sell your home:

* Sell by REALTOR - If you know the clock is ticking and the time is coming for your interest rate to adjust, or you just can't afford to make your payments any more, contact a REALTOR to see what they can do to get your home sold fast. Selling your home, especially if you have equity built, will always be your best choice.

* Sell to an Investor - If the seller's market is bad in your area and you need to sell your home fast, find an investor to buy your home. The only downfall to this is that you will more than likely take about a 20% hit to the value of the home. But if you have enough equity built up, this may not be a bad idea.

You could also ask an investor if he/she would be willing to buy the home and lease-purchase it back to you. Basically, the investor buys your home, leases it to you with the option to buy the home back at the end of a set term. This is especially helpful if you have children that are still in school. This way, you won't have to leave the area and disturb their education.

So there you have it. There are several ways that you can avoid foreclosure listed in this article. You just have to be aware of your situation, be honest about your situation and lastly, be proactive.

Get on the phone today... find out what your options are... and let's try and make a difference in 2008's real estate conditions.