Many experts will agree that the sub-prime mortgage lending crisis played a large role in landing the country in its current economic recession. This is in large part due to lenders who willingly gave out huge mortgage loans to customers who didn’t or who barely met the minimum lending standards. In turn, these customers were much more likely to default on their home loans, which many did. This caused a boom in foreclosure levels across the country and contributed to a consistently worsening economic crisis.

It’s important to understand that dodgy lending practices are not the only things that can produce a distressed mortgage situation. Many other factors may go into creating a situation that causes you to lose your home. Take the time to learn about these different situations so you can guard yourself against them.

Ultimately, a distressed mortgage situation occurs when you have trouble making your monthly mortgage payments or when you completely default on your mortgage loan. One of the most common reasons for a distressed mortgage situation is an increase to your monthly mortgage payments. If you initially signed on for a variable interest rate rather than a fixed interest rate, you are at risk of having your mortgage payments increased.

Many people, especially first-time home buyers, choose variable interest rates over fixed rates because the initial rate is often lower than the interest rate they’d land under fixed terms. Unfortunately, this low interest rate only lasts for a set amount of time – typically five or seven years. After that, your mortgage is subject to market forces and to the rates that your lender chooses to impose. This can cause your payments to skyrocket, eating into your monthly budget and ultimately making it impossible for you to meet your payment schedule. This is an especially risky situation if you bought a house that was initially outside your means but which was made possible only with the help of a variable loan.

Though this is the most common reason for a distressed mortgage situation, it’s also the most preventable. By resolving to sign on only for a fixed rate loan when you purchase your house, you’ll be able to make certain that your payments never rise to a level you cannot manage.

Other factors that contribute to a distressed mortgage situation are a job layoff or the failure of a business. Neither of these situations is wholly preventable as both are subject to market forces and to the demands and needs of the economy. Because neither of these situations is within your control, you may be able to request a loan modification or a refinancing deal in light of your distressed situation. In some cases, you may even be eligible for loan forbearance. It is important to be proactive in the event of a job loss or a business failure as waiting to act could cost you your home.

Death and illness are yet two other common reasons for a distressed mortgage situation. If the primary breadwinner in your family passes away without leaving enough life insurance or savings to adequately cover mortgage payments, you could risk losing your home. Similarly, if you or someone in your family faces illness that requires significant medical expenses or which takes them away from their job and income, you could face a distressed mortgage situation. In either case, a distressed mortgage situation can be prevented by making sure you have an appropriate amount of insurance and savings to carry you through any difficult times.

A final and very common reason for a distressed mortgage situation occurs in the event of a separation or divorce. In cases where two incomes are required to finance living expenses, a separation or divorce may make a mortgage entirely unmanageable. Though it is difficult, it is important to work through your personal difficulties quickly and to decide whether it’s in the best interest of both you and your spouse to quickly sell your house or to work out a mutual agreement so the mortgage is not sacrificed.  In such cases it’s essential to remember that both of your credit ratings will be harmed if you allow your mortgage to fall into default status.