Millions of people who probably couldn’t afford a home before were offered an opportunity to take out a mortgage when loose credit and subprime loans became the vogue, but now it is time to pay the piper.

This seemed like a wonderful way to own a home, especially when they were offered with no down payments, and seemingly attractive rates, even if they were going to be adjusted periodically.

Now, loans inflated by the issue that there was no equity put into them and that home prices are now falling precipitously, are turning out to be the American Nightmare.

Some of these mortgages could have rates approaching 10%, which translates to over $2,000 on even a modest home loan of $200,000. Many families can’t afford the additional $300 to $400 in mortgage payments. Re- financing is not an option since credit conditions have tightened and home values have fallen. (In all too many cases, the value of the home is less than the outstanding balance on the home loan.)

Can these homeowners find a solution? Congress is trying to find ways to help homeowners out of this crisis, but on an individual basis, each homeowner faced with the possibility of not making his loan commitment should be very pro-active in addressing the problem.

The one thing a homeowner should not do is to ignore the problem. If you know you will be late or unable to pay your monthly mortgage, get in touch with your lender and explain the problem. Illness or a loss of employment will almost force the bank to devise a payment plan for you, but if you have just been foolish with your budget, don’t expect a lot of sympathy.

Get in touch with a counselor. HUD (the Department of Housing and Urban Development) has a list of counselors they endorse who can assist homeowners to find answers to this problem.

Reduce overall expenses, especially any credit card debt. You may not be able to cut down on energy and food expenses, but now is not the time for the cell phone plan with a phone for each member of the family, or the premium high density television package from your cable provider. Whatever you are able to save you should use against your high interest credit card debt.

Discover if you may be a candidate for assistance. There is a program whereby some low income families can change their adjustable rate home loans to fixed year, 30 year loans at reasonable rates.

There are some more drastic solutions, but if all else fails, you may not have a choice.

Get rid of the property. You may have to sell at a loss in today’s terrible housing market, but some lenders may take whatever money you get in order to settle the loan. It is frequently a better solution for the lender.

Choose bankruptcy. This is the last step you should consider, since your financial life will be ruined for many years in the future. Your credit, already poor, will be worsened further, but if it is the only answer, you may be able to consolidate debt and even have some of it forgiven in some cases.

Solutions do exist, but not if the homeowner waits for the answers to come to him; aggressively addressing the problem may be the only way to avoid losing your home in foreclosure.

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What you should look for first in purchasing your first home is: whether or not to buy it! There are advantages to owning your own home, such as building equity in the home, and the many tax benefits such as the mortgage interest deduction and property tax deduction. Sometimes a changing lifestyle may give the potential homeowner no choice, for once you have a growing family, it is difficult to find rental space with two, three and even four bedrooms.

But don’t be blind to the disadvantages of home ownership, and make sure you are willing and are able to deal with them. You have to be reminded that when you rented and something went wrong, you just had to call the landlord. In your own home, these are your problems. There is no way around it, owning a house is a lot more demanding than renting.

But if the good outweighs the bad in your case, get ready to undertake this big step. The most important thing is to know how much home you can afford. There are many first time home buyer programs that may make it easier for you to qualify.

Checking into loan programs will also let you to learn how much down payment you will need and how much in monthly payments you can afford, based on your income.

The location you choose will usually be determined by purely practical matters, such as how far you are willing to commute, the quality of the school system if you have children and the nearness of family and friends.

The internet makes it simple to find homes that will meet your requirements. Any of the sites of major real estate agencies will allow you to choose a number of towns, or a given county that you have targeted as the ideal locale.

You may also decide to check out the school systems either by word of mouth, or by looking up internet surveys that rate schools; magazines frequently do such surveys as well.

You can even locate a service that ranks schools and then links you to a real estate agent in that area.

On a real estate site, you can now pick the town or area you are interested in from a drop down menu, then use their search features to hand pick your perfect home based on number of rooms, type of home and price.

This is the fun part of your search, and you can get a very good idea of your future home without even leaving your desk. But there is one visit you should have before you go see the real estate agent, and that is a mortgage broker to begin your mortgage application process.

You will find it so much easier and advantageous to shop for a house once you have a mortgage commitment in hand. First of all, it will place you as a serious buyer, and not just a “tire kicker”. This will also give you quite a bargaining chip, since the sale will move quickly if it doesn’t need to be slowed down in the mortgage application process.

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