The thought of foreclosure is something that frightens many homeowners. While you don't necessarily need to be scared of having your home foreclosed, you do need to have a solid understanding of what you can do to avoid finding yourself in this situation. Whether you're about to buy a home or you've been a homeowner for a while and are increasingly concerned about foreclosure, here are some important steps to keep in mind that will limit your risk of foreclosure taking place.

Don't Buy Beyond Your Means

Buying beyond one's means can be a path that leads straight to foreclosure for many people. When you sit down with a lender to get approved for a mortgage, you should be wary of buying a home in the full amount for which you're approved. Evaluate this number against your income and monthly expenses, and try to honestly assess whether you could manage a home in a certain price range. For example, you and your spouse may each earn about $30,000 per year. If a lender approves you up to $400,000, it may be a challenge to pay your mortgage. In addition to not buying beyond your means, working only with a reputable lender is also important.

Save as Much Money as Possible

You can't always predict your financial future. For example, if a loved one falls ill, you may find yourself contributing to his or her medical bills, which could leave you short on cash. As such, it's always a smart move to consistently save as much money as you can. If you find yourself getting a tax rebate or earn a bonus at work, it might be tempting to put this money toward an expensive purchase that you've been coveting. However, it's a better idea to save it. This way, if you end up struggling to pay your mortgage with your regular income, you'll have some money tucked away that you can use to avoid foreclosure.

Communicate Effectively With Your Lender

Some people fail to check mail from their lender until it's too late. Stay on top of all the correspondence from your lender. This can indicate whether there are any potential mortgage issues you could face so that you can react promptly. If you have any questions about the status of your mortgage, don't ignore them. Instead, talk to your lender right away so there are no unpleasant surprises down the road.

To learn more about this process, contact real estate services like Re/Max Alliance - The Diane Stow Team.