The process typically begins with a letter or phone call from your lender after your payment is more than 30 days late [source: HUD]. However, this does not mean you are in foreclosure. You still have time to speak to your lender and work out a payment plan or alternative solution -- or simply make the payment to bring your account current. Since the foreclosure timeline varies by state, it's important to contact your lender and your state's government housing office to fully understand your options and the amount of time you have before official foreclosure begins. A basic timeline outlined by the U.S. Department of Housing and Urban Development (HUD) estimates three missed payments -- or 90 days -- before an official demand letter or notice to accelerate is issued [source: HUD]. After receipt of this letter, you'll usually have 30 days to make your missed payments or contact your lender to work out a plan. If you do not respond after the 30 days offered by the demand letter, your lender will more than likely contact their lawyer and begin foreclosure proceedings [source: HUD].
If you do go into foreclosure, your credit score will be affected drastically, and will usually decrease between 200 and 300 points [source: Silberstein]. And even if your financial situation turns around quickly, you credit score probably won't recover for as many as seven years. This low credit score will make it difficult to buy a car, a new home, or even apply for credit cards or loans. Of course, the fear of homelessness aside, the affects a foreclosure has on your credit should have you running to your lender for advice. We'll discuss the many options available to help you stay in your home and avoid foreclosure next.