In today\'s troubled economy people are asking serious questions regarding foreclosure, the housing market and their current financial situation. A lot of people are worried and even more should be. There is clear evidence now that we have entered a period that is looking a lot like the great depression.

And this time there is no war (hopefully) to pull us out of this slump. However, one of the major problems we still have to combat is the lack of knowledge most people have when it comes to homes, mortgages, and foreclosure there is a serious lack of knowledge.

Not to worry though because I\'m about to go over what should be considered some seriously basic introduction to foreclosure and real estate and real estate related finance.

I don\'t think I need to explain a mortgage...but I will anyway. When we go to purchase a house there is no way the average person can afford the price tag out of pocket. Instead, we decide to borrow a large amount from the bank and pay it off in smaller amounts on a year by year basis.
This is the mortgage and the basic form of debt that everyone owes.

This means that the average Joe owes much more money than he thinks he does. That also means that the average Joe also has less money than he thinks he does. It\'s a fairly simple psychological factor--we can see clearly the money we\'ve earned but the money we\'re spending on our debt is intangible and therefore easier to ignore.

Foreclosure is common among people who decide to go for a house too large for their budget. The result? Not being able to pay debt and therefore having your debt collected by the bank in the form of your house.

I know this sounds both depressing and complicated but the key points to remember here are that mortgages are just fancy debts which in the long run must be paid back one way or another. That is, either start learning to buy houses you can afford or be prepared to give your house up for auction. This is a very depressing reality that many people have to learn on their own.

The key point to remember is that if you have a steady source of income and have picked a residence that is within your budget you should for the time being not have to worry about the current rash of foreclosures.