Everyone knows that the recent troubles within the mortgage industry have caused a lot of concern and chaos within the industry.

More and more people have become delinquent with their mortgage payments or have gone into foreclosure recently.

The numbers are downright alarming.

But the sad thing about this all is that most of the problems could be prevented.

Most of the delinquencies and foreclosures could have been prevented if the homeowners understood their mortgage and knew if they were going to face a rate increase or some other sort of change with their payment.

A recent article on Bankrate.com by Elizabeth Razzi, “Don’t get stung: Know thy mortgage,” discusses why it is so essential to know what type of mortgage you are in so you do not become another statistic of foreclosure or delinquency.

“As you read reports of borrowers who were surprised when payments on their adjustable-rate mortgages shot up from introductory teaser rates, or who were thwarted in their attempt to refinance because they discovered that their current loan has a stiff prepayment penalty, you might start to wonder if any such surprises lurk in your own mortgage. Dust off the old loan documents and look for some of these key terms, in case you have lingering doubts. If you are applying for a new loan, discuss these points with your loan officer.”

The first thing you need to look at is whether you are in a fixed-rate mortgage or adjustable-rate mortgage or ARM. With a fixed-rate loan, your payment will stay the same from month to month.

With an ARM, you usually start out with a fixed-rate for a set period of time and then your loan adjusts according to current market standards. This is what got many people into trouble because they did not even know they were in this type of loan.

“If it says your rate is fixed, check to see how long it will remain fixed. Thirty years? Five years? Six months? Unless it says 30 years (or more), you have some type of adjustable-rate mortgage, or ARM.”

“If it is an ARM, look for three things: the index, the margin and the adjustment or reset period. The index will be something widely published, such as the rate on one-year Treasury securities or a Federal Reserve cost of funds index called the COFI. Check the current rate for the various indixeson Bankrate's Rate Watch page.”

Next, you should look to check if there is a pre-payment penalty. This is especially important to do because it will let you know if there is a fee that is charged if you try to get out of the loan and refinance into a new one too early.

Finally, check all of your loan documents to see if you have a balloon payment.

“A relatively small number of mortgages call for a large lump-sum payment at the end, called a balloon payment. Borrowers need to be prepared to refinance well in advance of the date when such a balloon comes due.”

“You can get more help understanding these issues from local housing counseling agencies. For a referral, contact the U.S. Department of Housing and Urban Development, toll-free, at (800) 569-4287, or www.hud.gov.”