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It happens every year. Thousands of people lose their homes, because they can't make their mortgage payment. Maybe they've recently lost their job and now have too little income for their monthly obligation. Or maybe they purchased a loan that from the start was doomed to become unaffordable.

Whatever the reason, once you've reached the point where you're struggling to make your monthly payment, it's very hard to recover.

So the best time to avoid trouble is now -- before you sign on the dotted line.

Imagine if you could read the mind of the person who is trying to sell you a loan (hopefully you'd find more than just a book with blank pages). One thing that would become immediately obvious is that the average loan representative is looking out for her own financial interests.

That's no surprise, right? We all naturally tend to do this.

And while the loan rep may have several options he can offer, chances are that the first loan he offers you will be a good deal for your loan rep, even if it may not be your best deal.

Your best deal may the loan your rep mentions second, or third -- or never.

So while it's easy to get caught up in the excitement of the loan application moment, you can't jump at the first deal that sounds good. It's important to keep aware of the practical realities of what you can afford. One fact must remain at the forefront of your mind: No matter how good a loan sounds (and even if the loan is the ideal one for your situation), it's going to cost you a great deal of money.

That's why it's important to take the time and effort to be sure a loan is suitable for your unique circumstances.

You can do this by arming yourself with basic knowledge about the different types of loans, including their benefits, their costs, and their risks.

Then, when your loan rep makes you a deal you can't refuse, you can make a more reasoned evaluation of how well the loan suits your needs. And more importantly, you can evaluate how well it will work within your financial limitations.

So don't push aside those nagging thoughts that may be telling you there's something too risky about the loan you are looking at right now. Pay attention to the yellow warning signs at side of the road along your mortgage journey. Then ... proceed with caution.