With mortgage rates continuing to rise and the housing market continuing to soften, a homeowner's ultimate nightmare may be around the corner: when the value of your home drops below the amount you owe on it. If you need to sell, you'll be forced to make up the difference however you can.

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"A lot of people turn to their retirement funds," says Marc Minker, a certified public accountant with Mahoney Cohen in New York City. "It's not the best answer" but it may be your only way out.

If you're facing the crunch and don't absolutely have to sell, a better option, he counsels, is to wait out the market downturn. Whatever your situation, Minker recommends a few basic steps to make sure you're prepared for the worst, should the housing market take a serious turn for the worse:

Refinance your adjustable-rate loan into a fixed-rate one. Interest rates have risen sharply — 30-year fixed-rate loans are averaging 6.58 percent, compared with 5.77 percent a year ago, according to Freddie Mac — but they're still historically low and the pennies you spend now will pay dollars later on.

Set aside an emergency fund to make sure your mortgage payments are covered in case of catastrophe or if rates on your ARM rise sharply. You don't want to be forced to sell in a down market.

Consider taking out a home-equity line of credit, which you can tap when you want. Payments may be tax-deductible but rates are often variable so don't get carried away and spend your "emergency" credit line on a new sports car.

If your situation warrants it, consider downsizing or otherwise changing your housing situation — like moving from a seller's market to a buyer's market — to take advantage of the downturn.

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