A lender-approved short sale may be your best choice.

As home prices have dropped in some areas of the country, a growing number of homeowners are finding their home is worth less than the mortgage amount still owed to their lender (known as being "under water" or "upside down" in the mortgage). You may find yourself in this situation because:

• You purchased your home at the peak of the local market, just before prices began to drop; or,
• You took out an interest-only or payment-option loan and your monthly payments did not reduce the Principal owed - then the home's value dropped; or,
• You tapped too much home equity through second loans or lines of credit, perhaps as much as 125% of the home's value.
  

You Have Options - We Can Help
If you can still make your monthly mortgage payments now and into the foreseeable future, you are safe providing you do not need to move. You can wait out the market --perhaps even benefiting from lower property taxes with a lowered tax assessment -- until the correction is complete and home prices again begin to appreciate.

Even if you must move, you may be able to rent out the property to cover most or all of the mortgage payment, taxes and insurance - again delaying the sale of your home until its value increases.

You may, however, find yourself without a job or caught by escalating mortgage payments and other household or medical expenses you can no longer afford. Although some borrowers can negotiate workouts or loan modifications with their lenders or qualify for the government's Making Home Affordable Program, those may not be options in your situation. Often the best choice left to avoid foreclosure is to conduct a short sale, selling your home at its current market value.

What Every Short Sale Seller Must Know
Again, the problem is that you owe your lender more on the mortgage than the proceeds you can net from the home's sale at today's market value.

Simply conducting a short sale will not completely solve your problem, since your lender is legally able to hold you responsible -- and sue you, if need be -- for the difference between what you owed on the mortgage and what was paid to the lender from the proceeds of the short sale.

Lender Approved Short Sale
To become completely free of the debt on your home, you can ask your lender to approve a short sale -- where the lender agrees to accept, as fulfillment of your obligation, home-sale proceeds that are lower than the amount still owed on the mortgage.

Alternatives to Foreclosures
Before you attempt a short sale -- which may be your best choice in the final analysis -- you should understand there can be several alternatives to foreclosure. To learn more see our special outline to your Foreclosure Alternatives.