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Guest post by: Bud Gragg Become an Author

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If you're having trouble making your mortgage payment but want to avoid foreclosure, the short sale process is one way to go. At the very least, you'll be able to put off a foreclosure for up to a year; at best, you could even end up renting the house you're living in now for half of your current monthly mortgage payment!

How do Kristin and I know? Because that's exactly what we did with our primary residence. We put it up for a short sale, sold it to a cash investor, and now we're saving a lot of money renting our house from him!

But before you decide to do a short sale, here's what you need to know about the process.

To qualify for a short sale, you'll need to prove financial hardship.

The federal government started a program in April called Home Affordable Foreclosures Alternatives. HAFA sets deadlines for different parts of the short sale process, pays incentives to homeowners and mortgage holders, and requires that homeowners be released from any future liability for their mortgage.

That last point is important because, in the majority of states, the mortgage holder can come after you for the difference after a short sale. And some bankers are starting to get aggressive about doing just that. Not only that, your lender has 6 years to start trying to collect, and once it starts, it can hound you for 20 years!

Homeowners have already been able to negotiate their way out of their mortgages through short sales, but the passage of HAFA might make that process even easier.

Don't try to go to your lender yourself to negotiate a short sale. That way leads to heartaches when you aren’t able to execute a short sale because you don’t understand the process. Instead, hire a Realtor who specializes in short sales to negotiate with your lender for you. Please trust us on this. Kristin and I are both Realtors, and we had to go through a lot of short sale training and education to be able to truly do a good job for our clients. Short sales are not for the inexperienced Realtor.

Once you get the go-ahead from your lender, list your short sale with your Realtor. Your lender might try to force you to go with a particular Realtor or agency—don't do it.

And here's some good news for you. By taking matters into your own hands, you just might be able to find an investor who's willing to make a deal with you like the deal that Kristin and I made with our buyer!

But be careful on this one. You might be required to sign a document stating that you are getting no benefit from your short sale. This is called an Arms Length Transaction Agreement. If that happens, you'll have to move—if you don't, you'll be committing fraud.

Of course, once your house is listed, you may end up getting very little notice on the move date, so it's time to start planning for that date now. This means getting rid of stuff you don't need, packing anything you can pack, and making plans on where and how you want to live when the short sale is done.

But don't expect your short sale to be “short,” either! With the current market, it can take up to a year to sell even the best houses. However, you'll be able to save the money you were using to pay your mortgage during that time!

When it comes to saving you from the frustrations of a foreclosure, there's not a much better route than the short sale process. You may still need to foreclose, mind you, but at least with a short sale, you're putting off that date, usually for a long time.

And don’t fret if you need help finding a qualified, certified short sale Realtor. Just contact us and we can help you find one in your area.

Related Articles

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Referred by: http://www.meetkarennewman.com/

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