I’m behind on my mortgage — should I do a short sale?

Learning that one might face foreclosure can be disheartening. Foreclosure occurs when a homeowner falls behind on his or her mortgage payments, usually for three months. It is not unheard of for some lenders to wait as long as six months before starting foreclosure proceedings, although it is not as common. There are alternatives to foreclosure though, and Maryland homeowners might want to explore all their options before accepting their fate. One such option is a short sale.

A house is sold off during a short sale, for less than what the homeowner still owes on the mortgage. This might be an appropriate option for someone who believes that he or she can find a buyer quickly. A short sale is not a magic solution, though, and it is important to be very clear when working with lenders on what will happen when the sale is finalized.

Since a short sale involves selling a home for less than the balance on the seller’s current mortgage, this creates a gap between the proceeds from the sale and what he or she still owes the lender. Lenders might agree to accept less than they are owed and call it at that. However, others might require borrowers to come up with the funds to make up for the shortfall.

Like with all financial decisions, there are benefits and drawbacks to short sales. A short sale might be a good idea for someone who does not want to explore his or her options for bankruptcy, which can put a halt to foreclosure proceedings. Learning more about these options might give Maryland homeowners the courage to make the best possible decisions for their own unique situations.