A short sale may have credit or legal consequences and may result in taxable income to Seller. The Seller is advised to seek advice from an attorney, certified public accountant or other expert regarding such potential consequences of a short sale.

Below, BRIEFLY, are FIVE basic alternatives to a short sale that all sellers should visit:

1) REFINANCE ~ the only reason to refinance is to lower your monthly payments.  Based on the tightening of qualifying criteria for loan applications, refinancing in today's market is becoming more and more difficult.  It may be next to impossible to convince another lender to give you a loan with a reasonable interest rate if you are behind on your current mortgage.

2) REINSTATEMENT ~ Catch up your past due amount and bring current the payments on your loan.  There will most likely be penalties, late charges and other fees.  Lenders MAY allow these penalties and fees to be tacked on to the backend of your loan.

3) FORBEARANCE ~ These agreements are designed to delay foreclosure and can be a good short-term fix.  The lender prorates the delinquent amount over a period of time until it has been paid in full.  The prorated amount is added to each regular monthy payment, which results in a higher-than-normal payment for a period of time, but you can potentially solve your financial problems.

Another type of forbearance agreement allows the property owner to temporarily pay less than the full amount of their mortgage payment (or pay nothing at all).  If the homeowner can show evidence of future incoming funds that provide enough to bring the mortgage current at a specific time, the lender may consider this alternative to a short sale.  Unfortunately, the terms and conditions proposed by lenders are often formulated to fail from the beginning.

4) LOAN MODIFICATION ~ This is a written agreement between the lender and the borrower that changes one or more of the original terms of a note to help make payments more affordable and potentially eliminate the need to apply for a short sale.  Some of the common modifications include:

a) Adding missed payments to the outstanding loan balance

b) Change an Adjustable Rate Mortgage into a Fixed-Rate Mortgage

c) Temporarily reduce your interest rate

d) Amortize loan over a longer period of time (extend the number of years you have to repay the loan)

5) BANKRUPTCY ~ Please click here for more information ~ Chapter 13 Bankruptcy

The information provided in these foreclosure/short sale pages has come from not only our experience, but the Certified Foreclosure Specialist course provided by ForeclosureU.com.