People that are looking for a foreclosure alternative may want to try a short sale instead. While a short sale does not help you keep your home, it does help you avoid an actual foreclosure. You first must analyze your motivation before you pursue a short sale, if you want to save your home this is not the vehicle to do so.
In a short sale situation the homeowner is typically underwater on their loan, this means that you owe more on the loan than the home is worth. To proceed with a short sale your mortgage lender has to agree to selling the home for less than the balance remaining on the mortgage. In the ideal short sale situation the mortgage servicer will write off any balance remaining but this isn’t always the case. In some situations you’re still required to pay back any amount of the mortgage that is not covered by the short sale. This may not seem like the best situation, but if you’re having a hard time paying your mortgage and want to protect your credit rating, this smaller loan with smaller payments should be more manageable.
If you aren’t worried about your credit rating and don’t really care if you go through a foreclosure then a short sale is probably not the best option for you. You do end up losing the home and could possibly end up still owing some on the property. But if you’re looking to get out from under the mortgage with as little damage to your credit as possible, a short sale is a good idea.