Some experts say that one of the main causes of the rise in foreclosures is that many people purchased a second home when the real estate market was booming. The second home was purchased with the intent of reselling it quickly for a profit. But when real estate sales slowed down, a majority of these homeowners were stuck making additional mortgage payments with no buyers. Those homeowners that could not afford a second mortgage are now looking at foreclosure.

Sellers who are headed into default with their mortgage company and cannot work out financing alternatives with their lender have the choice of a short sale.

A short sale is when a mortgage lender agrees to discount a loan balance due to an economic hardship on the part of the borrower. The homeowner would sell the mortgage for less than the balance of the loan. All proceeds of the sale would be given to the lender to satisfy the debt. A short sale is typically faster and less expensive than a foreclosure. Plus it could save your credit that you’ve worked so hard to maintain.

You will need to prove to the lender that you can not pay what you owe. Gather as much documentation as you can when you discuss a short sale with your lender. Write a letter explaining your financial hardships. Ask your real estate agent to provide an estimate of the market value and have an appraisal done on your home. With good strong proof of your hardship your lender may agree to a short sale.

Foreclosures are not just expensive for the homeowners but for the lender as well. You will find that most lenders are just as motivated as you are to avoid foreclosure.

This entry was posted on Monday, June 16th, 2008 at 12:39 pm and is filed under General, Sellers Advice and Tips. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.