The current condition of the economy is a tough one and getting a low mortgage rate refinance is a tough thing to achieve. There are a number of problems you can face with your house. you may be having problems in affording your mortgage payments, you are not being able to qualify for a refinance, you can’t sell your house as the drop in property value has made your house worth less than what you owe on it. There is also the possibility that you may be behind on your mortgage payment or you may be bound by a tight budget so that you can make only the mortgage payment and not any other bills.
In such a position an option that you may consider is short sale. A short sale is a process in which a homeowner, that is, you will have to come to agreement with a mortgage company that the company will accept less as payment on your mortgage than what you owe. After this they forgive the rest of the amount that you had originally owed on the mortgage. A short sale can be beneficial for both you and the mortgage company. You can get out from under your old house which you can no longer afford and start off new. You don’t have to worry about foreclosure anymore. The mortgage company with which you are signing the deal benefits if your house doesn’t go into foreclosure. This is because, their business is not selling homes and this entails for them a lot of hassle with paperwork and associate costs. On top of that, during the foreclosure, the house is anyway sold at less than what it is worth. Thus for mortgage companies, short sale is more attractive than foreclosure.
However, this does not mean that a short sale is without its drawbacks. Firstly, you won’t be able to sell your new house and buy a new one with the proceeds. You have to find another place to live, either a rental place or with friends and family. Also, with a short sale on your record, your credit will take a plunge. However, in spite of these drawbacks, a short sale is your best possible option.