Should You Stop Making Payments To Do A Short Sale?

Good question. And I don’t have the answer nor would I ever suggest you miss payments. But I do have an opinion based on my own experience.

First a few facts:

• Missing payments will mess up your credit.

• Missing payments is no guarantee of a short sale approval.

• Missing payments could cause you to be foreclosed on.

However, if continuing to make payments is harming you and your family's future AND it is certain that you will not be keeping the property, then why continue to throw good money after bad?

Being delinquent on your payments will certainly help to prove a hardship. Plus your loan will then become a non performing asset and the investor will have to do something with it. A Short Sale is almost always their best option. They will not foreclose out of spite. They will dispose of the non performing asset in the way that limits their loss the most. That's a Short Sale.

I did Short Sales on 2 of my investment properties in 2010. I was delinquent and did not have to bring any money to closing. It was the best thing I had done in a long time. My only regret is that I didn't do the Short Sales sooner and I wish that I had done Short Sales on my other properties instead of selling and bringing money to closing.

By trying to "hold on" I cost myself thousands of dollars that could have been used elsewhere. My credit was damaged and is still damaged. But you know what?

It forced me to evaluate my complete financial picture. There’s a reason I got into the mess I was in. And it had nothing to do with the lenders “screwing me”. I got into the mess because I borrowed more money than I could ever of  had a realistic chance of paying back. Paying it back was dependent upon outside factors i.e. tenants paying rent and values increasing. If either of these went wrong I was screwed. And of course we all know what went wrong.

Sure I couldn’t have predicted the Real Estate crash of 2006 but I could have been in a position where it would not have mattered as much.

I went from owning 6 properties and almost a million dollars in debt to owning nothing but my home, which was bought using private financing after my Short Sales.

My home is half the size of the one I used to have. My auto is paid for. And I have a total of $100,000 in debt. This includes the mortgage on my house that has roughly 20% in equity.

My business is booming. I have zero financial stress and I'm getting ready to take a month off. That will be my third vacation this year after not having one in the last 15.

Maybe, just maybe, the Short Sale can be your beacon to a better life.

Moral of the story: Don't be a slave to your credit score and debt. Make a difficult decision now and get on with your NEW life.

I hope this helps.