It seems that a lot of home owners are unaware of their options or what they should do once they find they are unable to keep up with their mortgage payments.Regardless of your situation you should always contact (do this face to face if at all possible) your financial institution and let them know what is going on with you before things get out of hand.
It could be a long and frustrating process to even get face to face and speak with somebody, but the last thing you want to do is leave a voice message thinking or hoping they got it so everything should be fine because as far as you're concerned you left a message explaining your situation.
If you're not up to the task of doing this; work with a Realtor that is experienced in these kind of transactions and sign the necessary paperwork to have them work out a solution with your financial institution on your behalf. Keep in mind that you will have to let the Realtor know the reasons why you're unable to pay your mortgage on time, providing proof of how you got in this situation and utter honesty is key to favorable results.
Below are some differences of a short sale and a foreclosure;
SHORT SALE- The borrower owes more money on the loan than the property will sell for in the current market and is unable to bring the balance of that money to closing if the home sells.
The lender has not foreclosed on the property yet so the owner has an opportunity to sell the home in hopes of satisfying as much of the amount owed to the lender as possible. Lenders prefer you to remain in the home during this process because abandoned or vacant homes are more of a financial headache.
Less damage to your credit score. If you're current with other payments your score may only drop by 50 points.
You need permission and approval from the lender before you can sell your home for less than is currently owed on the mortgage.
FORECLOSURE- A process where the lending institution takes ownership of a home that the borrower defaulted on and discontinued to show financial interest in maintaining the home.
Process normally begins on loans that are more than 90 days past due.
Lowers credit score by 200 points or more. Remains on credit history for 7 years.
If you're currently experiencing hardship and have difficulty paying your mortgage go to www.hud.gov for more information and to find out what options you have. At the end of the day the lender really does not want your home; it normally costs them a lot o money to own and service your home. They would much rather the home be sold as a short sale because at least some of the loan money is acquired and also a new home owner would be responsible for the upkeep of the home.