There are a number of ways to avoid foreclosure. With the President’s mortgage modification program, many people may find that they can stay in their homes. But what happens if you need to sell your home? The situation changes, and you may have difficulty in this market. And what happens if you can’t get an offer on your home that covers what you owe on your mortgage? This is a problem for many whose homes have dropped dramatically in value.

Short sale

One option is engagin in a short sale. A short sale is an arrangement in which your mortgage lender agrees to take less for your home than you owe. The amount of the difference is forgiven, and the mortgage lender is just glad you tried to sell rather than simply walk away and leave the home to the bank as a foreclosure.

However, many mortgage lenders won’t consider a short sale unless you have the home on the market for at least 90 days. Others won’t think about it unless you are in mortgage payment trouble. You should also realize that a short sale can damage your credit rating. In this economy, though, many lenders understand that you might have had no choice and will take that into consideration when you go to buy a new home — provided your credit history and debt to income ratio are generally excellent.

A short sale can be a way of selling your home quickly in this difficult real estate market. However, if you don’t have to move and you can make your mortgage payments, you might be better off to wait until home values start growing again.