Do you owe more than your house is worth?

Or are you unable to make your mortgage payments?

Mortgage costs including taxes and insurance should be no more than 40% of your take-home income, at worst. Many people are paying more than this.

Your mortgage payments may feel like a crushing burden and you probably don't know where to turn for help.

It turns out that a short sale may be the answer for you.

I want to focus on doing a short sale -- that lets you sell your house, get out from under your mortgage without paying in any cash, and get out from under even if you owe more than your house is worth.

Because let's look at your choices.

Choice #1: If you sell your house and you owe more than it is worth, you can pay your own money to make up the loss.

For example, if the buyer pays $180,000 because that is all you can get as far as an offer, and your mortgage is for $250,000, you have to pay in $70,000 cash at closing or else the deal will fall through.

Do you have that kind of cash? Many people do not have that money. And I don't suggest you raid your 401(k) either.

So the only other option that is the least bit appealing is a mortgage short sale.

A short sale involves mortgage lender cooperation. Your mortgage company must agree to accept the buyer's full proceeds as payment in full for your mortgage. The home loan lender lets you out of your mortgage and allows the new buyer to step in and buy your house.

You are out of the picture and you didn't put any cash in.

The mortgage company may still decide to come after you later, to pay them for their financial loss. Each state's laws are different but often they have two to four years to file a complaint in court and sue you for their financial losses.

You can negotiate this, sometimes, during the short sale process. They will agree not to go after you, in writing.

The mortgage lender may also report you as a deadbeat to the credit agencies. Or not. You can negotiate this too, sometimes, during the short sale.

The key element though is that by doing a short sale, you are helping your mortgage lender get out of a big problem. And that gives you room to negotiate more than you thought possible.

You see, their problem is having a non-performing mortgage loan and they do not want your house back either.

Your problem is their problem.

So you can make things a lot better if you will sell your house and get the lender to accept the short sale. The lender loses money.

But not nearly as much money as they lose if they get your house back.

Getting your house back could cost the mortgage company tens of thousands of dollars.

Banks are not that great at holding on to your house. They have to pay for fixing it up because they can't sell a house in any condition. And they have to hold onto it while it sits on the market. Lenders typically only recover $0.68 per $1 of value on a foreclosure house if they take it back.

So why not do a short sale instead?

I have learned of the system that lets you sell your house in nine days, with no fix-up, in any market. Because it is a short sale, the lender expects to get clobbered. So they will let you sell your house for 75% - 85% of market value. That means that you can sell your house while your neighbors probably can't because they feel they must get a higher price than you need to get.

The market value of your house is the real market value today, not the one six months or twelve months ago. A short sale can be done substantially below this real market value. And that means that it is a good deal for the buyer. And good deals are the only deals that are happening today.

Remember, in a short sale, you aren't getting any of the proceeds yourself. All proceeds after closing costs go straight to your mortgage company. You won't see a dime of it.

So that means that all you care about is exposing your house to the market and letting the market decide what your house is worth.

As long as you can demonstrate to the lender that the buyer is paying a fair price today (a price that can be substantially below market value), you can get the lender to say "yes" to a short sale.

And that means you can get out from under your debt and move on with your life. You can even buy another house with little or no money down, no qualifying, and bad credit.

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