When you are facing foreclosure and you have tried everything to save your home, but you still can not find a solution, you may want to consider selling your home. It is unfortunate, but sometimes you have to step back and think about what is best for you and your family. Losing your home may be hard, but the stress of hanging on to something that will eventually be taken away is even worse.

Of course, if you want to keep your home and if there is still hope, I think you should fight for your house as long as possible. But I do not think it is smart to still be there when the sheriff shows up with a moving crew to throw all your belonging out into the street and change the locks. There are a limited number of ways to save a home from foreclosure and once you have exhausted all of them, and failed, then it may be time to move on and consider your other options.

First of all, selling the home yourself, or through a Realtor, is always your best option. If you can sell the home and pay off all the mortgages and liens, you will be allowed to keep any additional income that is gained from the sale of the home. Selling your home and leaving with your equity is a much better option than losing all your equity and having the sheriff forcefully remove you from the property. Many lenders will even give you extra time to complete the sale if your home is listed with a Realtor. Contact your lender and explain that you have tried everything else and now you would like them to give you time to sell the house. It will not hurt to ask, and many lenders would rather see you try and sell the house on your own, rather than go through with the foreclosure, sheriff sale, eviction, and redemption process.

If you have already tried to sell your home through conventional methods, it may be time to think about a 'short sale?, or 'deed in lieu of foreclosure.? A short sale is when the lender accepts a payoff for less than what is owed on the loan. A lender will generally approve a short sale when a home has decreased in value and more money is owed than the home is worth. Example: If you purchased your home with a loan for $300,000 one year ago and today your home is only worth $275,000, then your bank should approve a short sale, or even a short payoff for $275,000 (maybe less). In many cases, lenders will automatically approve a short sale regardless of the value of the home, because they are willing to accept a certain amount of loss in a foreclosure situation. In order for your lender to accept a short sale offer, you will need to provide them with the following items, in addition to anything else they ask for:

1. Hardship letter

2. Proof of income (pay stubs, tax returns, etc.)

3. Listing agreement (this shows them that you tried to sell the home at market value)

4. Purchase offer/contract

5. Financing approval letter for the purchaser

6. HUD Statement from the purchaser, showing disbursement of the funds

In a short sale transaction, you, as the homeowner, must be willing to walk away with nothing. Rules of a short sale specifically state that you are not allowed to benefit financially from this type of sale. You must also remember, any discount the lender give you is consider income for you. Example: If you payoff is $100,000 and your lender agrees to a $75,000 short sale amount, the difference of $25,000 is added to your income for tax purposes. Which means you'll owe the IRS additional money at the end of the year to pay the taxes on the $25,000.

While a short sale may not be the ideal solution to foreclosure, if you are out of other options, it is much better than just losing the house. If you have decided that you will not be able to keep the house, then a short sale will allow you to avoid foreclosure, and will give the lender the best chance to make as much of their money back from the defaulted loan as possible. The new purchaser will also be able to buy a house that may be far lower than market value. So, although a short sale may not be your preferred method of saving your home, it can result in a situation where everyone wins something in the end, or at least avoids losing even more.

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