In Connecticut we are seeing some people who are having a a hard time keeping up with mortgage payments. Some have lost their jobs, are getting divorced or realize they over-bought and just can't afford the house with all the other financial obligations they face.
If you miss a couple months of payments on your mortgage, your bank will start foreclosure procedures. You can throw your hands up, walk away, and let them auction off your house. However, don't assume everything is that easy - that foreclosure will significantly impact your credit.
However, home owners have another option. They can request their banks allow them to sell their homes even if they come up short on being able to pay off the mortgage. For many, this is a far better option than having a big "Foreclosure" sign put in the yard. If sellers are considering this option, they really need to speak to an experienced real estate agent since there are some things that need to be done months in preparation to prevent more significant financial loss.
You will need to take some steps to reduce your exposure. Also, you will need to prepare a package to submit to the bank requesting to do the short sale. There are specialists out there that have helped people through this before and they invaluable in their advice and service.
If you are having trouble paying your mortgage and want to avoid the embarrassment of a foreclosure and it's impact upon your credit, consider a short sale and get more information from an experienced real estate agent (like myself!).
