If you're one of the many families that owe more than your home is now worth and your payments have adjusted so high you can't continue to make payments, there is still hope for you to keep your home. 

You may have heard the term "short sale" but the first thing you as a homeowner needs to understand is what the term “short sale” means. Basically, the “short” is the amount your home market value is now compared to the amount borrowed and owed. When a homeowner opts for a short sale, there is much negotiation between the lender and homeowner to sell the property for less than what is owed along with a lot of paperwork.

I suggest to all property owners that purchased in the height of the selling frenzy, 2005-early 07, that want to sell their home as a short sale to first ask this question: Would I be willing to stay here if I could renegotiate the terms of my loan and get a reduced payment?

If the answer is Yes, then my advice is to contact your lender and renegotiate the terms of your loan, called a Loan Modification. Simply put, a short sale allows the homeowner to sell to another party for less than what is owed because the market value has decreased significantly. Why not do that for you? There is little difference in negotiating a modification of your loan and remain in the home as opposed to someone else purchasing the home at a reduced cost; a short sale.

The U.S. Department of Housing and Urban Development (HUD) funds free or low cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender. To find a HUD-approved housing counselor near you, call: (800) 569-4287. Furthermore, the Hope for Homeowners program through HUD will refinance mortgages for borrowers who are having difficulty making their payments but can afford a new loan insured by HUD's Federal Housing Administration (FHA). Please call (800) 225-5342 for more information about this program.