A lot of Americans today are facing the prospect of foreclosure. You may be facing the same situation like them. Do you know the choices you can make and what actions you should take?

There are three possibilities that can happen to you if you fail to pay your mortgage. (1) Foreclosure, (2) short sale and (3) Deed in lieu.

All three can be very similar but there are nuances that you must know so you can choose what can really be advantageous in your situation.

Most of the time a mortgage short sale is the best option to take. A mortgage short sale can happen when your home is worth less than your outstanding obligations. You're essentially selling your property at a lower cost so you can avoid long and costly foreclosure proceedings. You are a good candidate for a mortgage short sale if:

1. The value of your property or home should be less than the unpaid balance due to your lender.
2. Your mortgage is in default or near default or you just don't want to continue making payments. This means your payment is either late or not paid at all, or you have great credit but simply want out!
3. You must show a hardship, although this is not that difficult. Even "I am moving to a different city or state for work purposes" can be a hardship.
   
4. You should have only modest assets. A lender will never agree to a short sale if they think you can complete your obligation to them by going after your other assets — especially liquid assets like cash in brokerage accounts, or properties that are almost paid for. Exclude retirement assets from this calculation.
   

A mortgage short sale can also be beneficial for your lender. Your lender does not want to hold on to old property either. And they definitely don't want to lose a lot of money from foreclosure proceedings just to have your old property.

Short selling is also much more gentler with your credit score than having foreclosure or bankrupt in your record. You can negotiate with your lender to give a favorable report for your credit record. With mortgage short sale you can negotiate to be marked  Paid Settlement, or Paid Satisfactory, or Unrated.

Depending on your negotiation skills, who knows…maybe you can negotiate for Paid Satisfactory rating or better yet Unrated. Unrated is the most favorable mark  if you can't get Paid Satisfactory…because it's a neutral score. It's essentially like having no mark at all with no effect on your credit.

And watch this video on short sales and foreclosures. This is a screen shot — just type in your email and I'll get you to the real video. Thank you.