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If you have found yourself underwater with your mortgage and can no longer make the monthly payments, you may be frustrated and confused about what to do. A short sale is one option you may want to consider. However, before you do anything, you will want to reach out to your bank and see if a loan modification may be something they can help you with. If not, then discuss what steps you need to follow if you are going to get short-sale approval. Lastly, reach out to a realtor -- once you know what options exist -- to continue guiding you. That's the step where we come in. Call Valentino & Associates and her team of DC, MD and VA-area real estate experts for answers to the question, "Should you consider a short sale of your home?"

What is a short sale? A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property. Usually a short sale occurs when the borrower can no longer make the monthly mortgage payments and the lender determines that selling the property at a loss would be more beneficial than a foreclosure.

A short sale can help a homeowner eliminate the burden of a mortgage that he or she can no longer afford. This can keep a homeowner from declaring bankruptcy or going through the foreclosure process. A short sale however, is not without potential consequences.

What you have to lose:

1) There can be tax implications from a short sale. The forgiveness of the debt can, in some circumstances, be considered income for the homeowner resulting in an income tax obligation.
2) A short sale, bankruptcy, and foreclosure can all have a negative impact on the homeowner's credit score.
3) In some cases, if the homeowner has liquid assets, the bank may not be receptive to the idea of a short sale.
4) As many as 50% of short sales never make it to closing.

Moreover, if eliminating the mortgage will not help a homeowner make other monthly debt payments, a short sale may not be the best answer.

A short sale is something that needs careful thought. If you are considering a short sale, Valentino & Associates can help you decide what options are right for you.