You can no longer afford your mortgage payment and you’ve decided to try to get out from under your house. You could just wait until the bank forecloses, but that will damage your credit for years to come. A short sale is a good alternative. You’ll find a buyer and your Realtor will convince your lender that the selling price is the best they’re likely to get. But it’s not that simple. There’s one more thing. The mortgage company is still hoping that you can make the mortgage payments. In order to convince them that their only other choice is foreclosure, you need to write a convincing hardship letter.

Lenders know which kinds of things make loans default. If you claim to have a financial hardship, they will want to know specifically what the problem is. And they’ll want to verify it. Here are some of the more common financial hardships that tell lenders that a loan is not going to succeed.

Your payments have increased to a level that’s no longer affordable for you. If you got an adjustable mortgage by qualifying for the initial payment, then the interest rate went up, there’s a good chance that the payment is now more than you can afford. You are not the only person who thought they’d be able to refinance their home at a lower fixed rate in a couple of years. Unfortunately if you can’t get an appraisal that shows that your house is worth more than the loan balance, you won’t be able to refinance even though the interest rates are low now. Just like when you first applied for the loan, the bank will want to verify your current income. If your ratios would allow you to qualify for the current monthly payment, they won’t let you out of it.

Your income has fallen. Many homeowners have lost their jobs or taken pay cuts, making it impossible to make the mortgage payment each month. This is true whether you work as an employee or you’re your own business. Lenders understand that lack of income means that you cannot and will not continue to make mortgage payments. The money just isn’t there.

Your expenses are greater than before. Has an unexpected illness left you with unmanageable medical bills? Have property taxes increased to the point that you can no longer afford your home? Even if the cause was not completely out of your control, increase debt levels make it difficult to pay the mortgage payment.

Divorce, separation or loss of a borrower. If you qualified for the loan with two incomes and now there’s only one, you can no longer afford the house payment. Lenders recognize that in divorces, both people and their incomes still exist, but they won’t both be living in the house. The same incomes now must be used to support two separate residences.

Significant damage to the home. Lenders require you to have fire insurance on your home, but sometimes something happens that’s not covered, like an earthquake or a flood. Large expenses due to property damage may be seen as a hardship in the lender’s eyes.

Relocation. If you have to move for your job or for military service, the mortgage company understands that you won’t be able to keep up the payments on this house while paying for housing in the new location.

If home values had not fallen so much, homeowners with financial hardship would simply sell their homes and take whatever loss that meant. Since home values have fallen significantly in recent years, many homeowners can’t sell for enough to pay off the mortgage. If you can show the lender that you have a valid financial hardship, they may approve a short sale, which will allow you to get on with your life without the credit disaster of a foreclosure.

When you’re back on your feet and ready to buy a home again, you can apply for a home loan online. Just look at these beautiful new homes San Marcos and you’ll start thinking about how to shore up your credit quickly.

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