Short Sale vs. Loan Modification


There are advantages and disadvantages in doing either a Short Sale or a Loan Modification in order to rid yourself of your mortgage (debt) OR to keep you home.

We’ll break it down for you…


  • You can continue to live in your property through the very long short sale process which enables you to save money and prepare for your new financial future.
  • You get rid of a high loan balance on a property that is not worth what you paid for it – at NO COST to you by using Phoenix Short Sale REALTORS from the Cook & Associates Real Estate Advisors.
  • Delinquent property taxes will have been paid by your lender.
  • You will AVOID FORECLOSURE on your credit report.
  • As of today’s guidelines, you will be eligible for mortgage financing only 2 years after the close of your short sale.
  • You can begin new planning for you and your family’s future.
  • According to the Mortgage Forgiveness Debt Relief Act of 2007, you will have tax free debt relief on the federal tax return on the bank’s shortfall provided that you close the short sale by December 31, 2012.


  • You will have to move.


  • You can continue to live in the house.
  • You may have affordable mortgage payments for several years.
  • You have avoided foreclosure (at least temporarily).


  • The lender will more than likely not bring you current if you are behind on property taxes, HOA dues, or any other mortgage related liens. If they happen to bring you current, the amount paid will be added to that amount to your already high loan balance.
  • You are responsible to keep your property taxes current.
  • The lender will not reduce the principle amount of money owed on your loan to the current market value.
  • Since your principle loan amount is still higher than market value, there is no way to predict when the housing market may appreciate back to where it’s worth what you paid. Furthermore, you have to factor in all of your holding costs during the time you were waiting for your house to appreciate back to what you paid for it.
  • Many times, 2nd lien holders (mortgages) will not modify their terms.

For example, if you short sale your property in 2010 you will be eligible in 2012 to apply for a mortgage. And if you purchased a property sometime between 2003-2006; property values will probably still be at or lower in 2012 than they were during the 2003-2006 years making this a very sensible decision to make from a financial planning perspective.


Contact the Cook & Associates Real Estate Advisors today to help you decide!