If you can no longer afford your monthly mortgage payments, and you don't want to lose your home to foreclosure, consider a short sale.

A short sale is available to cash strapped homeowners who are having financial difficulties. In an ideal world, homeowners could simply sell their home and purchase a less expensive property. Due to a bad economy, homes can sit on the market for several months. Even worse, tighter lending guidelines make it harder for some people to qualify for a home loan. Lenders typically require a good credit history, and in some cases, a down payment.

With a short sale, you can sell your home for less than the balance owed. In turn, your mortgage lender agrees to cease all collections, and report a "paid" status to the credit bureaus. While beneficial, a short sale has its disadvantages. For starters, lenders have to approve every short sale request, and you're required to provide information on your finances and submit a hardship letter. Secondly, homeowners rarely earn a profit on short sales. But in the end, you're able to save your credit, in which you're able to buy another home in the future.