What Is A Short Sale?

A short sale is when the lender agrees to let you sell your soon-to-be-foreclosed home at a price less than what your mortgage balance is (thus selling it as a loss) and then forgiving you the difference. In the case of a short sale, you lose your home but you aren’t on the hook for the difference between the selling price and how much you owe. It’s not an idea situation but sometimes there’s nothing you can do except try to get out from under a loan that could bankrupt you.

Why would you want to do this? If there is no saving your home, you might as well rid yourself of the mortgage (and the house) by trying to get your lender to agree to this. A foreclosure will cause significant harm to your credit so this is a scenario that lets you leave free and clear, albeit without a home. Again, it’s not ideal but it’s better than foreclosure.