Short sale 101: What you need to know
Rather than have a home go into foreclosure, the bank may approve a short sale. This allows the home to be sold for an amount that is less than what is left on the mortgage loan. For example, if the home is sold for $150K but there is still $175K left on the mortgage loan, the lender agrees to take a $25K loss. In some cases, the homeowner may be partially responsible for a portion of the loss. However, in certain situations of hardship, this amount may be forgiven and the homeowner can be discharged from the loan.
In order to qualify for a short sale, you must meet certain criteria, such as being delinquent on your mortgage payments and not having the ability to refinance your mortgage. To learn more information about alternatives to foreclosure, visit our short sale page.