Skip to Page Content

Understanding Short Sales


What You'll Learn

  • Your lender will need to agree to a short sale
  • If you owe more on your mortgage than your home is worth and cannot afford to stay in your home, a short sale may be an option
  • A short sale can negatively affect your credit score

A short sale occurs when your property is sold at a price lower than the total amount you owe on the mortgage, and your lender agrees to a "short" payoff. A short sale becomes an option if you have a hardship that requires you to leave the property, and you do not have the funds to pay the difference between the net proceeds from the sale of your home and what you owe on the mortgage.

Short sales can help homeowners and lenders avoid many of the costly impacts of foreclosure.

There may be tax implications to consider if you pursue a short sale. Be sure to discuss this with your lender.

A short sale may make sense if you:

  • Don't qualify for any options to keep your home, including a modification, forbearance and reinstatement. Learn more about the options to stay in your home.
  • Owe more on your loan than your home is worth.
  • Need to move to keep or obtain employment.
  • Don't think you can sell your home at a price that would cover your loan amount.
  • Have tried, unsuccessfully, to sell your home at a price that would cover the total amount due on your mortgage.
  • Have no other liens or encumbrances on the property (such as a second mortgage, tax lien or homeowner's association lien) or the other lien holders are willing to cooperate in the transaction.

If your loan is owned by Freddie Mac, ask your lender if you qualify for a relocation assistance payment to ease your transition to new housing. Find out if Freddie Mac owns your mortgage.

Be aware that mortgage workout options affect your credit rating, some more than others.  Talk with your lender about how your credit may be affected.

If your mortgage is owned by Freddie Mac, learn more about our streamlined short sale transaction that can simplify the short sale process.


Key Take Aways

  1. If your mortgage is owned by Freddie Mac, ask your lender about our streamlined short sale option

  2. Talk with your lender about the negative impacts a short sale can have on your credit and taxes

  3. A short sale can save you and your family from the financial and emotional impacts of foreclosure

You May Also Be Interested In


Short Sales: Dispelling the Myths

For a lot of borrowers, short sales remain a mystery. Get the facts on the most common misconceptions about short sales.


Housing Counselors

Learn how housing counselors can help – from improving your credit to assistance with your mortgage.


Avoiding Foreclosure

Learn how to identify the early warning signs and pursue alternatives to foreclosure.


Back to Top