Equity Home Loans

How does a mortgage short sell work, and how will it effect my credit?

I'm tryin to sell my house in Michigan. We have had it up for sales for 2 months, and had only one showing. We can't lower our asking price any lower then it currently is without having to come to closing with money. (that I don't have) Since our realtor already lowered his commission he suggested talking to our mortgage company about a short sale. What is your opinion?

Public Comments

1. With a short sale, you are selling your home for less than the balance due on the mortgage. This way you are still paying back some of what you owe to the mortgage company and avoiding foreclosure and subsequently bankruptcy. You need to make sure the lender will agree to the short sale and will not hold you responsible for the deficiency balance. Get any agreements you make with them in writing. Good luck!
2. In a short sale, you are asking your mortgage company to accept the proceeds of the sale as full settlement of your debt. This is better than a foreclosure, but is still a partial forgiveness of the debt. A less damaging option may be to convince the bank to allow the sale and give you a loan for the difference. Unless you can afford to keep the house, you are better of with one of these options.