A short sale occurs when you sell your home for less than the amount you owe on the mortgage. It’s a long and complicated process – and one to which the lender must agree.
You have to be more than underwater on your loan – meaning your home is worth less than what you owe – to qualify for a short sale. According to The Balance, you typically need to meet four requirements to qualify:
- The market value of your home has dropped so that the home is worth less than what you owe on the mortgage.
- Your mortgage is in or near default status.
- You have fallen on hard times. Hardship can include unemployment, illness or medical emergency, bankruptcy, or a death. You’ll need to write a letter to the lender explaining and documenting your hardship.
- You have no assets.
Never take on a short sale without getting legal advice first.