Definition
A sale of a property for less than the outstanding mortgage balance, with the lender's approval. Homeowners pursue short sales to avoid foreclosure when they cannot make payments and owe more than the home is worth. Short sales impact credit scores less severely than foreclosures (50-100 point drop vs 100-150+) and have a shorter waiting period before obtaining a new mortgage.
Related Mortgage Terms
- Equity
The difference between your home's current market value and the remaining mortga...
- Foreclosure
The legal process by which a lender seizes and sells a property when the borrowe...
- Default
The failure to meet the legal obligations of a mortgage, most commonly by missin...
- Amortization
The process of paying off a mortgage through regular monthly payments of princip...
- Annual Percentage Rate (APR)
The total annual cost of a mortgage expressed as a percentage, including the int...
Understanding mortgage terminology helps you compare loan offers and make informed decisions. Use our mortgage calculator to see how these terms affect your monthly payment.