 TITLE: How Does a Short Sale Affect Credit? CONTENT: How Do Short Sales Work?\n------------------------\nA short sale is when you sell a home for less than your outstanding mortgage balance. It's a way to get out of a loan when you're underwater (meaning you owe more than the home's currently worth) and avoid foreclosure if you're having trouble affording your payments.\nBefore you proceed with a short sale, you'll need your lender's approval. Often, lenders may agree when a borrower runs into financial trouble—such as a job loss or medical emergency—and the lender determines a short sale will be more favorable than foreclosing on the property.\nIf you're approved, you'll still need to go through the home-selling process, which can be more complicated than a normal sale because your lender will ultimately be the one to accept or decline a buyer's offer. The timeline could also be drawn out if you have several lienholders (for instance, if you have a home equity loan or home equity line of credit), or if your lender sold your mortgage to an investor.\nAfter a short sale, you may be responsible for the difference between the sale price and the outstanding balance unless you get a waiver of deficiency from the lender or live in a state that doesn't allow deficiency judgments. END