When Your Debt Exceeds Your Home Value One option to consider is called a short pay off. Chris Colvin offers this Q&A on short pay offs. What is a short pay off? Imagine your home is worth $200,000, but you owe $220,000 on it. If you were to sell it in the open market at $200,000, you might net $184,000, or $36,000 less than what you need to pay off the loan. A short pay off is where your lender will forgive a portion or all of the short amount. What lender would just write off that type of money? Just about all of them will, with justification. Justification might stafford loans colorado debt consolidation mean a substantial loss of income that would prevent you from paying on the mortgage, therefore being forced in a position to sell the home. Attempting to sell short so you can upgrade to a larger property is not justification. In addition, lack of cash reserves will also serve as justification. Don't expect to place your home on the market at 75% of market value and expect your lender to jump on any offers. How will this affect my credit? Depending on how you negotiate the transaction, it could go on your credit report as, "settled," or, "paid," or "short payoff." It depends on the lender and how colorado debt consolidation colorado debt consolidation well you can negotiate. Are some lenders harder to deal with than others? Yes. If you have a Freddie Mac loan, Freddie Mac will probably want you to contribute to the short sale, get your agent to reduce brokerage fees, and get the buyer to take the property with the termites. Some lenders will just ignore you. What will my lender require from me in order to consider participating in a short sale? Packaging is very important. When you place the property on the market (go with an agent), your agent should send the lender the following: Your past 2 years tax returns Letter of hardship Complete loan application Preliminary title report Listing contract Copy can i buy a home after bankruptcy colorado debt consolidation of MLS A marketing plan for your home A broker price opinion (like an appraisal). When you have an offer, all of the above should be enclosed with the offer (except for the marketing plan) plus the purchase agreement, and a good faith estimate as to what the lender will net after the close of escrow. Why should I list with an agent? It seems if I can save the brokerage fee that the lender would net more and be more inclined to accept any offers that come in. You are correct. If you're loan is current, you may be able to get a qualified buyer yourself. If your loan free loan amortization schedule colorado debt consolidation is delinquent, or in