Homeowners / Short Sale Options
Short Sale Home Options
Your loan type matters. Here is what you need to know about qualifying for a short sale based on your mortgage situation.
Financial hardship is never easy to face, but a short sale can provide a real path forward. You may qualify for a short sale if you are experiencing one or more of the following situations:
- ✓Drop in home market value
- ✓Long-term financial hardship
- ✓Mortgage is near or in default status
- ✓No significant liquid assets
- ✓Reasonable attempts to sell at full market value have been unsuccessful
How Your Loan Type Affects Your Options
Your lender may respond differently to a short sale request depending on the type of mortgage you have. Understanding your loan type is one of the first things we assess when evaluating your situation.
Purchase Money Loan
A purchase money loan is the original loan used to buy the property, typically structured as monthly payments of principal and interest. In some states, these loans carry no recourse — meaning the lender cannot pursue a deficiency judgment after a short sale. This is an important protection for many California homeowners.
Rate-and-Term Refinance
A rate-and-term refinance changes the interest rate or term of an existing mortgage without advancing new money. Unlike purchase money loans, these are often considered hard money loans and may entail recourse, meaning your lender could be entitled to a deficiency judgment. Understanding whether your loan carries recourse is critical before proceeding.
Cash-Out Refinance or Home Equity Loan
These loans replace an existing mortgage with a new, larger one — with the difference paid out in cash. They are often used to pay off consumer debt, medical bills, or other obligations. Because they advance new money beyond the original purchase price, they typically carry recourse and require careful handling in a short sale negotiation.
Not Sure Which Option Applies to You?
Convincing a lender to agree to a short sale on your own can be complicated. Our experts are available Monday through Friday to help. Call us at 408.740.7400 or schedule a free Zoom call.
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