Skip to Content
James J. Quail & Associates, P.C. James J. Quail & Associates, P.C.
Free Consultations 516-246-2449

Alternative to Mortgage Loan Modifications: The Short Payoff

couple looking at paperwork

If you are upside down on your mortgage, owing more than the home is worth, you may have questions about what to do next. There are many loss mitigation options. These solutions are helpful, but they often keep you paying your loan, costing you more money in the long run.

One frequently unused option is a short payoff. In this article, we will outline what a short payoff is and how it can help you.

What Is a Short Payoff?

A short payoff is a way of completely paying off your loan at a lower price than you currently owe. Typically, people who use this option want to get rid of the home and start over elsewhere.

Your lender may not advertise the fact that they offer short payoffs. Go over your loan agreement thoroughly, and see if your creditor allows this option. If you need help, allow a legal professional to look through your paperwork. They may be able to locate hidden, vague language that reveals the potential to negotiate a short payoff.

Short Payoff Requirements

You must meet certain criteria to be eligible for a short payoff.

  • You must show your ability to pay off the debt after it has been reduced.
  • The offer must be reasonable in light of the fair market value of the property, condition of the property and any problems or timeframe for foreclosure.

When Should You Consider Asking for a Short Payoff?

If all of the following applies to you, a short payoff may be a good solution.

  • Market changes have significantly reduced the value of your home.
  • The condition of your home has worsened.
  • You cannot afford to keep up with payments with the current mortgage.
  • You are ready to leave the home or can obtain financing to stay.

Benefits of a Short Payoff

Short payoffs generally have only a small impact on your credit score. Any dings on your credit score may sound frightening. However, a short payoff will get you out of debt faster, allowing you to rebuild your credit more quickly.

You can also get out of the home faster and easier. Once it is paid off, you can sell the home at market price. You can then use this money to help secure your next home and rebuild your credit. Since the home’s current value is low, it may find a buyer more quickly.

Talk to an Attorney

Even when lenders offer short payoffs, they are reluctant to go through with them. You may need the help of an attorney to negotiate with your creditors. A skilled lawyer can gather and organize your financial information, using it to build a sound argument for your short payoff.

If you need help securing a short payoff for your home, trust our team to help. For a free consultation, you can contact us online or call us at (516) 246-2449.