Selling your home for less than the amount owed on the mortgage, with the lender’s approval.

Pros:

• Chance to restart your life sooner. Less stigma than foreclosure, less stress, and you get a clean slate to move forward.
• Control. You choose when you move — not the bank. In foreclosure, they decide, and eviction can mean your possessions end up on the street.
• Credit impact is softer. Usually, it is less severe than foreclosure, and you can often qualify for a new mortgage in as little as 2–4 years.
• Professional guidance. A trained short sale broker or agent handles the paperwork, approvals, and negotiations. With the right help, it’s not nearly as bad as people fear.
• Most lenders prefer it. As long as the home sells for fair market value, lenders typically approve — it saves them money compared to foreclosure.
• Relocation assistance. Many lenders will pay you $3,000–$15,000 to cover moving costs, deposits, and getting re-established.
• Release of debt. Most lenders will forgive the deficiency (the difference between what you owed and the sale price) if negotiated correctly.

Cons:

• Still some paperwork and waiting. It does take time, but with the right short sale professional, most of the burden is lifted off you.
• Not 100% guaranteed. Rare exceptions — like complicated liens or special mortgage insurance rules — can block approval. But these issues are usually spotted early, and other options can then be explored.

You voluntarily transfer ownership of your home directly to the lender instead of going through foreclosure.

Pros:

• Fast and private. No need to list or market the home; the process is straightforward if approved.
• Credit hit is lighter than foreclosure and often similar to a short sale.
• Sometimes you can get relocation help. While rare, some lenders will still provide moving assistance.
• Debt relief. If negotiated properly, you can be released from any further obligation on the mortgage.

Cons:

• Lose everything invested. You walk away with no equity, no sale proceeds, and no chance to benefit if the property sells higher.
• Not eligible if there are liens. Junior mortgages, HOA liens, or judgments usually block this option.
• Must negotiate release. Without it, the lender could still come after you for unpaid balances.
• Possible taxes. Forgiven debt may be considered taxable income in some cases.

The legal process in which the lender takes back the property after missed payments.

Pros:

• No effort required. Once you stop paying, the lender takes over the process.
• Time in the home. Depending on your state, you may stay months (or longer) without making payments.

Cons:

• Severe credit damage. One of the worst black marks, staying on your record for 7 years.
• Loss of control. The bank decides when you must move. After the sale, you can be evicted with little notice.
• Public and humiliating. Foreclosure notices are filed in the public record, and neighbors may see posted signs.
• Constant monitoring. The lender or their reps may drive by, knock on your door, or serve notices.
• Harassment from outsiders. Once filed, investors and “foreclosure rescue” scams will start calling and knocking on your door. Many families say this was the most stressful part.
• Deficiency judgments are possible. Lenders may still pursue you for unpaid balances, wage garnishment, or bank levies.
• Biggest regret. Most people who go through foreclosure later say they wish they had done a short sale instead.

A permanent change to your loan terms — usually lowering payments by extending the term or adjusting the rate.

Pros:

• Stay in your home. If approved, you can keep living there.
• Immediate payment relief. Monthly bills may be reduced, giving short-term breathing room.

Cons:

• One chance only. New rules mean you get only a single modification — no repeats.
• Often just a stall tactic. For many, it doesn’t solve the long-term problem of affordability.
• Risk of re-default. Many homeowners still end up back in trouble within a few years.
• No fresh start. You remain tied to a home and debt that may not be sustainable.