Can I Sell My House in Abilene If I Owe More Than It's Worth?
An underwater mortgage, sometimes called an upside-down mortgage, means the amount owed on the home loan is higher than what the house is currently worth [1]. It is more common than most homeowners realize. Nationally, an estimated 3 percent of mortgaged properties are underwater by at least 25 percent, a number that has been ticking upward over the past year [2]. If that describes your situation in Abilene, the good news is that being underwater does not mean you are stuck.
How Does a House End Up Underwater?
There are really two paths to this situation. The first is a drop in local property values since the home was purchased, which reduces what the house is worth without changing what is owed on it. The second is falling behind on mortgage payments, since missed payments allow more interest to accumulate while the principal balance stays roughly the same, effectively working against the homeowner's equity over time [1].
Either way, the result is the same problem: selling the house the traditional way would mean walking away with less money than what is still owed on the loan, or in some cases, owing money out of pocket just to close.
What Are My Options If I'm Underwater?
Homeowners in this position generally have a few paths forward. Staying in the home and continuing to pay down the mortgage over time is one option, assuming the payments are manageable and there is no urgent need to sell. Refinancing is another possibility in some cases, though a lack of equity can make that harder to qualify for, since lenders weigh equity heavily when assessing risk [1].
A short sale is a more direct route if selling now is the priority. In a short sale, the mortgage lender agrees to let the home sell for less than what is owed, with the lender absorbing the difference or working out a separate repayment arrangement [3]. Short sales require lender approval on any offer, which can slow the process down and is not guaranteed even when a reasonable offer comes in [4].
Can I Just Sell for Cash If I'm Underwater?
Yes, but the mortgage payoff still has to be addressed at closing regardless of who the buyer is. A title company will calculate what is owed on the loan and determine what needs to happen with the difference between the sale price and the payoff amount. In some cases that means bringing money to closing to cover the gap. In others, especially where a short sale arrangement is in place, the lender may agree to accept less than the full balance owed.
A direct cash sale does not eliminate this step, but it does remove other variables that can slow a traditional sale down, like buyer financing contingencies and appraisal requirements that a struggling market can complicate further.
Will I Owe Taxes on Forgiven Mortgage Debt?
This depends on your specific situation and current tax law, and it is genuinely a question for a tax professional rather than general blog guidance. In some past situations, forgiven mortgage debt from a short sale has been treated as taxable income unless specific exemptions applied. Because tax treatment can change and depends on individual circumstances, homeowners considering a short sale should talk with a tax professional or attorney before finalizing anything.
What If I'm Underwater and Behind on Payments?
This combination adds urgency, since missed payments can eventually lead toward foreclosure if the situation is not addressed. If this describes your situation, it is worth reading through what options exist for homeowners behind on payments in Abilene, since some of the same considerations apply [5]. Contacting your mortgage servicer directly and speaking with a qualified housing counselor or attorney is a good first step regardless of which path you choose next.
Does Being Underwater Mean I Can't Sell At All?
No. It means selling requires an extra step of working through the payoff amount with your lender or a title company, but it does not make the house unsellable. Joe Homebuyer Abilene works with homeowners in a range of difficult financial situations and can talk through what a sale would actually look like given your specific loan balance and the home's current condition [6].
Sell an Underwater House in Abilene TX
If you owe more on your Abilene home than it is currently worth, you still have real options, whether that means waiting it out, exploring a short sale, or moving forward with a direct sale. Joe Homebuyer Abilene can walk through what your specific situation looks like and help you understand the path forward that makes the most sense.
Joe Homebuyer Abilene helps Abilene homeowners work through difficult financial situations with honesty and a clear path forward, not more confusion.
Sources
[1] Underwater mortgage? Know your options – Rocket Mortgage – https://www.rocketmortgage.com/learn/do-you-have-an-underwater-mortgage
[2] Underwater mortgage? Know your options – Rocket Mortgage (ATTOM Q4 2025 data) – https://www.rocketmortgage.com/learn/do-you-have-an-underwater-mortgage
[3] What Is a Short Sale in Real Estate? – PNC Insights – https://www.pnc.com/insights/personal-finance/borrow/what-is-a-short-sale.html
[4] What Is An Underwater Mortgage & What Are Your Options? – SmartAsset – https://smartasset.com/mortgage/underwater-on-your-home-loan-you-do-have-options
[5] Can I Sell My House Fast in Abilene If I'm Behind on Payments? – https://abilenecashhomebuyers.com/blog/can-i-sell-my-house-fast-in-abilene-if-im-behind-on-payments
[6] What We Buy – https://abilenecashhomebuyers.com/what-we-buy
[7] How Do I Sell My House Fast in Abilene to Avoid Foreclosure? – https://abilenecashhomebuyers.com/blog/how-do-i-sell-my-house-fast-in-abilene-to-avoid-forclosure