With the hike in the interest rates on Adjustable rate mortgage, Foreclosure becomes a daily phenomenon in the US finance market. When one goes through the foreclosure, it becomes very difficult for him to improve his credit score. It does not only drop the credit score by 300 points but it is also shown on the credit report for 10 years. So it is very tough to get approve for another mortgage within two years after one has gone through the foreclosure process.
Deed in lieu of foreclosure is one of the smarter ways to avoid foreclosure. If you are having problem regarding your mortgage payments, you should talk to the lender and let him know about your financial hardship and he may find out some solutions for you- like mortgage modification, forbearance etc. If you cannot afford any of these options, you can go for Deed in lieu of foreclosure. Deed in Lieu affects your credit lesser than foreclosure. It will drop your credit score only by 80 to 100 points. And if the sale price is lesser than what you owe to the lender, you need not pay for the deficiency. It will be exempted and that is the biggest advantage of Deed in lieu over Foreclosure.