Posted on: 10th May, 2006 01:22pm
If you're not able to pay your mortgage and you can't sell the home or get a work out plan, a deed in lieu of foreclosure is your third option. This option allows you to transfer the property to your lender in exchange for being released from your mortgage.
Does deed in lieu of foreclosure affect credit score?
When you go for deed in lieu of foreclosure, it affects your credit score. Your score will drop by 250 points or so and will stay on your credit report for 7 years. After 7 years, you can have the deed in lieu removed from your credit report and start to rebuild your credit. At the end of the 7th year, you can request the bureaus to remove it from the report.
How long after deed in lieu can you buy home?
Because a deed in lieu has a negative impact on your credit, lenders won't offer you a mortgage for the first 2-3 years. In the meantime, if you try and rebuild your credit the chances are that you may be approved for a loan after the 2-3 years has expired. After that you can buy a new home.
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my wife and i along w/another couple bought a 2 family with an agreement that one resident would buy the property in one year, he defaulted and left us with a ton of damage and bills. long story short we ended up doing a deed in lieu on the property. our wives were the primary lendees on the mortgage as a result we are seeing a major hit on her credit score taking it down to a 660 or so. lenders can't use her on a loan if we want to refinance or anything because they say the hit disqualifies her. we did not enter this deal to go into the hole, we worked real hard for many years to keep our credit very very good and this one property seems to have wrecked us, we don't have a ton of money, we work hard and have a small home of our own that we would like to refinance, i am getting no's from lenders. i really need some help and i feel hopeless at this point. i just don't want to see all that my wife and i are working for shot because of one bad deal that we only entered into because one tenant wanted to buy the place and take care of it and then we got stuck with it. it took thousands out of our pockets before the deed in lieu. as i said other than that we have had excellent credit, mine is over 740-750. please offer any advice, it is truly truly appeciated. i feel that we are good hard working people and we just don't want to feel hopeless.thank you so much, matt long
Hi Tim,
If you wish to buy a home with a mortgage in future, then you need to compile proofs of your income, assets, debts that you have paid off and you will be currently paying for.
Refer to http://www.mortgagefit.com/preapproval.html for more details on the paperwork that can help you to buy the home of your choice.
Hope that helps
If you wish to buy a home with a mortgage in future, then you need to compile proofs of your income, assets, debts that you have paid off and you will be currently paying for.
Refer to http://www.mortgagefit.com/preapproval.html for more details on the paperwork that can help you to buy the home of your choice.
Hope that helps
i am speaking to an attorney in regards to a bankruptcy to surrender 2 condos that turned bad investment in the fl market. i am in the mortgage business and seen people recover from a bankruptcy far more quicker than a foreclosure. granted both do stay on the report for 7 years and both are looked upon for 24 months from filing date, but lenders can't come after you for the defiency balance. my question is though in reading about the deed in lieu of foreclosure does it affect your credit if you have never been late on the mortgage before since the mortgage is immediately setteled with the mortgage company? i'm a liitle confused, but this might be a better option for me to look into. i'm certainly not trying to get out of all my debts, but the condos i have are killing me financially!
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Hello Sammy,
A deed in lieu has negative effects on your credit but it is less than that of a foreclosure.
In order to be eligible for deed in lieu, you need to have some late payments. Your lender might also ask you to go for short sale if you haven't tried to sell your property before filing deed in lieu.
A deed in lieu has negative effects on your credit but it is less than that of a foreclosure.
In order to be eligible for deed in lieu, you need to have some late payments. Your lender might also ask you to go for short sale if you haven't tried to sell your property before filing deed in lieu.
How many points does your credit score drop if you have a deed in lieu?
Hi,
Deed in lieu may lower your credit score by about 50-100 points.
Deed in lieu may lower your credit score by about 50-100 points.
Hi,
I have to make a quick decision in regards to either proceed with a Deed of Lieu or a Short Sale. But I'm not sure what is my best option. I've already contacted a real estate agent to proceed with a short sale but was declined as my mortgage company went out of business and was purchased by another company. My current mortgage company has confirmed that they are willing to hear any offer's that we may have. But I am unsure which has a more negative effect on my credit score a Deed of Lieu or a Short Sale. I heard that with a short sale the effect can stay on your credit for only 7 months. Is this true? If so, how long does a Deed of Lieu last on your credit>
I have to make a quick decision in regards to either proceed with a Deed of Lieu or a Short Sale. But I'm not sure what is my best option. I've already contacted a real estate agent to proceed with a short sale but was declined as my mortgage company went out of business and was purchased by another company. My current mortgage company has confirmed that they are willing to hear any offer's that we may have. But I am unsure which has a more negative effect on my credit score a Deed of Lieu or a Short Sale. I heard that with a short sale the effect can stay on your credit for only 7 months. Is this true? If so, how long does a Deed of Lieu last on your credit>
Hi Melissa,
Welcome to this forum.
Short Sale is far better than Deed in lieu of foreclosure and has lesser negative effects on your credit report. DIL and Short Sale both stays on your credit report for almost 7 years but DIL will drop your credit more than 100 points whereas Short Sale will drop your credit score only around 50 points and you can be approve for another loan after 18 months.
Thanks,
Larry
Welcome to this forum.
Short Sale is far better than Deed in lieu of foreclosure and has lesser negative effects on your credit report. DIL and Short Sale both stays on your credit report for almost 7 years but DIL will drop your credit more than 100 points whereas Short Sale will drop your credit score only around 50 points and you can be approve for another loan after 18 months.
Thanks,
Larry
Hello Melissa,
There is another factor that should be considered. In case of a deed in lieu of foreclosure, the lender cannot seek a deficiency judgment but he might do that if you are going for a short sale, unless your state has anti-deficiency laws.
There is another factor that should be considered. In case of a deed in lieu of foreclosure, the lender cannot seek a deficiency judgment but he might do that if you are going for a short sale, unless your state has anti-deficiency laws.
i am a senior and on a low income i have a disabled son who lives with me. my husband passed away five years ago and the home we bought twenty years ago is in need of major foundation repairs i have excellent credit but cannot afford the repairs needed on the property. i have contacted the mortgage company and they suggested a deed in lieu but this was two months ago. what will this do to my credit if i do the deed in lieu.
Hi Renna,
Welcome to the forum.
Is it a mortgaged property? Why do you want to do deed in lieu? Are you late on your mortgage payments?
As you have said "the home we bought twenty years ago" I think there is good enough equity in your property. So why don't you consider Reverse mortgage? If you want you can get a lump some money at a single time for the repair works and to meet you other needs or you can take the money on a monthly basis.
If you want to know more about reverse mortgage, you can check this article out on reverse mortgage - http://www.mortgagefit.com/reverse.html
Hope this will help you :)
Feel free to ask if you have any further questions.
Best of luck,
Larry
Welcome to the forum.
Is it a mortgaged property? Why do you want to do deed in lieu? Are you late on your mortgage payments?
As you have said "the home we bought twenty years ago" I think there is good enough equity in your property. So why don't you consider Reverse mortgage? If you want you can get a lump some money at a single time for the repair works and to meet you other needs or you can take the money on a monthly basis.
If you want to know more about reverse mortgage, you can check this article out on reverse mortgage - http://www.mortgagefit.com/reverse.html
Hope this will help you :)
Feel free to ask if you have any further questions.
Best of luck,
Larry
my company recently went through some restructuring and in turn this cost me a great amount of financial problems. we had relocated to a new area and within a year my pay was dropped 10,000.00. needless to say this was the end of last year and also the time when the housing market was starting to plummett. we did get renters that were interested in renting our house however, they were always late and we eventually had to evict them. now we are in a situation where because of the market dropping on housing my house no longer appraises for what it was worth 17months ago and i can't find anyone to refinance our house because of what i owe and where the appraisal comes in at. we are in a bad situation and are considering giving our house back. also i took another position along the same line of work and have transfered out of the area. what would be the best thing for us to do as we have always had good credit and this would be the first time anything like this would come against our credit. we are currently working with a realtor trying to do a short sell on our house but are finding quite a bit of resistance when trying to get info from our mortgage company. any advice?
Try calling Sterling Asset and Equity Corp., Joe 561-330-0400
welcome ken,
doing a short sale is a good option if you know longer want to keep the house. however, you may want to ask your realtor how many short sales she has done. very few realtors know how to "really" approach a short sale. if your realtor has not done at least 20 short sales i would find one who has.
if you want to keep the house then contacting your lenders "loss mitigation" department would be the smart thing to do. just make sure that you talk to the "loss mitigation" department.
doing a short sale is a good option if you know longer want to keep the house. however, you may want to ask your realtor how many short sales she has done. very few realtors know how to "really" approach a short sale. if your realtor has not done at least 20 short sales i would find one who has.
if you want to keep the house then contacting your lenders "loss mitigation" department would be the smart thing to do. just make sure that you talk to the "loss mitigation" department.
