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.
Related Forum Discussions:
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
I was transfered out of state for my job. I own a home in MO but live and rent in MN. I had the house on the market for 7 months without one offer. Then a I had one renter for a year and a second renter for 7 months. For the last 11 months, I have had a relative living in the house who did not pay rent. So now I am behind in my mortgage by 4 months and at risk for foreclosure. Do you think I should try a deed in lieu our should I move back to MO and live in the property? Would it be wise to hold on to the property or should I not count on the possibility of the market turning around? I am also worried about my credit which has already taken a big hit. I just don't know what to do. I don't qualify for any modification. I have tried it all...HELP!!!
Hi!
Welcome to forums!
To Guest,
A deed in lieu of foreclosure is a good option to get rid of the property. Moreover, you won't be liable for paying off the balance dues resulting from the property sale. However, a deed in lieu of foreclosure will have negative affects on your credit score and will lower it by 250 points.
To Guest,
You can apply for a deed in lieu of foreclosure for the property located in MN. Once the property sale is over, you should then move to your property located in MO. As you're unable to pay off the mortgage dues, it would be better to get rid of the property through a deed in lieu of foreclosure. Your credit score would get reduced by 250 points after a deed in lieu of foreclosure.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
To Guest,
A deed in lieu of foreclosure is a good option to get rid of the property. Moreover, you won't be liable for paying off the balance dues resulting from the property sale. However, a deed in lieu of foreclosure will have negative affects on your credit score and will lower it by 250 points.
To Guest,
You can apply for a deed in lieu of foreclosure for the property located in MN. Once the property sale is over, you should then move to your property located in MO. As you're unable to pay off the mortgage dues, it would be better to get rid of the property through a deed in lieu of foreclosure. Your credit score would get reduced by 250 points after a deed in lieu of foreclosure.
Feel free to ask if you've further queries.
Sussane
I have a situation where my mother-in-law lost her husband several years ago. Before his death he added her name to the Deed for their home, but she was never a borrower on the mortgage. She can no longer make the payments and the house is under water. Is there an affect on her credit score if she deeds the property to the bank or short sales the property - the loan does not appear on her credit report and her score never benefitted from making the payments.
Hi JAF!
Welcome to forums!
As your mother-in-law's name is not mentioned on the mortgage docs, she is not personally liable for the mortgage. If she goes for a short sale, it won't have a negative affect on her credit report.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
As your mother-in-law's name is not mentioned on the mortgage docs, she is not personally liable for the mortgage. If she goes for a short sale, it won't have a negative affect on her credit report.
Feel free to ask if you've further queries.
Sussane
My husband became ill a couple of yrs ago and is now on disability, so our income was severely cut. I am working, but we cant afford the payments on our home. We are still making the mortgage payment, but it's made late every month. We consulted our mortgage company about mortgage assistance, but even then our payment would be still be too high. We put the house up for sale in June 2010, but no activity whatsoever. Plus our house is upside down. Not only this, my husband and I are living together but we are separated. We plan on divorcing when we are financially able to. Should we apply for a deed in lieu? Any advise will be immensely appreciated. Thank you
Hi Guest!
Welcome to forums!
As you're facing hardship, it will be a good option to apply for a deed in lieu of foreclosure. However, the lender will accept your request for a deed in lieu of foreclosure only if you're delinquent on your mortgage payment.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
As you're facing hardship, it will be a good option to apply for a deed in lieu of foreclosure. However, the lender will accept your request for a deed in lieu of foreclosure only if you're delinquent on your mortgage payment.
Feel free to ask if you've further queries.
Sussane
Not sure what to do, confused as ever. I have a rental property that I cannot afford, am behind in 2200 in payments on mortage and 3000 in taxes. I cannot find any good tenants, cannot sell it as it has been for sale for a while. I have also tried to short sale it with a couple nibbles but nothing. I just received something in the mail stating they will have legal proceedings against me if I dont pay. I don't know what to do, I am facing foreclosure. Do I deed in lieu?
Hi trenkle,
You can contact your lender and apply for a deed in lieu of foreclosure. You'll have to convince your lender about your financial hardship. If the lender is convinced, he will agree to a deed in lieu of foreclosure which will help you in getting rid of the property.
Thanks
You can contact your lender and apply for a deed in lieu of foreclosure. You'll have to convince your lender about your financial hardship. If the lender is convinced, he will agree to a deed in lieu of foreclosure which will help you in getting rid of the property.
Thanks
I recently got married to a wonderful guy that has a mortgage as I do. He was laid off due to cut backs and decided to go to school and aquire a degree. In the meantime his unemployment ran out and now he is working part time for low pay juggling school and I am working all the hours I can to maintain two mortgages and two properties. We are drowning fast. We refuse to allow our mortgage payments to go into default but neither house is selling and they are priced very low. Mine is priced at a loss but the market is simply dead. I heard about Deed in Lieu of foreclosure....is this or anything an option as we have not yet allowed either mortgage to go into default. Although, I feel we are blessed to have the resourses to work like fools so that we do not loose the properties....I truly do not know how much longer I can handle 12 hour days and weekends and quite frankly fear that my work may run out. There is some indication that it is slowing and I need to have a plan. Help!!!!!!
Hi, I was wondering what is the best way to go with my situatuion....I live in WA and have a house I rent in LV, The renters are getting behide, and having to pay the morgatge payment to say my credit, the hosue couldn't sale before my hubby got transfered to WA so we have been renting it, we finacially can't keep paying the payment for them, we may have to said them to move out...we do not ever plan on going back to LV, so we want to let the house go with out hurting our 799 credit score...What do you suggest? Thanks for your input JoAnn
Boy, I think I need to learn how to spell on my questionier, Huh?:) Sometomes my fingers and ny brain don't work together. Hope you understood my questions?! Joann
Hi, We have a rental that going on Foreclosure, I'm really worried because I'm getting student loan for my son which is a Parent Plus Loan. I heard if my house goes on either Foreclosure or Short Sale I won't qualify for Parent Plus Loan for my son because they run a credit check every year. So I'm stuck I don't know what to do. What about a Deed in lieu, is it less Damaging? Do you know anything about this? Any advice is truly appreciated.
to steamroller,
the lender will want you to be delinquent on your mortgage payments if you want to get a deed in lieu of foreclosure. if you're delinquent on your mortgage payments, then you may qualify for it if you're facing a financial hardship. but it'll lower your credit scores by 250 points.
to joann,
if you list the property in the market and sell it off and pay off the mortgage dues in full, then the sale of the property won't affect your credit. however, if you go for the options of deed in lieu of foreclosure or a short sale, then your credit scores will be definitely affected.
to betty,
a deed in lieu of foreclosure will affect your credit in a similar way. i would suggest you to go for a short sale. this will have a less negative affect on your credit scores. however, you'll be liable for paying the balance dues resulting from the sale of the property.
the lender will want you to be delinquent on your mortgage payments if you want to get a deed in lieu of foreclosure. if you're delinquent on your mortgage payments, then you may qualify for it if you're facing a financial hardship. but it'll lower your credit scores by 250 points.
to joann,
if you list the property in the market and sell it off and pay off the mortgage dues in full, then the sale of the property won't affect your credit. however, if you go for the options of deed in lieu of foreclosure or a short sale, then your credit scores will be definitely affected.
to betty,
a deed in lieu of foreclosure will affect your credit in a similar way. i would suggest you to go for a short sale. this will have a less negative affect on your credit scores. however, you'll be liable for paying the balance dues resulting from the sale of the property.
I bought my condo 3 years ago for $250,000 and owe $224,000. The same units are now selling for $110,000f. I am having trouble making my payments and wonder if I should just stop paying and wait for foreclosure or go to bank and ask for principal reduction to market value and adjust the payment accordingly.
Thanks
Thanks
Hi anonymous,
If you're facing hardship in paying off the mortgage balance, then you should contact your attorney and check out if he will help you in modifying the mortgage. A loan modification will help you in saving the property from foreclosure. However, if you want to get rid of the property, then you can stop paying the mortgage balance and apply for a deed in lieu of foreclosure.
If you're facing hardship in paying off the mortgage balance, then you should contact your attorney and check out if he will help you in modifying the mortgage. A loan modification will help you in saving the property from foreclosure. However, if you want to get rid of the property, then you can stop paying the mortgage balance and apply for a deed in lieu of foreclosure.