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
the 7 years will be counted after the property is sold off by the bank in a deed in lieu of foreclosure auction.
I know that a Deed in Lieu of Foreclosure is a factor that can cause a denial of a Federal Direct Student Loan (Parent Plus) However, they say it can be appealed with "extenuating circumstances" My DILF was from HSBC and I had to move for my job and couldn't sell. Is this considered an "extenuating circumstance"? Is there anything I can do to get this loan?
Welcome Helen,
It will depend upon the lender as to whether or not he will consider your situation as "extenuating circumstance". If the lender considers your situation as "extenuating circumstance", then you will be able to qualify for a loan.
It will depend upon the lender as to whether or not he will consider your situation as "extenuating circumstance". If the lender considers your situation as "extenuating circumstance", then you will be able to qualify for a loan.
Would a divorce be considered a "hardship" and thus mitigate any of the potential negative ramifications that can result after a with a deed in lieu of is executed?
Hi Guest!
Welcome to forums!
A deed in lieu will help you in getting rid of the property and will also lower your credit scores by 250 points. This is irrespective of the fact that whether or not you go through a divorce.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
A deed in lieu will help you in getting rid of the property and will also lower your credit scores by 250 points. This is irrespective of the fact that whether or not you go through a divorce.
Feel free to ask if you've further queries.
Sussane
After a deed in lieu of foreclosure has been completed how do you rebuild your credit. And when can you purchase a house? Thanks Jackie
Hi jackie,
Check out the given page in order to take steps to improve your credit after deed in lieu of foreclosure:
http://www.mortgagefit.com/credit-rating/credit-repair.html
Thanks
Check out the given page in order to take steps to improve your credit after deed in lieu of foreclosure:
http://www.mortgagefit.com/credit-rating/credit-repair.html
Thanks
we are moving out of state and have contacted our mortgage company regarding my husband's job being transferred to a different state. they have told us to put the house up for sale for three months and then we can do a dilf. we also have a second mortgage as well. we have notified them and were told that they woul dlet us out of the mortgage obligation with dilf. will this affect our credit twice? will we get hit with two 250 pt deductions on each of our credit since my husbands and my name is on both mortgages? i have read that some people's credit was hit by 60 pts doing dilf. is tis a number set for everyone? the 250 points? thanks! leslie
Hi Leslieinflorida,
It will not affect your credit twice. A deed in lieu of foreclosure will lower your credit score by around 250 points. However, you might be responsible for paying off the deficient balance resulting from the second mortgage.
Take care.
It will not affect your credit twice. A deed in lieu of foreclosure will lower your credit score by around 250 points. However, you might be responsible for paying off the deficient balance resulting from the second mortgage.
Take care.
will a deed in lieu of foreclosure affect my credit or show up on my credit report?
According to Fair Isaac, the company behind the FICO score, it will drop your credit score anywhere from 50 to 125 points, depending on what your current credit score is. The higher the current credit score, the bigger the drop.
It will also take you 3 to 7 years to get your credit score back to where it was which will likely cost higher rates and fees for credit cards, auto loans, etc.
However, in comparison to a foreclosure or bankruptcy the effect on your credit score will be less if these are the options you have.
It will also take you 3 to 7 years to get your credit score back to where it was which will likely cost higher rates and fees for credit cards, auto loans, etc.
However, in comparison to a foreclosure or bankruptcy the effect on your credit score will be less if these are the options you have.
According to the company that should know Fair Isaac, a deed-in-lieu of foreclosure does not lower your credit scores by 250 points. Depending on your current credit scores, you can expect a drop of between 50 and 125 points.
I can't provide a link by forum policy but do a Google search for "How to Wreck Your Credit Score" that appeared in the Wall Street Journal 9 April 2011.
Also, be careful with what you will read on this forum as often the posters are using erroneous or outdated information as with a drop of 250 points on your credit score for a deed-in-lieu of foreclosure.
I can't provide a link by forum policy but do a Google search for "How to Wreck Your Credit Score" that appeared in the Wall Street Journal 9 April 2011.
Also, be careful with what you will read on this forum as often the posters are using erroneous or outdated information as with a drop of 250 points on your credit score for a deed-in-lieu of foreclosure.
Is the Deed-in-Lieu of Foreclosure the same as "Cash-for-keys"? if not, what are the differences between the two?
welcome juaninlasvegas,
deed in lieu of foreclosure and cash for keys are not the same. to know all about deed in lieu of foreclosure, take a look at the given page:
http://www.mortgagefit.com/deed-lieu.html
cash for keys involves the mortgage companies giving money to the homeowners in return for the keys of the home. this program not only encourages the homeowner to turn over the home in good condition but also gives them a little extra cash to move to a new location.
deed in lieu of foreclosure and cash for keys are not the same. to know all about deed in lieu of foreclosure, take a look at the given page:
http://www.mortgagefit.com/deed-lieu.html
cash for keys involves the mortgage companies giving money to the homeowners in return for the keys of the home. this program not only encourages the homeowner to turn over the home in good condition but also gives them a little extra cash to move to a new location.