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 bought my home in 05 for $350k via a 1031 exchange and put $50k down. Since then, the area I live in has taken major hits and in continuing to decline. As such, currently my home is worth approx $175k but my mortgage (a 5/1 ARM) is $294.5k. Jobs are going away right an left and I've applied for jobs outside of the State of FL. I'm not late but things are extremely tight each month and I struggle to make the tax and insurance payments every year since these are paid separately from the mortgage. I've been looking at Deed in Lieu vs. Short Sale vs. Short Refi. If I get a job in another state there is no way I can afford to keep both payments up. Another key factor is that my Mom has had to move in with me as she can no longer keep her house which is almost as far under and my home.
I'm trying to do the least amount of damage to my credit score so I might be able to either rent or buy a home in the area I have to move.
Comments, help, information all greatly appreciated.
Thank you.
I'm trying to do the least amount of damage to my credit score so I might be able to either rent or buy a home in the area I have to move.
Comments, help, information all greatly appreciated.
Thank you.
Hi Guest!
Welcome to forums!
If you're planning to rent a property, then you can afford to go for a deed in lieu of foreclosure. This will reduce your credit score by 250 points but you won't be liable for the deficient amount resulting from the sale of the property.
A short sale, on the other hand, would reduce your credit score by 75-100 points. However, you'll have to pay off the balance amount from the sale of the property.
If you plan to purchase a property, then short refinance will be the option for you. This will not hamper your credit score but you would be liable to pay off two mortgages.
Welcome to forums!
If you're planning to rent a property, then you can afford to go for a deed in lieu of foreclosure. This will reduce your credit score by 250 points but you won't be liable for the deficient amount resulting from the sale of the property.
A short sale, on the other hand, would reduce your credit score by 75-100 points. However, you'll have to pay off the balance amount from the sale of the property.
If you plan to purchase a property, then short refinance will be the option for you. This will not hamper your credit score but you would be liable to pay off two mortgages.
I bought an apartment in indiana, and I'm doing mortgage payments, in the middle time trying to rent my property since july until now and nothing!!!
I know that if I sell is not a good business now because people say that Im going to loose money....but I just want to do something quickly I really don't care but I don't want to pay more mortgage...I need money to study...The only thing is I dont want to affect my credit score...What should I do???
Thanks for your time and advise.
I know that if I sell is not a good business now because people say that Im going to loose money....but I just want to do something quickly I really don't care but I don't want to pay more mortgage...I need money to study...The only thing is I dont want to affect my credit score...What should I do???
Thanks for your time and advise.
I'm in an investor in AZ with underwater homes. Thinking of short sales or deed in lieu, but I don't want the credit hit.
Can I (or an agent or attorney) negotiate a short sale, etc, with the lender while still current, and not have a big hit on my credit score?
Furthermore, will they examine my other assets (such as my savings, 401K, primary residence equity, etc) to decide whether to agree to a short sale or deed in lieu? The thing is I have a fair amount of cash, but not enough to cover the negative on all the properties I hold.
Can I (or an agent or attorney) negotiate a short sale, etc, with the lender while still current, and not have a big hit on my credit score?
Furthermore, will they examine my other assets (such as my savings, 401K, primary residence equity, etc) to decide whether to agree to a short sale or deed in lieu? The thing is I have a fair amount of cash, but not enough to cover the negative on all the properties I hold.
hi,
to nanysugar,
if you cannot make mortgage payments, then your best bet would be contact the lender and apply for a deed in lieu of foreclosure. though it will lower your credit score by 250 points, you won't be responsible for the deficient amount. if you go for a short sale or a foreclosure, you would still be liable for the deficient amount.
to peppy_happy,
a deed in lieu or a short sale will hit your credit scores. a short sale would lower your credit score by 80-100 points whereas a deed in lieu would lower it by 250 points. before approving it, the lender would definitely look into your financial situation.
thanks
to nanysugar,
if you cannot make mortgage payments, then your best bet would be contact the lender and apply for a deed in lieu of foreclosure. though it will lower your credit score by 250 points, you won't be responsible for the deficient amount. if you go for a short sale or a foreclosure, you would still be liable for the deficient amount.
to peppy_happy,
a deed in lieu or a short sale will hit your credit scores. a short sale would lower your credit score by 80-100 points whereas a deed in lieu would lower it by 250 points. before approving it, the lender would definitely look into your financial situation.
thanks
I HAVE THREE INVESTMENT PROPRTIES. ALL THREE HAVE BEEN TAKEN A BEATEN FROM TENENTS & CRIME. I HAVE SANK OVER 30,000 INTO THE PROPERTIES IN THE LAST THREE YEARS TRING TO KEEP THEM RENTED. THEY ARE ALL VACANT. TRIED FOR 3 MONTHS TO SELL NO OFFERS. HOW DO I PROCEED WITH A DEED IN LIEU.
Hi ALLIDAM!
Welcome to forums!
Write a hardship letter to the lender and apply for a deed in lieu of foreclosure. The lender would come to know about your financial situation from this letter. Depending upon that, he would agree to your request.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
Write a hardship letter to the lender and apply for a deed in lieu of foreclosure. The lender would come to know about your financial situation from this letter. Depending upon that, he would agree to your request.
Feel free to ask if you've further queries.
Sussane
have a rental property in FL that is vacant for last 3 months. Cant affort to make those payments, cant sell if for Iwhat I bought it for. It hasnt been a profit/investment for the past 2 years. What can I do? . missed 2 payments already and the bank is moving slow in solutions. :cry:
Hi yenycota,
In my opinion, it would be a better option to go for a deed in lieu of foreclosure. Though your credit score would be ruined by 250 points, but you won't be liable to pay the deficient amount to the lender. In a short sale, the lender can sue you for the balance amount resulting from the sale of the property.
In my opinion, it would be a better option to go for a deed in lieu of foreclosure. Though your credit score would be ruined by 250 points, but you won't be liable to pay the deficient amount to the lender. In a short sale, the lender can sue you for the balance amount resulting from the sale of the property.
Does a deed in lieu really knock your credit score down by 250 pts? That seems to be worse than a foreclosure.
Welcome myhotlx,
In most cases, it has been noticed that a deed in lieu of foreclosure lowers the credit by 250 points. However, I don't think it's worse than a foreclosure because in a deed in lieu you do not have to pay the deficient balance whereas in a foreclosure you're liable to pay it off.
In most cases, it has been noticed that a deed in lieu of foreclosure lowers the credit by 250 points. However, I don't think it's worse than a foreclosure because in a deed in lieu you do not have to pay the deficient balance whereas in a foreclosure you're liable to pay it off.
I was transfered last April from SC to NC. I currently have a house in SC with only around $3000 equity. I have had the property on the market for 4 months with no bites. Since April I have borrowed against my 401K and have gotten way behind on credit card payments to provide for my family and keep vehicle payments current. I am almost 2 months behind on my mortgage right now and getting further behind. The loan is a VA loan through GMAC. Would you suggest a Deed in Lieu of Forclosure in my situation?
A deed in lieu of foreclosure will be a good option in your case. It will help you get rid of the property and you won't be responsible for the deficient amount resulting from the sale of the property. However, it will have negative effects in your credit score. Your score would get lowered by around 250 points. Moreover, in order to get a new loan, you will have to wait for 3-4 years.
Hello,
I have a duplex in SW Florida that is worth about 50K. I owe 143K, and am having a horrible time paying the mortgage due to income loss. I have also had a slew of bad tenants (drugs, being hauled off to jail, leaving owing thousands, etc.) and though I have applied for loan modification, I have not been presented with a permanent solution. I am getting to the point where the stress and cost is too much for me to handle. Should I consider deed in lieu? foreclosure? I am afraid of a deficiency judgment and also the tax obligations. Any suggestions would be appreciated.
Thank you!
I have a duplex in SW Florida that is worth about 50K. I owe 143K, and am having a horrible time paying the mortgage due to income loss. I have also had a slew of bad tenants (drugs, being hauled off to jail, leaving owing thousands, etc.) and though I have applied for loan modification, I have not been presented with a permanent solution. I am getting to the point where the stress and cost is too much for me to handle. Should I consider deed in lieu? foreclosure? I am afraid of a deficiency judgment and also the tax obligations. Any suggestions would be appreciated.
Thank you!
Hi arie,
Your query has been replied to in the given page:
http://www.mortgagefit.com/florida/dil-option.html
Take a look at it. I hope it'll help you.
Sussane
Your query has been replied to in the given page:
http://www.mortgagefit.com/florida/dil-option.html
Take a look at it. I hope it'll help you.
Sussane