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
Hi I was co-signor on a mortgage that we had to do a deed in lieu . main signor was unable to work due to health issues about 1 year into the loan and I also had a leased vehicle which I could not afford to return early due to penalties and the need to get to work. How will this affect my ability to purchase a new house. Its been a year and a half .
Hi r,
As you were the cosigner for the loan, the deed in lieu of foreclosure will have a negative affect on your credit report. You won't be able to purchase a property within the next 3-4 years.
Thanks
As you were the cosigner for the loan, the deed in lieu of foreclosure will have a negative affect on your credit report. You won't be able to purchase a property within the next 3-4 years.
Thanks
I own a weekly time share in Hilton Head. I do not have a mortgage. The complex has 950 units, but slowly many units are foreclosing (about 20%). The remainging unit holders, including myself, has to share in the expenses of those forclosed units, as well as additional expenses. I want to foreclose on my unit. Is a deed-in-lieu the way to do it. The week was purchase in 1983 for $7,000 and now the value has dropped to $1,000. The annual maintenance fee is $994.00. It would be absurd for me to continue own the unit..................
How does a deed in lieu of foreclosure affect a spouse's credit report IF she is not on the loan or house documents but house was bought during the marriage?
im in the mid 700's no late payments, no collections, im in pretty good standing. in these horrible economic times would i really take such a hit on my credit score and would creditors not be willing to positively evaluate no late credit card payments, excellent debt to income ratios, etc.. im shocked to hear i could be so seriously penalized when everything else is near stellar. And solely because we are in near great depression conditions i gotta take such a hit
Hi Gene,
If you are unable to afford the property any longer, you can apply for a deed in lieu of foreclosure. However, the lender will agree to your request if you're delinquent on your mortgage payments. Also, you should remember that a deed in lieu of foreclosure will reduce your credit score by 250 points.
Hi blindsey,
Though the house was bought during the marriage, if the spouse's name is not mentioned on the mortgage, the deed in lieu of foreclosure will not affect her credit.
Hi Allison,
If you go for a deed in lieu of foreclosure, it will have a negative affect on your credit report. Once the deed in lieu of foreclosure is over, you need to take steps and improve your credit score. To know some steps to improve your score, you can check out the given page:
http://www.mortgagefit.com/credit-rating/credit-repair.html
Thanks
If you are unable to afford the property any longer, you can apply for a deed in lieu of foreclosure. However, the lender will agree to your request if you're delinquent on your mortgage payments. Also, you should remember that a deed in lieu of foreclosure will reduce your credit score by 250 points.
Hi blindsey,
Though the house was bought during the marriage, if the spouse's name is not mentioned on the mortgage, the deed in lieu of foreclosure will not affect her credit.
Hi Allison,
If you go for a deed in lieu of foreclosure, it will have a negative affect on your credit report. Once the deed in lieu of foreclosure is over, you need to take steps and improve your credit score. To know some steps to improve your score, you can check out the given page:
http://www.mortgagefit.com/credit-rating/credit-repair.html
Thanks
i am in the process of filing bankruptcy. i need to move because ive out grown my condo but i never considered the affects it may have. will i better doing a short sale or just including it in the chapter 7 bankruptcy.
If it is the condo for which you need to file bankruptcy, then I would suggest you to go for a short sale. This will help you in getting rid of the property and your credit score won't get affected much. Your score would get reduced by 80-100 points. However, you would be responsible for paying the deficient mortgage balance to the lender.
If you've other unsecured debts which you want to get rid of along with condo, then you may file bankruptcy.
If you've other unsecured debts which you want to get rid of along with condo, then you may file bankruptcy.
i have a home that i have not lived in for 10 years. it was under a ballon contract which fell through the people destroyed my home. i live 7 hours away and have been making payments on a unsellable home. i don't want to ruin my credit but can't continue this way forever. is the deed in lieu of foreclosure going to be any better on my credit than a foreclosure. it seems to be the same..
Hi Guest,
The credit affect on your report would be the same both in case of a foreclosure and deed in lieu. Both of them would reduce your credit scores by 250 points and would remain on your credit report for 7 years. However, unlike foreclosure, in case of a deed in lieu, you won't be liable for paying the deficient balance resulting from the sale of the property.
Thanks,
Jerry
The credit affect on your report would be the same both in case of a foreclosure and deed in lieu. Both of them would reduce your credit scores by 250 points and would remain on your credit report for 7 years. However, unlike foreclosure, in case of a deed in lieu, you won't be liable for paying the deficient balance resulting from the sale of the property.
Thanks,
Jerry
HELP! My wife and I own a house that we resided in. There was an outbuilding that we had a bait and tackle shop in. When the tourism industry busted I took a job out of state. We bought a house and moved the kids but tried to keep the house up north. Eventually our savings dwindled and we had to liquidate everything. We tried selling the house short but apparently the bank is running out of patience. They said that they are starting foreclosure and that they tried to file a deed in lieu of foreclosure for us but since it was 5% business it was rejected. What do we do now? My daughter starts college in the fall and I have to be able to help her fund her schooling!
Hi JeffNtonya,
You're in a tough situation. As the deed in lieu was rejected, you should contact your lender and check out if he can help you short sale your property. If the lender rejects that offer, then your property may be foreclosed by him.
Thanks
You're in a tough situation. As the deed in lieu was rejected, you should contact your lender and check out if he can help you short sale your property. If the lender rejects that offer, then your property may be foreclosed by him.
Thanks
We are 4 months behind on our mortgage. We have tried to sell the house but no houses are selling in our area. Our credit is shot because my husband lost his job 1 1/2 year ago and we got behind on several bills. Is a deed in lieu the best way for us to go?
Hi anonymous,
As you're delinquent on your mortgage payments, it is a good option to apply for a deed in lieu of foreclosure. It'll not only help you in getting rid of the property but you won't be liable for paying off the balance dues even. However, your credit score would go down by 250 points.
As you're delinquent on your mortgage payments, it is a good option to apply for a deed in lieu of foreclosure. It'll not only help you in getting rid of the property but you won't be liable for paying off the balance dues even. However, your credit score would go down by 250 points.
Hello, Our home in California is getting ready to go into forclosure. I tried to work with the bank and they said they could not modify my loan. Now they gave me an option to do a deed in lieu. My husband is terminally ill and cannot work and my job looks like it is going under soon. Is this deed in lieu a wise step to take. I just want to get out from under it. Am almost 60 and jobs are not easily found as everyone knows.