Posted on: 10th Oct, 2007 06:40 am
We applied for a construction loan last year as our future primary residence. During construction we got into financial difficulties (suregry and lost of income) and decided to sell it. It has been on market for over 9 months and no offers. It's already priced below market value and we are running out of money. We are paying mortgage in the house we live and this new house as well.
1. What is the better option: short sale or deed in lieu?
2. This new house is only on my name and I am worried about ruin my credit. Right now my credit is about 700. Does anybody know how much lower will it go after short sale and after deed in lieu?
3. I read that it will stay on my credit for 7 years. Is this true?
4. How long will I have to wait till my credit goes up?
5. I was never late on any payments. Will it make a difference with lender and my credit if I make my payments on time while under process?
6. Do I have to be late with my payments to be considered by lender for short sale or deed in lieu?
Any thoughts or ideas would be greatly appreciated.
Thank you,
Lana
1. What is the better option: short sale or deed in lieu?
2. This new house is only on my name and I am worried about ruin my credit. Right now my credit is about 700. Does anybody know how much lower will it go after short sale and after deed in lieu?
3. I read that it will stay on my credit for 7 years. Is this true?
4. How long will I have to wait till my credit goes up?
5. I was never late on any payments. Will it make a difference with lender and my credit if I make my payments on time while under process?
6. Do I have to be late with my payments to be considered by lender for short sale or deed in lieu?
Any thoughts or ideas would be greatly appreciated.
Thank you,
Lana
Hello Lana,
1. I think you can go for a deed-in-lieu if you are having financial difficulties. The property has already been on market for 9 months and you are getting no offer, so short sale will be a problem. You may also consider to rent your house with a lease-to-purchase option. You can pay the mortgage installments from the rent and when the lease period gets over you can pay the entire balance from the selling price.
2. Short sale lowers the credit by about 100 points and stays on the report for 18 months to 4 years. A deed-in-lieu has less negative effects on your report than foreclosure.
3. I think foreclosure or bankruptcy stays on your report for a long period of 7 years.
4. It depends on how well you can manage your loan and make payments in time and at regular intervals. For more information on how to boost up your credit, you may look here http://www.mortgagefit.com/credit-rating/credit-repair.html
5. Your credit is quite good now but I think you need to have late payments for filing deed-in-lieu of foreclosure. This will affect your credit.
I think it will be better if you take advice from a credit counselor.
1. I think you can go for a deed-in-lieu if you are having financial difficulties. The property has already been on market for 9 months and you are getting no offer, so short sale will be a problem. You may also consider to rent your house with a lease-to-purchase option. You can pay the mortgage installments from the rent and when the lease period gets over you can pay the entire balance from the selling price.
2. Short sale lowers the credit by about 100 points and stays on the report for 18 months to 4 years. A deed-in-lieu has less negative effects on your report than foreclosure.
3. I think foreclosure or bankruptcy stays on your report for a long period of 7 years.
4. It depends on how well you can manage your loan and make payments in time and at regular intervals. For more information on how to boost up your credit, you may look here http://www.mortgagefit.com/credit-rating/credit-repair.html
5. Your credit is quite good now but I think you need to have late payments for filing deed-in-lieu of foreclosure. This will affect your credit.
I think it will be better if you take advice from a credit counselor.
Hi Lana,
I have a question. Are you paying against the construction loan still now or you have already converted it to a mortgage loan?
I have a question. Are you paying against the construction loan still now or you have already converted it to a mortgage loan?
Hi Lana,
It's better for you to go for deed in lieu because short sell will have more effects on your credit report. And yes it will be shown on your credit report for 8 to 10 years. As you have made your payments on time, it will certainly help your credit score and the lenders will have a good impression on you. But make sure that you do not make late payments to go for the foreclosure :)
It's better for you to go for deed in lieu because short sell will have more effects on your credit report. And yes it will be shown on your credit report for 8 to 10 years. As you have made your payments on time, it will certainly help your credit score and the lenders will have a good impression on you. But make sure that you do not make late payments to go for the foreclosure :)
This loan was converted to a permanent loan, so we are paying it like any regular mortgage
Thanks for your replies. Hoewever, I am still not clear what is the best option.. Short sale lowers my credit score by 100 points and stays on report for a few years. Deed in lieu is better than bankruptcy but is it better than short sale? Plus I HAVE to be late on my payments, which is double negative for report purposes. I am trying to fins investors to buy it at the smaller price...
I was thinking about renting, but I can only ask about rent amount equals half of my monthly mortgage, so it would not help too much. Plus no one will rent for a short time and renters may damage new house.
We tried to re-finance, but banks don't offer anything unless you live there. Dead end, no matter where we looks or try.
We don't have a financial counselor, and he/she will cost money....
I was thinking about renting, but I can only ask about rent amount equals half of my monthly mortgage, so it would not help too much. Plus no one will rent for a short time and renters may damage new house.
We tried to re-finance, but banks don't offer anything unless you live there. Dead end, no matter where we looks or try.
We don't have a financial counselor, and he/she will cost money....
Hello Lana,
I think it is better to have a short sale in your report because it proves you have at least tried on your part to pay off the debt as much as possible.
I guess the late payments and deed in lieu do not have a double impact on your report since it is for the late payment that you go for the deed in lieu.
If your property has been on the market for the past 9 months without any offer, do you think you will be able to find investors soon?
If you put up your house on rent, then at least you are getting half the amount of your mortgage, which is still better than none. You can talk to your lender for some alternative repayment plan.
And regarding the tenants damaging your house, you can always enter into some kind of agreement with them which makes them responsible for repairing any kind of damage they do to your property.
I think it is better to have a short sale in your report because it proves you have at least tried on your part to pay off the debt as much as possible.
I guess the late payments and deed in lieu do not have a double impact on your report since it is for the late payment that you go for the deed in lieu.
If your property has been on the market for the past 9 months without any offer, do you think you will be able to find investors soon?
If you put up your house on rent, then at least you are getting half the amount of your mortgage, which is still better than none. You can talk to your lender for some alternative repayment plan.
And regarding the tenants damaging your house, you can always enter into some kind of agreement with them which makes them responsible for repairing any kind of damage they do to your property.