Posted on: 15th Dec, 2008 05:55 pm
is it good or bad how does it effect credit
Hi nick,
If you cannot afford your mortgage payments anymore and if you are worried that the lender will foreclose upon your property, then I think, deed in lieu is one of the good options available. In this process, one has to give away the property to the lender and the lender issues a mortgage release certificate. Then the lender sells the property in the market to recover his debts.
There remains a deficient amount from the sale of the property. In a deed in lieu, this deficient amount is forgiven by the lender. But you will have to pay taxes on this forgiven amount as the IRS will consider this as your income. However, you should note that a deed in lieu will reduce your credit score by around 250 points. To know more about deed in lieu check out the following links:
Deed in lieu Foreclosure
How Deed in lieu of foreclosure affects credit score
Thanks
If you cannot afford your mortgage payments anymore and if you are worried that the lender will foreclose upon your property, then I think, deed in lieu is one of the good options available. In this process, one has to give away the property to the lender and the lender issues a mortgage release certificate. Then the lender sells the property in the market to recover his debts.
There remains a deficient amount from the sale of the property. In a deed in lieu, this deficient amount is forgiven by the lender. But you will have to pay taxes on this forgiven amount as the IRS will consider this as your income. However, you should note that a deed in lieu will reduce your credit score by around 250 points. To know more about deed in lieu check out the following links:
Deed in lieu Foreclosure
How Deed in lieu of foreclosure affects credit score
Thanks
I have not paid my second house since Feb 09.My husband had lost his
job and I have supported this house for 2 yrs using up my equity from
my first house.Our savings are all gone including my husband's 401-K
to pay property taxes.We tried to rent out the house but our renters were
not paying us and owe us back rents from May 2008. We just got them evicted and they have no means to pay us the back rents.I am afraid that the bank will issue a 1099 on me since I also stopped paying the taxes on the house.Pls advise.
job and I have supported this house for 2 yrs using up my equity from
my first house.Our savings are all gone including my husband's 401-K
to pay property taxes.We tried to rent out the house but our renters were
not paying us and owe us back rents from May 2008. We just got them evicted and they have no means to pay us the back rents.I am afraid that the bank will issue a 1099 on me since I also stopped paying the taxes on the house.Pls advise.