Deed In Lieu Of Foreclosure: Benefits Over Foreclosure
When you can no longer afford your mortgage payments or no longer want your home, you can ask your mortgage lender that if they can offer you a deed in lieu of foreclosure instead of the lender foreclosing on you. A deed in lieu of foreclosure is when you transfer the deed of your home to your mortgage lender in lieu of the mortgage lender foreclosing your home, which can be extremely time consuming and costly for the mortgage lender.
Deed In Lieu Of Foreclosure: Advantages Of Deed In Lieu
The biggest advantage of going through a deed in lieu of foreclosure instead of a regular full foreclosure is that you save tons of time and hassles. You avoid going through the foreclosure process and the auctioning of your home at the sheriff’s sale. Another major of a deed in lieu of foreclosure versus a full regular foreclosure is that you get to avoid a deficiency judgment. Mortgage lenders will not sue you for the upside down loss or writeoff the mortgage lender will get from the sale of your property and the amont of mortgage balance you owe them. In lieu of giving the mortgage lender the deed of your property, they will not go after you on any deficits whereas with a regular foreclosure, the mortgage lender can come after you for the deficit. The United States Congress has extended a law that benefits those who have gone through a deed in lieu of foreclosure called the forgiveness of debt act which forgives tax forgiveness for the debt that was written off.
Deed In Lieu Of Foreclosure Versus Foreclosure
A homeowner will always come out ahead with a deed in lieu of foreclosure versus a regular foreclosure. A better alternative to a deed in lieu of foreclosure for a distressed homeowner is a short sale. A short sale is when your mortgage lender gives you permission to sell your home at a value lower than the balance of your mortgage loan. Both short sales and deed in lieu of foreclosures have major negative impact on your credit scores. However, although your credit scores may drop as much as 200 FICO points initially, your credit scores will gradually improve over time. As your deed in lieu of foreclosure and/or short sale ages, the less of an impact it will have on your credit scores. Once your deed in lieu of foreclosure is finalized, get yourself three secured credit cards and those credit cards will spike up your credit scores. Each secured credit card will boost your credit scores by at least 30 or more points and your credit scores will rapidly increase as your secured credit cards ages.
When Can I Qualify For Another Mortgage Loan After A Deed In Lieu Of Foreclosure?
You can qualify for a conventional loan after a 2 year waiting period after a deed in lieu of foreclosure and/or short sale as long as you have a 20% down payment and re-established credit. For a FHA loan, foreclosure, deed in lieu of foreclosure, and short sale are all 3 year waiting periods from the recorded date of deed in lieu of foreclosure and foreclosure and the HUD settlement date for short sales.
Mortgage After Foreclosure
HUD launched the FHA Back to Work Extenuating Circumstances Due to an Economic Event mortgage program back in August 15, 2013 where the waiting period shortens to a one year waiting period after a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale as long as the homeowner was unemployed or underemployed for the prior six months to the initiation of the bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale which resulted in a 20% reduction of their household income. If you are a home buyer in Illinois, Florida, California, Wisconsin, or Indiana and are interested in the HUD’s new FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan program contact me at 262-716-8151 or at www.gustancho.com .