It can happen to the best of us: Somehow, someway we lose our source of income, sending us into a downward financial fall. And unfortunately, try as you may, it’s possible the bank will want to foreclose on your home.
However, before you think the worse, understand that you do have options, including retaining foreclosure defense services for a possible deed in lieu of foreclosure. We’ll explain.
Deed in Lieu of Foreclosure
This deed is a document that transfers title from you, the homeowner, back to the bank that holds your mortgage. Keep in mind that banks are not obligated to accept a deed in lieu of foreclosure.
While going this route does help you avoid foreclosure, there are some downfalls to this, including the negative effect it will have on your credit. You’ll also find difficulty when it comes to buying another home in the near future, and you could still be held liable for the mortgage repayment.
In order for you to buy another home, you must wait four years without having extenuating circumstances. You must wait two years to get a mortgage purchased by Freddie Mac or Fannie Mae. However, if you decide to take the foreclosure route, the wait is seven years with no extenuating circumstances, and five years with.
If you decide to pursue a deed in lieu of foreclosure, you’ll want to make sure the deed releases you from the liability of repaying the loan. The bank may reject your offer if taking the deed will not be profitable for the bank, if there are certain encumbrances attached to the property, or if the servicing guidelines prohibit this type of resolution.
For more information on how you can avoid foreclosure, contact us.
