Foreclosure. It is a word that strikes fear in the heart of every homeowner. While some people are not able to escape the unfortunate reality of losing their home to mortgage debt troubles, it doesn’t always have to end in foreclosure.
It’s Not Just Giving Up
A deed in lieu of foreclosure essentially means you are signing over the title to your home in exchange from being released from responsibility of repaying your mortgage loan. By taking ownership and possession of the home, the lender becomes responsible for the property and debt. Sounds a lot like a foreclosure right? It’s not.
The difference is essentially that you voluntarily agree to relinquish the property and avoid the experience of the court taking away the property legally. By agreeing to give up the property you save yourself the hassle of the eviction process and may even be able to buy yourself enough time to relocate without added stress. A deed in lieu also has less effect on your credit standing and chances at obtaining a loan in the future than a foreclosure.
The Last Stop
While a deed in lieu is a better option than foreclosure, it certainly isn’t the first place to start. Always check with your lender to review your options. You may be able to save your home through a mortgage modification, or lower your payment by refinancing. A short sale is also another option to consider before pursuing a deed in lieu with your lender.