Many people facing mortgage debt must try and decide the best course of action to relieve their debts and minimize the risk of foreclosure. When finances become tight, it may also seem like your options are closing in around you. In fact, the opposite is true. A deed in lieu of foreclosure can quickly absolve you of your mortgage debt and a short sale can relieve both your ownership rights and debts after the sale of the home. However, dealing with lenders is never easy and they may try and convince you to take a certain course of action.
What To Consider In Short Sale
Many lenders will request that you pursue a short sale prior to considering a deed in lieu of foreclosure. While this may not be a bad thing for some, other people may not have the time or money to complete the short sale process. In a short sale, the lender agrees to absolve you of your mortgage debt in once you sell the property; whereas in a deed in lieu you are not responsible for the sale and simply relinquish the title to the lender.
A short sale may get you out from under liability of your mortgage debts but they can take a lot of time and energy to complete. When you attempt to sell the home in a short sale, the lender has the final approval of the sale of the home. If the lender thinks you can get more for the home, they may deny the sale. Further, when you do sell the home there are tax liabilities that go along with the sale. Although you may have your mortgage debts resolved and no longer be liable for the mortgage loan, you will likely end up responsible for the tax liability on the sale of the home.