Lee's Summit Missouri Deed in Lieu of Foreclosure
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How to fill out Missouri Deed In Lieu Of Foreclosure?
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FAQ
Drawbacks Of A Deed In Lieu No guarantee of acceptance: Your lender isn't obligated to accept your deed in lieu of foreclosure. Your credit will still take a hit: While a deed in lieu arrangement won't harm your credit as drastically as a foreclosure, you can still expect your score to drop.
One downside to a deed in lieu is that you may face taxes on the amount of your forgiven debt, which the IRS considers income. The taxable amount is the total debt at the time it was forgiven minus the fair market value of the home at that time.
Less damage to your credit: A deed in lieu agreement stays on your credit report for 4 years while a foreclosure sticks around for 7 years. Taking a deed in lieu agreement can allow you to buy a new home sooner than if you go through a foreclosure.
There's less negative impact on your credit score. With a deed in lieu of foreclosure, the drop might be anywhere from 50 to 125 points or higher. With a foreclosure, the drop is anywhere from 85 to more than 160 points, which means that it could take significant time to rebuild your credit.
There are several differences between a deed in lieu of foreclosure and a foreclosure. Mainly, a deed in lieu is a mutual agreement between a homeowner and their lender, while in a foreclosure, the lender involuntarily takes back the property after an extended period of nonpayment by the homeowner.
Your credit score may drop by a range of 50 to 125 points after a deed in lieu of foreclosure, depending on where it stood before the deed in lieu, according to FICO data. The impact is slightly less severe than a foreclosure filing, though, which may drop your credit score by as many as 160 points.
Less damage to your credit: A deed in lieu agreement stays on your credit report for 4 years while a foreclosure sticks around for 7 years. Taking a deed in lieu agreement can allow you to buy a new home sooner than if you go through a foreclosure.
A deed in lieu might make sense for you if: ? You're already behind on your mortgage payments or expect to fall behind in the near future. ? You're facing a long-term financial hardship. ? You're underwater on your mortgage (meaning that your loan balance is higher than the home's value).