How Does Deed in Lieu of Foreclosure Differ From Foreclosure?
It goes without saying that no Houston homeowners wants to lose their house. The moment that you realize your circumstances have changed and you are no longer going to be able to afford your Houston house is a stressful time. You’ve probably heard of foreclosure before. Most homeowners at least know the term. But a foreclosure isn’t your only option if you cannot pay on your mortgage.
Deed in lieu of foreclosure is an alternative that could be better for you in the long run.
What is deed in lieu of foreclosure?
When a Houston homeowner opts for a deed in lieu of foreclosure, they are taking the step to let the lender know that they cannot afford their mortgage. Instead of waiting and working through the traditional foreclosure process, the Houston homeowner agrees with the lender to hand their keys over. As soon as they do this, the lender agrees to release the homeowner from the mortgage.
Why is this a better option than foreclosure?
Foreclosure is a very long process that costs the lender money and damages the credit of the homeowner. It is a bad deal for all parties involved. Unfortunately, sometimes it cannot be avoided due to situations that are outside of the homeowner’s control. Divorce, medical bills, and job loss are just a few of the reasons that lead to foreclosure.
When a Houston homeowner and lender opt to go the route of deed in lieu of foreclosure, it changes the process. Instead of a long legal process for the lender to send all the right notifications and then wait for the homeowner to vacate the property by the deadline, the process moves quickly.
When the homeowner turns over the keys, it saves the lender the money they would have to spend working to remove the homeowner from the house. Because of the changes in the process, the lender frees the homeowner from the loan.
It still has a negative impact on the credit score of the homeowner, but it is not as big of an impact as it would be if the house were to be foreclosed on.
The average foreclosure in America takes over 600 days to complete from start to finish. That’s why the lender would prefer not to go that route. The faster the lender can get the homeowner out and the house back on the Houston market, the faster they can go back to recouping some of their lost expense.
Before you proceed with deed in lieu of foreclosure, it is wise to speak with an attorney about your options. There are some circumstances when you could be held financially responsible for making up the difference at tax season, and it will still impact your credit. Carefully consider your options before rushing into either of them.
Do not delay to speak with your lender or else they might not be able to work with you on your loan. Talking to your lender as soon as you can’t make your payment is the best way to proceed. Ask questions and make sure your lender explains all of your options.
And if you need to sell your Houston home fast, we can help. Our team specializes in working with distressed Houston home sellers. Call us today and see what we can do.