Going through a foreclosure is stressful, and it can have long-lasting consequences for your credit score, your wallet, and even your health. Some people pursue a deed in lieu of foreclosure as an option to avoid the effects of full foreclosure.
5 Things You Should Know about Deed in Lieu of Foreclosure
Before you pursue it, you should know these five important facts.
1. A Deed In Lieu Of Foreclosure Is a Legal Document
This legal document transfers the title (and ownership) of the home to the bank or other lender that holds the mortgage. The name “deed in lieu of foreclosure” means that you will give the lender the deed to your home if they agree to drop the foreclosure proceedings.
2. Choosing A Deed In Lieu Of Foreclosure Can Be Less Damaging Financially
Foreclosures can have devastating consequences that can negatively affect your financial future for years. For example, your foreclosure can reduce your FICO score by 100 points or more, according to Experian. Moreover, a foreclosure remains on your credit score and hurts your credit for as long as 7 years. Many lenders will refuse to work with you as long as the foreclosure remains on your credit score.
While this option does affect your credit score, it can be less damaging to your credit profile than a foreclosure judgment.
3. It Is A Last Resort
While a deed in lieu of foreclosure is better than a full-blown foreclosure sale in Ohio, it still a drastic step that you should consider only after you have exhausted all other options. Your foreclosure defense lawyer can help you explore other options, such as a short sale or a loan modification.
4. It Is More Private Than a Foreclosure
Foreclosures can be financially devastating, and they can also be embarrassing – foreclosures come with a public notice taped to your front door. A deed in lieu of foreclosure is more private and is therefore a better choice for those who have a visible presence in their community or who simply wish to keep their financial struggles private.
5. It can often eliminate a deficiency
Many lenders who accept a deed in lieu will waive a deficiency. A deficiency arises when you sell a property for less than what is owed. Normally you would be responsible for paying that difference even if you lose the home. As incentive, the lender will often agree to waive that.
Contact Cozmyk Law If You Are Facing Foreclosure
For more information on deed in lieu of foreclosure in Ohio, consult with Cozmyk Law. Our foreclosure defense lawyer can help you explore the options to help you avoid foreclosure.