Deed in lieu of forclosure has its positive as well as its negative sides. This is an option that you may consider if you are no longer able to meet the monthly mortgage payments on your home. The following are the benefits and disadvantages that you should consider before you make up your mind.
Benefits
One of the benefits of a deed in lieu of forclosure is that it provides you a way of protecting your credit record. Your credit record will suffer if it has a record of a forclosure. This might make it impossible for you to be able to purchase another home for up to 10 years. This option makes it possible for you to avoid having a forclosure on your credit history.
Another advantage of the deed in lieu is that it can be done very quickly. If you are released quickly from the mortgage payments that you have to make every month, the money that you will owe will be less and you will have less penalty fees to pay. You will owe less money if the title to the home is signed over as quickly as you can.
Disadvantages
Some people may not be comfortable with the speed at which the process is executed. When the title has been signed over in a deed in lieu of forclosure, you will have very little time to move out of the house. Some people would rather stay in the house until they are forcefully evicted by the sheriff’s office. The moment you discover that you cannot sell your house, a deed in lieu has to be done quickly.
Some people may also not be comfortable with the bank requirement that they have to attempt to sell their home first. This means that the home has to be registered with a real estate agent and you have to pay the attendant costs such as an appraisal and the agent’s fees. This may not go down well with individuals who do not have any money.
You should know that a deed in lieu of forclosure is not possible if there are existing liens on the property. It is almost impossible to avoid a forclosure if there are liens on your home. The only way to avoid a forclosure in this instance is to pay the missed back payments. This may not be an option for you since you do not have any money. A legal battle may ensue if there are liens on the property.
There are a lot of benefits as well as disadvantages of a deed in lieu of forclosure. If you are no longer able to make the monthly mortgage payments on your home, you should carefully consider these pros and cons. A deed in lieu can help you to avoid having a record of a forclosure on your credit. This will also make it possible to become debt free at a faster rate. You should also know that you will have to find alternative accommodation when you choose a deed in lieu of forclosure.
