Being unable to meet your loan requirements and make your mortgage payments can never be good for your credit score, but there are ways to minimize the blow to your financial health. Short sale and deed in lieu of foreclosure are just two of the actions you can consider to minimize the ding to your credit score brought on by a foreclosure sale. Comparing short sale vs. Deed in Lieu of Foreclosure is a good idea when exploring your options for easing your housing debts and financial burdens.
Talk to a professional who can give you guidance and proper advice. Our Gainesville bankruptcy and foreclosure defense attorneys here at Law Offices of Justin McMurray, P.A. are always ready to lend you their expertise when it comes to debt management, foreclosure, and bankruptcy solutions. Whether you are ready to transfer ownership of your home or initiate a short sale to make sure your property will be in good hands, we can help you ease the process. Simply call us for a free consultation.
Short sale vs. Foreclosure and Deed-in-Lieu of Foreclosure
When completing a short sale, you are given permission to initiate the sale of your home for a price that is below what you owe on the mortgage. Short sales are common solutions for homeowners who owe more than their home is worth. A lender might agree to the sale rather than endure the time and the expense of a foreclosure. In most cases, the lender forgives the remaining balance or deficiency, unless otherwise stated in the agreement.
Deed in Lieu on the other hand is a deed action often used after a failed attempt for a short sale. In a deed in lieu agreement, the property is simply retitled to the lender or the bank, which effectively pays back the collateral of the loan. Deeds in lieu offer the same end game as a foreclosure, where the lender reclaims the ownership of the property and attempts to sell the property to another potential owner.
To avoid a deficiency with a short sale, your attorney should make sure that the sale agreement explicitly states that the transaction is for the full satisfaction of the debt owed. It should also state that the lender agrees to waive its right to the deficiency.