Hi
There is a huge debate concerning deed in lieu and foreclosure. And not only that, there seems to be a confusion between these two options. I thought I should clear it up as well and let you know their meanings and impact in detail here. Let’s get to it, shall we?
Deed in lieu vs foreclosure - meaningDeed in lieu is when the borrower transfers property rights to the lender as a payment for a mortgage. It is basically avoiding foreclosure altogether by willingly offering to sign the deed to transfer property in the lender’s name. It is often referred to as a deed in lieu of foreclosure.
Foreclosure, on the other hand, happens when the borrower fails to repay the loan and the lender starts the process of foreclosing the loan by gaining access to mortgaged property with the purpose of sale.
Get best deals on home loan interest rates and overall assistance till disbursement with NoBroker Home Loan services Is deed in lieu better than foreclosure?Now let’s understand what are the impacts of deed in lieu and analyse if it is better than foreclosure. To compare these two concepts, I will focus on majorly 2 things: impact on credit health, and financial incentives drawn from these options.
It should be noted that foreclosure and deed in lieu have almost the same repercussions. Your credit score does get impacted if you foreclose your loan or sign a deed in lieu of foreclosure. In future, lenders will take a look at your credit report to find that you signed a deed in lieu of foreclosure or foreclosed your loan.
Sometimes, in case of signing a deed in lieu, the lender may offer some financial incentive in return for property occupancy in good condition. This is done to ensure that the borrower doesn’t damage the property in any way and for that they receive some sort of incentive.
By the looks of it, both deed in lieu of foreclosure and foreclosure have their fair share of risks and benefits. You will have to see which one suits your situation the best.
Understand your EMI calculations easily and quickly with NoBroker EMI calculatorRead more:
What is foreclosure
How to buy a house in pre foreclosure
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Is deed in lieu better than foreclosure?
Tripti
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3 Year
2022-05-11T13:01:02+00:00 2022-05-12T07:03:32+00:00Comment
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