Posted on: 02nd Feb, 2009 02:47 pm
What are the risks of a deed in lieu if you have great credit but cannot sell your property?... My sister bought a condo when she was stationed in Florida. She moved and put the condo on the market. It has been on the market for over a year. She has never missed a payment and just wants out of the note. She is out of the Navy and will never move back to where her condo is. The bank mentioned a deed in lieu. She is afraid this will reflect negatively on her credit score. What exactly happens with her credit score? She is not in arrears on her note.
Hi sheshells,
If your sister is moving out and cannot sell the property, well then deed in lieu is the right option for her. But it will bring down her credit score by 200-250 points. It will remain on the credit report for 7 years though after 2-3 years, she can again qualify for mortgage. She'll have to rebuild her credit and get it back on track.
Usually banks don't accept a deed in lieu if the borrower is not behind in payments. But in this situation, it's good that the bank has already agreed. At least your sister can move out by giving away property. She doesn't need to pay off the loan anymore.
Take care
If your sister is moving out and cannot sell the property, well then deed in lieu is the right option for her. But it will bring down her credit score by 200-250 points. It will remain on the credit report for 7 years though after 2-3 years, she can again qualify for mortgage. She'll have to rebuild her credit and get it back on track.
Usually banks don't accept a deed in lieu if the borrower is not behind in payments. But in this situation, it's good that the bank has already agreed. At least your sister can move out by giving away property. She doesn't need to pay off the loan anymore.
Take care