We are only about 2 weeks behind inthe mortgage, but have been that way for months, and things fon't appear to be improving. We have a lot of credit card debt but are up to date on those payments.
The short sale is probably a little bit better for you credit than a deed in lieu. Either one will work, and you get pursue both. However, to apply for a deed in lieu the bank usually requires that a borrower put the properyy up for sale for 90 days prior. So I would recommend first finding a good realtor, putting the property up for sale, and also applying for a deed in lieu after the property has been on the market for 90 days. Keep in mind, that if you do find a purchaser for the short sale, or the bank approves the deed in lieu, you may be required to pay a deficiency depending on whether the bank thinks you can afford it after looking at your financials. Good luck.
The information in this answer is not intended as legal advice nor do I intend to create an attorney-client relationship with any reader simply by answering this question or contributing as a member of AVVO.
Family Law Attorney
If you are struggling to keep up with your bills, you might also want to try a loan modification or a bankruptcy. In a Chapter 13, you can keep your house, if you are able to make monthly payments toward your secured debt for a period of time. A bankruptcy could also get you off the hook for any deficiency balance. If you do not want to file for bankruptcy, the next best thing would be a short sale. The foreclosure process is lengthy and expensive, and the quicker you can make it go, the better. You can try negotiating a short sale with the lender, but you may have to list the property for sale first.
Elizabeth A. Demonte Anderson & Associates P.C. 630.653.9400. The statement above is general in nature and does not constitute legal advice, as not all the facts are known. You should retain an attorney to review all the facts specific to your case in order to receive advise specific to your case. The statement above does not create an attorney/client relationship.
Consumer Protection Attorney
I think it is really unlikely that a lender would foreclose on somebody who is only two weeks behind on payments. You should apply for a loan modification if you have not done so already. If you don't want to sink any more money in the property, because you are underwater, deeds in lieu or short sales are good possible options, but you should hire an attorney to review the documents to make sure personal liability is released.
The above response is not intended to create, nor does it create either an attorney-client relationship or an ongoing duty to respond to questions. It is intended to be solely the educated opinion of the author and should not be relied upon as legal advice. The response given is based upon the limited facts provided by the inquiring person and additional or differing facts might change the response. Attorney is licensed to practice law only in the state of Illinois. Responses are answers to general legal questions and the inquiring party should consult a local attorney for specific answers and advice.
Decide first whether you want the house or not. Some people don't want their home, because it is worth half what they owe. Others want to keep their home no matter what. All of the options you mentioned will normally only succeed or occur if you first fall behind in your mortgage payments by at least two months. I don't tell people to stop making their mortgage payments, though. Your decision whether to stop your payments is based on whether or not you can reasonably afford them. In the event that you stop making your payments, and you want to keep the house, you then apply for a mortgage modification, using a free modification company that you can find by searching "making home affordable" and "hope system." Your credit will suffer when you stop making payments, so you might as well settle your credit card debts also. You can use the money you save by not paying your mortgage, to offer settlements to your credit card holders, for about 25% to 40% of what you owe them. Being able to settle credit card debts this way will free up money which will make it easier for you to make your mortgage payments going forward. You won't be able to use the credit cards any more though. you will need instead to rely on cash, and debit cards. If you get a mortgage modification, and settle your credit card debts, then great, you have a lower mortgage payment, and no credit card payment.
If you stop making your mortgage payments, and you don't want your house, then the procedure is similar, except that you apply for a short sale, usually after you have first applied for a HAMP modification. Applying for the HAMP modification first will help you to become eligible for a HAFA short sale later, which often can get you paid $3,000 upon completion of your short sale. If your short sale is not successful, you then apply for a deed in lieu of foreclosure. Foreclosure is the worst alternative, and can run your chances of owning any home for quite a while.
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