Deed in Lieu of Foreclosure Vs Short Sale
When you are unable to pay your mortgage and go into default on your loan, eventually you will end up in foreclosure.
There are a number of different options that are available to help you out of this situation and two of them are a deed in lieu of foreclosure or a short sale.
When doing a direct comparison of the deed in lieu of foreclosure vs short sale, you will find that there are actually a lot of similarities between the two. One may be more beneficial than the other, however, so here are some of the similarities as well as some notable differences.
The first thing that you need to understand is that in a deed in lieu of foreclosure, you are simply turning the property back over to the bank in order to avoid foreclosure.
The downside to this is, you are generally going to be responsible for any deficit that occurs as a result of the pending sale not making up for the balance that is still due on the note. The impact of this can be significant, as it can end up on your taxes as income. There are some tax breaks that are available as a result of the frequency that this is taking place but it may not cover all of your bases that are necessary.
Short selling, on the other hand, is a loan that takes place in which the property is sold for less than what is actually owed on it. At times, this may be beneficial to you as the bank may forgive the deficit between the amount that is owed and the amount that is paid for the short sale.
It is important for you to make sure that you look at the paperwork carefully in order to make sure that this is true. This may be one of the benefits of the short sale when doing a comparison of the deed in lieu of foreclosure vs short sale.
One other thing that you may want to consider when doing a deed in lieu of foreclosure vs short sale is the fact that if you go through a short sale, it may be possible for you to stay in your home for a longer amount of time.
During this time, you may not be responsible for paying the mortgage and this can help you to save up a little bit of money in preparation for the move.
