When Not to Seek a Deed-In-Lieu of Foreclosure

If you owe more on your home than what it is worth, cannot refinance for whatever reason, and the payment has become to be too high for your income, a Deed-In Lieu of Foreclosure may seem like a way out. This would allow you to "walk away" from your mortgage. Sounds like a great option, right?
Do not go this route.  The fact that your credit will plummet and take over 5 years to recover is the least of your concerns.  Also, you won't qualify for another mortgage for over 5 years.  The biggest issue though has to do with that when you "walk away" your mortgage company will forgive that debt for you.  Any debt forgiven on a mortgage will be considered INCOME by the IRS.  Depending on how much your home is underwater, you could end up with a big tax bill.  You want to make sure that your SOLVING your financial problems by walking away; not creating new ones.

If you have any questions, feel free to call me any time.

Keith Turner
860-444-0650
KeithT@mccuemortgage.com