Deed in Lieu of Foreclosure and Other Options to Save your Home

As the economic conditions worsen and mortgage markets dwindle, mortgage borrowers are not left out of the challenges. You realize that nobody wants to face foreclosures, but this event may happen if you do not take action early. Whether your lender has executed foreclosure proceeding or the foreclosure seems unavoidable, remember that you still have other numerous options that you can use to offer sustainable solutions. Often many people are unaware of some of the options that have worked well for homeowners with challenges of repaying their mortgage loans.

Although you have several options, each of these options has its benefits and downsides. However, they are better alternatives to foreclosure.

Deed in Lieu of Foreclosure

A Deed in Lieu of Foreclosure is one of the creative real estate strategies that you as the homeowner can use to avoid foreclosure on your home. You can decide to deed the home back to the mortgage lender (the bank) as a last resort where you do not foresee chances of saving your home. If you decide to go for a deed in lieu of foreclosure, you are allowing your lender to take possession of the home and to avoid the hit to your credit scores. Although you still lose your home with deeds just as you will with a foreclosure, the advantage of a deed is that you can re-establish your credit. A person who has allowed a lender to proceed with a foreclosure leaves a huge dent on his or her credit and may have problems borrowing in the future.

Even though loosing your home is a very emotional and traumatic experience, a Deed in Lieu of Foreclosure might be a good option if your mortgage is seriously underwater. It is smart to cut your losses and at least save your credit so you can continue on with your life.

Loan Modification Procedures

Before you wake up to the realities of a foreclosure, you should consider re-negotiating your loan repayment with the lender. This is an option that every borrower has whose income has reduced, but is willing to continue paying the loan. This process involves reducing the monthly repayment and extending your loan repayment term. With this alternative, your lender may decide to eliminate charges for late fees and other costs associated with failure to pay full installments. Although extended term of the loan will raise the overall loan interests, the additions are less than the costs of foreclosure.


One can seek to refinance his or her mortgage loan as a strategy to lock out foreclosure proceedings. If you are behind on mortgage repayments, you may consider refinancing, especially if you foresee challenges of repaying the current monthly installments. Nobody wants to taint his or her credit and some lenders are willing to help their clients.

If your current lender is hesitant to refinance your mortgage, you can research another lender who may be willing to buy off the loan through a refinancing program and avoid having to sell short or giving into foreclosure. However, you will need to prove that you can pay the proposed amount before the lender grants you the request.

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