Knoxville Short Sales: What is Deed-in-Lieu of Foreclosure?

3895590793_79cc34158a_zAs a distressed property owner, you may hear about many alternatives to help Knoxville homeowners avoid foreclosure. But, what is the difference between a Knoxville short sale and doing a deed-in-lieu of foreclosure? Is there one alternative that is better? A deed-in-lieu of foreclosure and a short sale are alternatives for Knoxville homeowners to avoid foreclosure. They both, however, are slightly different and come with specific risks and benefits. Read on below to see a comparison of both foreclosure alternatives available to Knoxville homeowners. Deed-In-Lieu of Foreclosure What it is: A deed-in-lieu of foreclosure is where a Knoxville homeowner deed their home back to the lender, who will in return release the homeowner from their mortgage. Benefits: The lender promises to cancel any foreclosure proceedings. The homeowner avoids foreclosure and does less damage to their credit. Risks: The lender could still pursue the homeowner for a deficiency judgement. Why it could be the right choice: The homeowner will want to read the contract carefully to make sure the lender will not hold them liable for a deficiency judgement. While consulting with an attorney can be costly, having an attorney look over the contract is significantly less expensive than having a lender pursue you for a deficiency judgement. Short Sale What it is: A homeowner owe more on their home than it is worth. The seller negotiates with their  mortgage company (or companies) to accept less than the full balance of the loan at closing. A buyer closes on the property, and the property is then ’sold short’ of the total value of the mortgage. Benefits: The homeowner avoids foreclosure and does less damage to their credit. Risks: Negotiating short sales can take a long time. Distressed homeowners will want to make sure they select an agent that has experience with the process and is able to do them successfully. Otherwise, while the short sale is being negotiated, the homeowner may end up in foreclosure anyhow. Also, the distressed homeowner will want to make sure they know the terms of their short sale and that the lender agrees not to pursue them for a deficiency judgement. Determining whether a loan modification, short sale or deed-in-lieu of foreclosure is the best option for you can be a difficult and complicated decision. As a CDPE, I specialize it helping distressed Knoxville homeowners avoid foreclosure and explore what is the best option for them.  Please let me know if there is any way that I can assist you, feel free to send me an email or give me a call at 865-696-9002.

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