For Knoxville homeowners facing foreclosure, a Knoxville short sale or deed-in-lieu of foreclosure tend to be the most common options to avoid foreclosure. If a short sale doesn’t work out, most homeowners tend to turn to a deed-in-lieu of foreclosure as a last effort to avoid foreclosure. Fannie Mae recently announced new guidelines for the deed-in-lieu of foreclosure program. If you’re considering doing a deed-in-lieu of foreclosure, here are three things you should know.
First, under the new deed-of-lieu of foreclosure program, homeowners have options as to how long they are able to stay in the home. Homeowners have the option to vacate the house immediately, stay for three months without rent, or to stay for a year in the home and pay market rent. These options give homeowners a choice as to what will best fit their needs after completing a deed-in-lieu of foreclosure. Some homeowners are ready to vacate immediately, while others need a little time to get back on their feet. Previously, if a homeowner completed a deed-in-lieu of foreclosure, they would have to vacate immediately.
Another thing to know is that a deed-in-lieu of foreclosure is still much better for your credit. The wait to buy a home after doing a deed-in-lieu is between 2 to 4 years. If a homeowner is able to prove documented hardship as the reason they did a deed-in-lieu of foreclosure, they can be eligible to buy a home again as soon as two years. In comparison, for those who go through foreclosure the wait can 3 to 5 years and a foreclosure does far more damage to your credit.
Finally, in certain cases, Fannie Mae can request that the borrower make cash contributions for the difference of what is owed on the home. Fannie Mae outlines in what situations they may require homeowners to make cash contributions and the equation they determine if that is necessary after completing a deed-in-lieu of foreclosure. To read more about those requirements, be sure to check out Fannie Mae’s Servicing Guide Outline.
Are you wanting to explore your options to avoid foreclosure on your Knoxville home? If so, do not hesitate to give us a call at 865-696-9002 or send an email to [email protected]. Our team specializes in helping Knoxville homeowners avoid foreclosure, we’ve helped countless Knoxville homeowners avoid foreclosure and would love to help you in anyway that we can.