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Can I give my house back to the bank?
Can I give my house back to the bank? Under some circumstances you can give your home back to the bank voluntarily. This is known as a deed in lieu of foreclosure. A deed in lieu of foreclosure is simply when you give the bank all of the ownership interest in the home and give up your ownership interest. This is usually done when a homeowner is behind on the mortgage and it releases the borrower from the mortgage debt. There are advantages and disadvantages of a deed in lieu of foreclosure for both the borrower and the lender which will be explained throughout this page.
As a borrower when you give your house back to the bank it will still report on your credit report as a foreclosure. This will make buying a new home harder in the future and the affect it will have on your credit score will be devastating! As soon as you feel you may start missing mortgage payments you should call the lender who services your note. The last thing they want to happen is to proceed with a foreclosure on your property. Many times they will work out a payment plan with you to help get you current and in good standing on your mortgage.
A deed in lieu of foreclosure is a benefit for a bank because they don't have to go through all of the legal proceedings of a foreclosure and it helps to speed up the process of getting rid of the home for them. Also, the lender gets to decide if it is willing to accept the home back to put them in control of the situation. In the case of a home where more money is borrowed on the home than it is worth, a deed in lieu of foreclosure will probably not make sense to them and the lender will most likely not allow a borrower to give their house back to the bank.
If you had a home that you had to give back to the bank you should reflect on the situation. Was the home more then you could afford? Did you acquire to much consumer debt making the mortgage harder to pay? By figuring out why you were forced to give the house back to the bank you can avoid the same mistake in the future!
If you are considering giving your house back to the bank because of your mortgage contact the bank. Often they will adjust your payments to accommodate your situation.
A major benefit for a borrower to file a deed in lieu of foreclosure is that the borrowers debt is released immediately and that a public judgment like a foreclosure is prevented.
» DISCLAIMER: The information contained in this article on 'Can I give my house back to the bank?' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.
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