Losing your home to foreclosure is one of the most traumatic things that can happen to a homeowner.  A foreclosure can haunt you long after your home is taken away – it has a devastating effect on your credit score for years to come.

If you are having trouble keeping up with your monthly payments then you may want to consider going for a deed in lieu of foreclosure.

A deed in lieu of foreclosure is the process in which the homeowner gives the property to the lender because they can no longer afford to make payments.  The lender then sells the property to retrieve most or all of the balance that you owed them.

The lender marks your loan as being “paid” rather than defaulted or foreclosed.  This saves your credit score from losing several hundred points.

A deed in lieu of foreclosure is not necessarily a good thing, it just saves your credit score from plummeting.  You still lose your home.  A better alternative to a deed in lieu is a mortgage loan modification.  With a mortgage loan modification you keep your home and often end up with a better mortgage rate.

Your first step should always be talking with your lender.  All too often those that fall behind hide from their mortgage lender.  This only makes things worse.  Talk to them.  Ask them what your options are.  If the first person that you speak to doesn’t give you a favorable answer, ask for their supervisor.  Explain that you want to do whatever it takes to work with them and explain your current financial situation.

The bank does not want to take your house.  They want you to make your payments and more often than not, they will modify the loan to make sure that happens.