Home Mortgage

Question

Doris asks:

We own a home with my father in law. We have never made a late payment (past the 30 day mark) but our interest rate just jumped and it is becoming very difficult to make the payment prior to the 30 days late.

We have been weighing our options and are not sure what we should do. We owe $460 on our home and according to a few lenders/appraisers, our house is valued at $470 to $475. Our first and second loan are with different companies. We have listed the house but with the market the way it is, you can’t get a 100% loan so whoever were to buy our home would have to come in a substantial down payment. That possibly will not happen.

Do you think a DIL is a possibility? My father in law just added my husband to the title a few weeks ago but my father in law is the only one on the loan. If a DIL is an option, who’s credit will it affect?

Answer

larry answers:

You should first talk to the lender and make your situation clear to him. See what the options are that he provides to you. There are lot’s options like Forbearance or Mortgage Modification. If no options avail for you, only then you can request your lender for Short sale or Deed in lieu of foreclosure.

Deed in lieu of foreclosure is much better option than foreclosure because it will affect your Credit Score less than foreclosure. Deed in lieu of foreclosure will drop your credit score 80 to 100 points but foreclosure will drop your credit score 200 to 300 points.

I think both your husband’s and father in law’s credit will be affected but you father in law’s credit will be more affected as his name is on the loan.

Source: Mortgagefit.com

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