Deed in Lieu of Foreclosure means you can not pay your loan to your lender. Your lender then have a right to take the ownership of your home. You can not do anything cause you have bad credit and can not pay your loan. When your home ownership transfer to the lender/bank, your loan then return to zero.
Died in Lieu of Foreclosure make your credit score drop by 250 credit points. It should impact much to your credit score. However, this credit score point can raising up by the time goes on. It depend on your loan payment after all. Maybe you need several year to get trust by the bank so you can propose new credit for buying house. If you have cash, you can buy new house right away. but if you want to buy mortgage credit. You can not do it after you get deed in lieu of foreclosure.
You can avoid the bad effect of Deed i Lieu by doing home refinancing to modify your loan. If you can get lower interest rate, then its the better choice for you. You get new loan with better scheme and lower monthly payment. You can stabilize your financial condition while increasing your credit score.
The next important part is deed in lieu of foreclosure tax implications. Cause you have DIL, you have responsibility to pay a deed tax . And in other hand you must pay income tax too, its because you have canceled debt from your lender. If you don’t understand much about tax, its wise for you to contact some tax attorney and looking for the best solution.
Well, whatever your financial condition, Dead in Lieu must be not your option. There are a lot of financial solution scheme for you out there. Searching on internet, ask your friends, visit some financial institution, move your body to get information about how to avoid deed in lieu of foreclosure. Hopefully you can save your home.
