Deed in lieu impact on credit
Years ago we purchased a rental property. Unfortunately we rented to people who did not pay on time or fully and we were unable to get them out for a long time. We covered the mortgage for as long as we could. Finally we were able to get them out but not until they really messed up the house. The bank offered us a deed in lieu and our lawyer told us it would only be on our credit for 3 years. Last year we tried to refinance our own home and couldn’t because of the deed in lieu on the rental property, which at this point was more than 3 years ago. Then we couldn’t get a student loan for our son going off to college because of the deed in lieu. Did our lawyer mislead us? Do we have to wait seven years before we are able to do either of those things? I’ve read contradictory information about deeds in lieu. Any info from you would be very helpful!
Big fan! Always enjoy your segments on WGN.
Terry Says
I’m not an expert on this process, but from my research it depends on how the lender categorizes this process as to whether it will stay on your credit report. Read this article.
BUT, this shouldn’t impact your SON’s ability to get a student loan, when you file the FAFSA form. It will impact your ability to get private student loans, which are credit based. It may be a “saving grace” keeping you from being overwhelmed with debt. Perhaps your son could live at home and attend community college — since there is little in-person learning going on anyway.
You can contact the bank to ask that they remove this item from your credit, based on your agreement with them. But there is no guarantee they will do so.
