KnowYourPro

We owe more on our RI home than what is worth, way more... We are moving and can't decide what the lesser of the evils is.. A foreclosure, a deed in leau, or a short sale. Our current home mortgage and 2nd mortgage are in my wife's name. new mortgage in SC will be in my name. SC laws when applying for a mortgage does not take into effect any debt or credit of the spouse if they are not on the loan..

Am I missing something by thinking a deed in leau is our best option considering BofA has already offered it as a solution?

We really need a credit expert here. I am under the assumption that a Deed In Lieu would be as bad on your credit as a foreclosure. Short sale at least offers you a chance to negotiate that the loans just show as "paid" rather than "settled less than full value". This is not my specialty and anything I say on this subject is speculative at best.

Speaking from personal experience (owned a home, bought in 2005, sold March of 2008), the short sale is the way to go. Did a short sale for $125k less than what was owed, and this was before short sales were even really discussed as an option.

My short sale actually shows up as 'settled for less than owed' or something similar, just so you know. Also, I am pretty sure a DIL is not as bad as a foreclosure.

But which will effect your credit worse? DIL or shortsale?

Jeff, I would want to know how upside you were...I have actually seen borrowers take an unsecured note loan with mortgage holder on realtively small amounts to avoid any hit whatsoever to their credit. I think you mentioned that you current home is just in your wife's name and you will purchase in your name only..In that case, I would probably short sale, control the reporting date on the derogatory item on the credit and just start rebuilding your wife's credit while relying on your good credit for any major purchases the next few years.

Really, its an extremely personal choice after weighing all of your options..

Good Luck!

Rich- I think it goes foreclosure, DIL, short sale. Foreclosure being the worst, of course.

we are listing this week. If after 90 days no sale, we will deed in leau.

Thank you everyone for your help.

Good luck Jeff. Did your lender allow you to market the home for less than what is owed? Drop the price until you get an offer, and put the following language into the listing "All offers subject to bank approval" and you should be covered.

My Brother lost his house and now his credit is messed up. He is 40 years old and my 79 year old Pop is cosigning a car and an apartment for him...that ain't right poor guy