| Option | Keep home? | Best for | Credit impact | Speed |
|---|---|---|---|---|
| Loan Modification | ✓ | Permanent hardship, want to stay | Low–moderate | Slow (months) |
| Repayment Plan | ✓ | Temporary, resolved hardship | Minimal | Fast |
| Refinancing | ✓ | Current, good credit + equity | Minor dip | Moderate |
| Short Sale | ✗ | Underwater, must exit | ~100–150 pt drop | Slow (60–120 days) |
| Deed in Lieu | ✗ | Can’t sell, must exit cleanly | ~100–150 pt drop | Faster |
| Foreclosure (avoid) | ✗ | — | Severe, 7 years | Drawn out |
Houston note: In Texas, a short sale or deed in lieu can still leave you owing a deficiency unless the lender waives it in writing — lenders have up to 2 years to pursue it. Always negotiate a written deficiency waiver. After a short sale or deed in lieu you can often buy again in 2–4 years, versus up to 7 years after a foreclosure.
How to choose
If you want to keep your home
Start with the option that matches your hardship: a repayment plan if your hardship was temporary and is now resolved, a loan modification for a lasting income drop, or refinancing if you’re still current with good credit and equity.
If you need to exit
A short sale is usually attempted first; a deed in lieu is the faster fallback if the home won’t sell. Both protect your credit and future borrowing far better than a completed foreclosure.