Chicago has become a popular choice amongst buyers to purchase foreclosed homes. It involves legal possession of a mortgaged property when a mortgagor fails to make the payments. And in 2021, Chicago had 439 foreclosures and 177 REOs.
So if you, too, are worried about not being able to pay your mortgage in time, you can opt for loan modification law services in Chicago, IL. This way, you can get help with restructuring mortgage loans so that some of the loan terms are changed to make the payment more affordable. As such, the article contains vital information regarding loan modification which can help you with loan payments and save your home.
What Is Loan Modification?
Modification of loan involves changes in loan terms by the lender to help you avoid foreclosure. It could be making permanent or temporary adjustments to loan lengths, switching from adjustable to fixed rates, lowering interest rates, or all the above.
Chicago is considered a relatively affordable city to reside in than some of the major urban areas; hence, about 16 percent of the population are from the middle-income group. So, loan modifications are beneficial for them as a reduction in monthly payment can be convenient to make adjustments in their current budget. And if you are already in mortgage forbearance, a modification request can be made after the expiry of forbearance if you still need mortgage assistance.
Do You Qualify for a Loan Modification?
The loan modification law services in Chicago, IL, will help you assess eligibility requirements for a loan. In the meantime, some lenders consider a missed or late mortgage payment or risks of missing a payment for the borrower to qualify. The cause of hardship will also be assessed to determine if modification is the most appropriate approach toward affordability. It means that if you do not have a source of income, a modification will not help. But, payment terms could be modified accordingly in case of reduced income.
There could be several reasons why your current mortgage payment may become unaffordable. In some cases, you need to give proof of hardship to the lender. And some of the reasons may include loss of income, divorce, natural disasters, increasing house costs, illness, and a health pandemic. So, you must discuss the reasons for financial hardship at length with your lender.
How Can Home Loans Be Modified?
The median price of homes in the Chicago metro increased by 8.6 percent in 2021, making it necessary for people to modify loans and lower the monthly payments. And some ways of loan modifications include:
Interest rate reduction: Lower interest rates will reduce the amount of each monthly payment without the need to pay closing costs.
Increase loan term: Extending years to repay the debt will lower monthly payments. However, it may involve you paying high interest over the entire loan term.
Move to fixed rates: Adjustable loan rates are often unaffordable, so you can go for fixed rates where the interest rate is fixed over the term.
Reduce principal balance: In housing crises, lending standards are loosened, and lenders lower the loan amount. However, the local housing market determines the reduction of the principal amount, the amount you owe, and the loss the lenders would bear if they opt for this choice.
When you are struggling with loan payments, you must seek advice from the loan modification law services to adjust your loan terms and ensure your credit remains unaffected. This way, you don’t have to face the risks of missing monthly payments or even losing your home.
