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10 Best Ways To Avoid Foreclosure in Chicago, IL

by Jun 3, 2021

Are you a homeowner and you have fallen behind on your monthly mortgage payments? If yes, there is a high chance that you have received or you are about to be handed a foreclosure notice. Before things get out of hand, it’s imperative for you to take swift action and engage your lender so that you can explore amicable options. As a homeowner, going through foreclosure is not a good experience and it can damage your credit score.

We have prepared this ultimate guide to give you tips on how to avoid foreclosure in Chicago, IL that you can implement to help stop foreclosure.

10 Ways To Avoid Foreclosure in Chicago, IL

1. Pay off the loan balance

During the pre-foreclosure phase when your home is still in the earliest stages of the foreclosure process, you can turn things around. If you can manage to get enough cash to pay off the loan balance, the best decision is to pay the missed payments so as to stop the lender from proceeding with the process further.

2. Pay off arrears

If you can manage to raise funds from another source to pay all the monthly mortgage amount past due, don’t hesitate to contact your lender. The lender is more interested in the arrears compared to foreclosing on the home. By doing so, you will protect your credit score and eliminate any risk of losing your home.

3. Partial FHA Claim

If you have an FHA-insured mortgage, your lender can help you get a one-time interest-free loan from your mortgage guarantor to bring your loan account current. Once approved, your lender may allow you to stay for several years before you can start repaying this loan. To qualify for a partial FHA claim, your mortgage loan must be between 4 and 12 months delinquent. Also, you must prove that you will start making full mortgage payments once this period is over.

4. Repayment plan with the lender

If you can’t manage to clear the arrears or even pay off the loan balance at a go, you may need to consider engaging your mortgage lender as soon as possible and explain your situation so that you can agree on a repayment plan. This option works best for homeowners who have faced a temporary financial setback and are sure they will manage to recover and clear all the mortgage arrears.

5. Loan modification

If you can no longer be able to pay the agreed monthly mortgage payment due to loss of income, communicate with your mortgage lender to discuss the possibility of modifying the terms of your loan. By doing so, your lender might revise the monthly mortgage payments or interest rates to reflect your current financial status.

6. Forbearance agreement

Mortgage forbearance is an agreement that allows distressed homeowners to put on hold all their monthly mortgage payments for a certain duration. The forbearance grace period is granted to allow you to restructure your financial sources and budgeting. Once the grace period is over, you will continue honoring your monthly payments. You will also be obligated to pay back all the accrued amount that was put on hold during the forbearance phase either as a lump sum or through a new repayment plan.

7. Refinance

By refinancing your mortgage, you are able to pay off your existing mortgage and take a new mortgage on new favorable terms. As a homeowner who is no longer able to meet your monthly mortgage payment, refinancing your mortgage can work for you.  It helps you take advantage of lower interest rates or change to a more favorable type of mortgage. It’s important to note that when you are refinancing, you can change the terms of your new loan but not the original loan balance or your collateral.

8. Deed in lieu

A deed in lieu when used in reference to the foreclosure process is when a homeowner agrees with the lender to transfer the title of the home to the lender. If the lender agrees and the deed in lieu is effected, the borrower is no longer obligated to repay the mortgage. A deed in lieu has a little negative impact on a borrower’s credit score and it’s an option compared to a foreclosure.

9. Short sale

A short sale is a scenario where you as the homeowner decides to sell your home for less than what you owe on the mortgage. Your lender must, first of all, agree to this kind of arrangement. When you are given a go-ahead, the lender will then receive all the proceeds of the sale and in return forgive the difference. A short sale agreement also has less impact on your credit score.

10. Bankruptcy

Filing for bankruptcy should be your last option as a homeowner facing foreclosure. The reason behind this is the fact that bankruptcy has far-reaching effects on your credit report. If you file for bankruptcy, all the lenders and creditors will be issued with a stay on your loans. A stay means creditors will not be able to collect their loan until your bankruptcy case is heard and determined.

Let’s Work Together To Avoid Foreclosure in Chicago, IL

Facing foreclosure can be a daunting experience, but it is not a death sentence. However, working with Onyx Homes, LLC is the best decision for you at a difficult time like this. We have experience in dealing with frustrated homeowners who want to sell their properties and resolve their debts.

We can purchase your home directly and make you an all-cash offer (often within 24 hours). You can be sure of a hassle-free transaction when you work with us so that you can move on to live the best life that you deserve.

Let’s Work Together

Contact Us Today: (847) 262-9062

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