While the Covid-19 pandemic is ending, homeowners are still falling behind on mortgage payments as they build back their finances. Foreclosures hit record low rates in 2021 due to government relief efforts, but will that trend end as the housing market normalizes? A home loan modification is a good idea for homeowners who face foreclosures down the road despite these relief programs.
What Is A Home Loan Modification?
A home loan modification is ideal for homeowners who want to leave forbearance but are not eligible for refinancing. If your financial outlook is not going to change anytime soon, this is a good option.
Your lender will either reduce your rate or increase the loan term to make your mortgage affordable and manageable by modifying your loan.
President Joe Biden’s Mortgage Relief Plan
If you opted for VA, FHA, or USDA loans, you might even be eligible for President Biden’s mortgage stimulus program. It allows homeowners to reduce their payments by almost 25% via a home loan modification.
This is how the program works – homeowners who opted for government-backed mortgages and were unable to make their monthly payments during the pandemic receive enhanced aid. The option is especially beneficial for those who cannot pay their taxes, are searching for employment, re-training, or face any other hardship.
Loan modification options differ as per the loan program a homeowner participates in:
Loan Relief for FHA Loans
With FHA loans, homeowners will be able to lower their monthly interest and principal payments by a whopping 25%. These changes also include increasing the loan term by 360 months per the current market rate.
Loan Relief for USDA Loans
Borrowers who opted for USDA loans will be able to reduce their monthly payments by up to 29 percent via interest rate reductions, term extensions, or by covering past mortgage payments if they have them.
Loan Relief for VA Loans
Similarly, homeowners who opted for VA loans can also get a 20% payment reduction on their mortgages and larger ones. The loan terms for this kind of loan may also be extended to 480 months, reducing overall mortgage payments significantly. On the other hand, it may increase the interest rates that have to be paid over the life of the loan.
Home Loan Modifications in Illinois
Illinois is creating a mortgage relief program called the Illinois Homeowner Assistance Fund, effective from April 2022 onwards. Under the program, eligible households will be able to apply for $30,000 in free aid that can help them pay off property taxes or reduce overall payments, among others.
Homeowners who live in communities that have been hit hard by the pandemic will be prioritized at no cost. To qualify, homeowners must prove that they have been suffering financially because of the pandemic on or after January 2020. Plus, they must also own or live in their home as a primary residence, be at least 30 days late on mortgage payments or other expenses, and have a total household income of less than 150 percent of the area median income.
Get a Home Loan Modification Easily With help from Covert Marrero Covert
Having a Warrenville home loan modification attorney in your corner is a good idea. Contact our home loan modification attorneys at Covert Marrero Covert LLP for on and off-site appointments. We will streamline the process for you.