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Round Lake Bankruptcy AttorneyHomeowners may experience financial difficulties that affect their ability to make mortgage payments. The COVID-19 pandemic has led to hardship for many homeowners, and government programs have been implemented to provide homeowners with relief. In some cases, a homeowner may qualify for forbearance, which will allow them to temporarily pause or reduce mortgage payments. Homeowners who have received forbearances will need to understand how this will affect their ability to sell their home

Addressing Forbearances During a Real Estate Transaction

A homeowner can request a forbearance if they experience financial hardship, and a mortgage lender may agree to defer a certain number of mortgage payments, or a person’s monthly payments may be reduced temporarily. However, it is important to understand that these amounts will need to be paid at a later date. Depending on the details of a forbearance agreement, a balloon payment may be added to the end of a loan, or a payment plan may be created in which the amount that is due will be paid off in addition to ongoing mortgage payments. A homeowner may also be able to negotiate loan modifications that will allow them to make affordable payments as they pay off their mortgage and any additional amounts that are due.

If a person chooses to sell their home after receiving a forbearance, they will need to be sure to fully understand the amount that will be due on their mortgage. If a balloon payment was added to the end of the loan, this amount will need to be paid in addition to the loan’s principal. To ensure that the sale price of the home will fully cover the amount due on the mortgage, a homeowner can request a payoff statement from their lender. This will provide them with a full understanding of the amount that will need to be paid to release the mortgage lien. 

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chicago real estate lawyerFor many people and families, homeownership is an important goal. Owning your own home not only ensures that you and your family will have a place to live and call your own, but it is also a good investment that can provide you with a number of financial benefits. However, if you are planning to buy a home, you will want to be aware of some mistakes that could affect your ability to obtain a mortgage or make a good offer on a property. These include:

  • Failing to get preapproval for a mortgage - The first step to buying a home often involves understanding what you can afford. By looking at your income and expenses, you can determine an amount that you will be able to put toward a mortgage each month. With this information, you then work with a bank or other mortgage lender to get preapproval for a loan of a certain amount. With this preapproval, you will be able to make an offer once you have found the home you want to buy, and this will show a seller that you will be able to pay the amount offered.
  • Not saving for a down payment - Being able to put down a certain amount of the home’s purchase price at the time of the sale will provide you with equity in your new home, and it will lower the total amount owed, resulting in lower monthly payments. It is often a good idea to take some extra time to save up for a down payment before proceeding with buying a home. You may also be able to receive assistance with your down payment through federal or state programs.
  • Harming your credit score - As you prepare to sign the paperwork for your home loan, any major changes to your finances could affect this process. You will want to avoid doing anything that could result in a lower credit score, such as missing payments on any bills, canceling credit cards, or taking out a new loan for a car or appliance.  
  • Failing to consider costs and expenses - You will want to make sure you understand all of the closing costs you will be required to pay when buying a new home. You will also need to obtain homeowner’s insurance, and you will need to be prepared to pay property taxes. You may also want to consider the costs of utilities at your new home, including electricity, water, sewer, gas, phone and internet service, and garbage disposal, as well as homeowner’s association fees, landscaping, and any other ongoing expenses.

Contact Our Gurnee Real Estate Attorneys

When buying a home, you will not only need to consider multiple types of financial issues, but you will need to address any legal matters related to the transaction. At Newland & Newland, LLP, we can provide you with representation, ensuring that your rights will be protected at all times. To get the legal help you need, contact our North Chicago real estate lawyers at 847-549-0000 and set up your free consultation today.

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