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Financing a new home in Chicago (Page 1 of 2)
Chicago is the largest city in the state of Illinois and also the third most populated city in the United States of America, with almost 3 million people. Chicago is located along the southwestern shore of Lake Michigan and when combined with its suburbs and the nine surrounding counties in Illinois, the metropolitan area known as Chicagoland encompasses a population of 9.4 million. Nowadays Chicago is known as a major transportation, business, and architectural center of the US and it is the economic, business, financial and cultural capital of the Midwest. The Chicago area is moderately expensive; the home price median here is nearer the national median than homes in spots such as New York City. Buyers can probably spend about three times their incomes, depending on the part of the area where they’re house-hunting.
Chicago’s suburban real estate market is as vibrant as the city itself. The suburbs have developed both commercial as well as residential real estate at a tremendous pace. A large number of properties are always available for purchase in Chicago’s suburban areas such as Lake County, Kane and DeKalb counties and DuPage and Will counties. There are real estate firms that specialize in one of the suburbs, while others deal with all of them. When financing a new home in Chicago, have in mind that the real estate prices are high. Northern suburbs are considered “elite”.
There are many ways to finance a new home in Chicago. It all depends on your credit history, the price of the property and your income. The next paragraphs give brief explanations on some of the methods for financing a new home in the city of Chicago.
The first thing to understand is the difference between a variable, or adjustable interest rate mortgage and a fixed rate mortgage. With a fixed rate mortgage, the monthly payments remain the same over the period of the loan. The adjustable rate mortgage has a lower introductory interest rate, but it may vary over the duration of your loan. So depending on the interest rates, whether they are lowered or raised each month, your monthly mortgage payments will also change accordingly.
When financing your new Chicago home through a loan, no matter if it is adjustable or fixed rate, you have to consider the length of the loan, in terms of how long you finance your home. The most common terms are 15, 25, 30, 40 and now even 50 year mortgages in some areas. Of course, the longer the period the more you will pay in interest over the duration of the loan.
With a FHA home loan you can purchase a single family home, condo, house, or apartment in one of the neighborhoods in Chicago. This FHA home loan is mostly used by first time home buyers because it allows the purchase of a home with a lower down payment, in some cases as low as 3%. This form of new home financing requires you to have a good credit history and enough income to cover the loan and your other financial obligations.
The Chicago City Mortgage program offers qualified first-time homebuyers 30-year, fixed-interest mortgages at competitive interest rates and a gift of 4 percent of the mortgage amount to cover down payment and closing costs.
Loan Modification, Workout Options and Other Ways to Avoid Foreclosure
Foreclosure is one of biggest problems the people of America are facing right now. Countless of homeowners default on their mortgages and thus find themselves on the brink of losing their homes, or are already facing the devastating situation already. This widespread occurrence is due to the dire economic situation the country is facing right now and people are simply not able to keep up with their financial obligations as money becomes harder and harder to come by.
The legal process of foreclosure is not suddenit does not happen overnight. It generally takes place when a homeowner consecutively misses mortgage payments every month. These accumulating missed payments prompt lenders to take action. However, theres still hope for those whose properties have not been foreclosed yet. There are in fact a variety of work out options and other ways for a person to avoid foreclosure altogether. A good example is loan modification.
(1) Loan Modification This is probably the most popular and most effective solution to prevent foreclosure. It is a process wherein one or more terms of a borrowers loan are permanently changed. If the loan is modified successfully, the person can expect to enjoy lowered monthly payments, reduced interest rates, a 30 or 40-year fixed loan, principal balance reduction, partially or completely waived past payments, credit preservation and home ownership preservation.
(2) Forbearance This is an agreement with the mortgage company where the homeowner agrees to pay a portion of his or her regular payment or none of it for a certain period of time. The company will then offer that person a temporary reduction or suspension until he or she is able to sort financial matters out and be able to make regular payments. Usually, this is combined with a repayment or reinstatement plan to pay off missed payments.
(3) Refinance As long as the property or home in question has enough equity, the homeowner can use his or her new mortgage to pay off his or her old loan along with any late or even attorneys fees. If this is the chosen alternative to avoid foreclosure, then it is a good idea to look around for the best terms being offered and then compare the Annual Percentage Rate or APR.
(4) Reinstatement A borrower may be given the chance to pay off the total indebted sum in a lump sum payment on a specific, negotiated date. This option is usually combined with forbearance because the person can show that funds from a bonus, tax refund or other sources will become available at a certain time.
(5) Repayment Plan For this workout option, the mortgage company or lender can help the delinquent borrower catch up with missed payments with the creation of a feasible schedule for repaying past due amounts. The amount the borrower is behind can be combined with a portion of what is due on a regular monthly payment.
(6) Short Sale The person can sell his or her home. In case the amount received from the sale is not enough to pay off the loan the mortgage company will be willing to accept a payoff amount thats less than what is owed on the borrowers balance.
(7) Deed-in-lieu Foreclosure The borrower can voluntarily transfer the title of his or her property to the lender in exchange for the cancellation of the mortgage debt.