Being unable to make monthly mortgage payments can be a scary position to be in, with foreclosure looming right around the corner.  There are more than a few options to consider before that point, however.  Here are some suggestions inspired by one of our favorite sites, Lifehacker.

Disclaimer: We are not attorneys, mortgage lenders, or financial advisors, but we recommend you reach out to a qualified professional. Here are some we've worked with before.

Refinance or Modify Your Existing Loan

A good first step to take in this situation is to look into modifying your current loan or take on a new loan to replace your current one (refinancing).  This option will not be a possibility for every homeowner, nor will it always be an easy process, but it is a good place to start.

Contact your loan servicer or a mortgage lender as soon as it begins looking like you can't make your monthly mortgage payments, as the longer you wait, the fewer options you will have.

Here are the most likely options a loan modification or refinance will have:

Reduce Your Interest Rate

Refinancing your interest rate is step that can easily cut back on your monthly mortgage payments.  In fact, refinancing by even 1% can save you as much as $2,000 a year, according to Yahoo Homes.

Locking in a low rate may include switching from a variable to a fixed interest rate.

Closing costs and lender fees can be a big deterrent for this procedure.  Thankfully, we have a great relationships with several lenders here in Chicago - who can greatly reduce these costs.  Here's how to contact them.

Extend Your Loan Term

Wikipedia CommonsThings are looking up for the 2014 housing market, based on our own anecdotal evidence, the daily news, and the KCM blog.  Why can we expect the trend to continue?  

Here are 3 interesting points from KCM blog and David Berson, chief economist at Nationwide.

1. 2014 should be the strongest housing year since the Great Recession

Most economists expect the job market to continue improving in 2014, which will expedite the housing market in a positive manor.  Despite the rising interest rates we've previously mentioned, the housing market should still thrive.  Mr. Benson states the following:

Most economists expect an improved job market in 2014, with employment growth accelerating and the unemployment rate continuing to decline.  That jobless rate drop will reflect more of a pickup in employment than further declines in the labor force participation rate. This will be the key factor improving housing demand this year, even if mortgage rates rise and affordability declines. While the housing market tends to do especially well when the job market improves and mortgage rates decline simultaneously, that combination of events occurs only rarely…People buy homes when their job and income prospects improve – even if it’s more expensive to do so – rather than buy when it is inexpensive to do so but they’re worried about keeping their jobs.

2. Demographics are expected to start favoring housing activity

Credit: a rental property appears, in many ways, like a great venture, especially when it comes to building wealth over time.  While most people do have the means and capability to do venture down the road of becoming landlord, it may be more work than many expect.  

If you're thinking of becoming a landlord, consider these points (many of them inspired by Zillow) before you get yourself into something that can be time consuming, stressful, and potentially detrimental to your finances.

1.  You'll have to fix things.  A lot.

If you aren't a fan of weekend or late room calls asking you to come fix a busted furnace or deal with a clogged shower drain, investing in a real estate property may not be the best option for you.  One-hour fixes are lucky fixes at best, and many times you may have to call in professionals to assist you - which you'll be paying for.

Make sure you're willing to spend some of your free time - and this means Thanksgiving, Christmas, Super Bowl Sunday, and any other time of day or night - being able to come and fix problems that your tenants have.

2.  You'll need to have some free time to begin with.

If you're someone who works excessively busy work weeks (read: 60+ hours a week), and/or you have kids, and/or you are managing a business, investing may not be the best call for your lifestyle.  Properties often need some TLC.  Yes, sometimes you get lucky, but it is definitely the exception to the rule when this occurs.  Zillow says landlords should expect to be called to a property usually around 4-6 times a year if not more, and some of these times will be very time consuming.

In short, if you feel you're a relatively "busy" person, real estate may not be the best idea for you.

3.  You'll need to have some savings to dedicate to the property.

As we venture into the spring and summer seasons, the housing market reaches opportune conditions for sellers (as we've recently mentioned).  In preparation to sell your home, you may be thinking of doing some home improvement projects to help better sell your home.  Which home improvement projects yield the best results without breaking the bank?  

As a home seller, there are two paradigm shifts that will make you successful on the market:

  • You are turning your home over to the market.  Act like it is no longer your residence, but your product. That will make home life a little more difficult, but will result in money in your pocket.
  • Start "moving" on now.  You're going to have to box up all of your things to move, start by packing three to six boxes before you go on the market, to reduce clutter in your home and create negative space.

Here are 7 specific projects we recommend.

1. Update your bath with quick, inexpensive fixes

Updating your bath rarely needs a complete gutting and replacement of fixtures.  Something as simple as replacing your dated toilet seat for $30 and 10 minutes of your time can do wonders for a buyer's first impression of the room.

Consider replacing your shower curtain and liner if they're worn (no one likes seeing any mildew when they're house hunting), and recaulk around the tub for a cleaner, more finished look.  An updated shower head will also add a luxury feel to your bathroom.

2. Clear out (or hide) unwanted clutter

Old newspapers, unread mail, and old shampoo bottles lining your bathtub are only some of the many ways your home has likely accumulated clutter over time - and will not win you any favors showing your home.  Take some time and analyze the clutter level of each room in your home.  Do I really need to have all of those papers on my desk?  Are there too many coats and shoes in the foyer?  Box, donate, and toss.  The more the better, usually.

3. Hide personal items

On the same vein as #3, having too many "personal" objects laying around your place doesn't bode well for selling your home.  While family photos and wedding invitations covering the fridge may feel homey and inviting to you, when a potential buyer enters a space for the first time, you want them to be able to visualize the space as their own, not like they are in the presence of someone else's well loved home.

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2526 N Lincoln Ave
Chicago, IL 60614

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