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This 40 Year Mortgage Extension Can Avoid You Losing Your Home

When you experience significant financial hardship, it can feel like your world is crashing down around you. You may be struggling to pay your bills, keep a roof over your head, or put food on the table. It can be a very stressful and overwhelming time.

There are some things that you can do to help ease the stress of financial hardship. First, try to create a budget so that you know how to live within your means, and have a better understanding of where your money is going. This can help you cut back on unnecessary spending and make sure that you are prioritizing your bills.

You can also reach out to family and friends for support. They may be able to help you with finances or just provide a listening ear during this tough time. Here we will talk about the emergency loan-modification options.

The Consequences Of Rising Interest Rates On Homeowners

When interest rates rise too fast, homeowners can find themselves in a difficult situation. If they have adjustable-rate mortgages, their monthly payments can go up suddenly. This can make it hard to keep up with the mortgage and put them at risk of foreclosure. 

Even if they have fixed-rate mortgages, rising interest rates can still affect them because it becomes more expensive to refinance. Homeowners who are struggling to keep up with their mortgage payments should contact their lender as soon as possible to discuss their options.

An extreme but likely example would be a homeowner with a $500,000 variable rate who signed at 2% interest rate mortgage in Q4 2017 with a 5yr term loan and is now facing a new term at 5.7% currently. Using our mortgage calculator, we see that their payments would have gone from $2,110 to $2,780 on renewal, which can really affect a monthly budget. 

What Emergency Loan-Modification Options Are And How To Reduce Your Payments With A 40 Year Mortgage

Most people don’t know that there are emergency loan-modification options available to them when they’re facing foreclosure. This is because the mortgage companies don’t want to give you a chance to save your home. They would rather see you lose it so they can make a profit off of it.

But, did you know that you have rights as a homeowner? You have the right to modify your loan in an emergency situation.

If you’re facing foreclosure, or even if you’ve already received a notice of sale, you can still modify your loan. You may be able to reduce your interest rate, extend the term of your loan, or even get rid of some fees and charges that have been added on.

It’s important to act quickly if you’re in danger of losing your home. The sooner you contact your lender and let them know what’s going on, the more likely they’ll be to work with you. Don’t wait until it’s too late. 

In the above example, the now $400,000 loan, after 5 years, by changing the amortization period to 40 years (say the lender increased it by 15 years from 25), would have a new payment of $2,180. That is very close to the old payment of $2,110, all things considered. It can really help one with a budget.

Source: The Globe And Mail