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Foreclosure Defense

5 Options When You Can’t Afford Your House in Illinois

By July 15, 2020August 15th, 2023No Comments

Facing the reality of not being able to afford your mortgage payments can be terrifying. In many cases, this prospect is because of a sudden or unexpected circumstance that is beyond your control, such as job loss, divorce or death, that results in a significant financial burden.

Unfortunately, when such a circumstance arises, mortgage lenders are disinclined to sympathize with your hardship and missed payments may mean home foreclosure.

So, what are your options when you can no longer afford your house payments?

There is no right answer to this question. 

It depends on your particular situation and this means there may be options that fit your needs that may not, however, work for everyone.

In this article, we discuss five of the main options you may want to consider if you are afraid of losing your home or just looking for some peace of mind.

Loan Modification

After the housing crisis of 2008, the federal government initiated the Making Home Affordable program as part of an emergency economic stabilization plan.  The MHA program was designed to help offset many of the dishonest lending practices that led to the mortgage crisis. Part of that plan included the option for homeowners facing financial hardship to apply for a modification of the terms of their mortgage loan. 

If a homeowner can prove that they are in fact facing an economic hardship that makes the current terms of their loan unbearable, they can advocate for themselves and attempt to obtain more favorable loan terms.

A loan modification may mean a temporary or permanent change to your mortgage interest rate, monthly payment amount or the term of your loan.  Although loan modification is a fairly lengthy (and paperwork-intensive) process taking potentially months or longer, loan modification is a viable option for many people that can no longer afford their house.

It should be noted, however, that modification under the original program is only open to homeowners whose first mortgage originated before January 1, 2009.


Similar to loan modification, refinancing your home can be a viable option when you want to stay in your home.

Refinancing is done in an effort to allow a borrower to obtain more favorable (and affordable) terms including a lower interest rate (which usually means a lower monthly payment) and/or a change in the duration of your loan.

Simply put, you are just replacing your current mortgage loan with a new one. Refinancing is a tool that can be used to reduce your monthly mortgage payment, eliminate private mortgage insurance premiums, consolidate debt or switch from an unpredictable adjustable rate mortgage to a more manageable fixed rate mortgage.

However, if you are one of many homeowners who is economically stretched to the max, keep in mind that there are various criteria to be met and you will have to have good credit. Refinancing may come with extensive fees, appraisal costs, and it may cost you more in interest over time.

Short Sale

A short sale is another option that homeowners turn to when they owe more on their house than it is worth.  When property values plummeted in 2008, many property owners were left facing this unexpected and depressing reality. 

In a short sale, the homeowner (seller) accepts an offer for their home that is less than the amount owed to their lender.  Accordingly, the seller ends up “short” when paying off the loan, leaving a deficiency that may or may not be forgiven and could have tax consequences, but with approval of the short sale from their lender, they are able to still close on the sale and move on. 

Ultimately, it is up to the lender to decide if the short sale amount offered is acceptable and there are some lenders who are more willing to agree to a short sale than others.   

Short sales are typically initiated by the homeowner in an effort to avoid foreclosure.  While it may not be the perfect solution, it is one option to consider when your house is “upside-down” and a short sale will generally have less of an impact on your ability to secure credit than a foreclosure or bankruptcy, leaving you in a better position to purchase again in the future.

It is vital to understand how the process works and seek the advice of both an experienced short sale attorney and a tax professional who can explain the benefits and shortfalls of a short sale. 

Deed in Lieu of Foreclosure

Another option that allows homeowners to avoid foreclosure is called a “deed in lieu of foreclosure.” With this option, the bank agrees to release you from your mortgage in exchange for giving them a signed deed to your house conveying ownership to your lender.

Similar to a short sale, this will have a negative impact on your credit score, but not as bad as a foreclosure sale.  In many instances, the lender will agree to not go after you for the deficiency which is difference between the balance you owe on your home and its current value. 

Homeowners who are considering this option should speak with their lenders about possible help with relocation expenses through private programs, often called “cash-for-keys”.

Under these programs, you may also receive a cash incentive for turning over your property if you agree to move out on a mutually agreed upon date, and you agree to maintain the property and leave it in a “broom swept” clean condition.

Sell or Rent

Of course, if you cannot make payments on your mortgage and the house is worth more than you owe, selling may make the most sense financially. However, if you’re not in a position to sell, or maybe just not ready, renting your home can also be a practical option.

When renting your home, you may be able to collect rent sufficient to cover your mortgage payments or, in rare circumstances, even more. When renting your home, however, it’s important to consider everything you are still responsible for as an owner and landlord (e.g., repairs, taxes, insurance, etc.). 

Unless you are moving in with family or friends, you will need to factor in whatever expenses will apply to your new living conditions.

If you are in a situation where you can no longer afford your house, there are options at your disposal to help you and your situation. It’s important to consider all of your options, and make the best decision for you and your family.

Contact Adam Diamond Law today

Foreclosure can be a stressful and unpleasant situation for homeowners. Adding to the pressure of losing your home comes the daunting foreclosure process itself, and seeing your house go to the highest bidder.

That’s why it’s important to get in touch with an experienced and qualified foreclosure defense attorney. Contact Adam Diamond Law today to make sure you are in the best possible position and know your legal rights. 

Whether a foreclosure lawsuit has already been filed or is simply inevitable, discussing your options with a foreclosure defense attorney at Adam Diamond Law as early as possible in the process is crucial to achieve the best results.


DISCLAIMER: This article and any information contained herein is solely for informational purposes and is only applicable in the state of Illinois. While it is important that you educate yourself, nothing herein should be construed as legal advice or create an attorney-client relationship. For specific questions, I always urge you to contact a local attorney for advice pertaining to your specific legal needs.

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