The COVID-19 Pandemic has severely impacted many people’s savings and personal finances. It has led to many people receiving salary cuts or even becoming unemployed.
To lessen the financial impact that COVID-19 has created, a new mortgage stimulus program has come into effect that can help you in many ways.
The Latest Homeowner Relief Stimulus Program
One of the largest benefit programs that cater exclusively to American homeowners has been released by the government, known as the Homeowners Assistance Fund.
Many people have yet to take advantage of this program as banks do not widely circulate it. This is because it saves money for homeowners only, not for banks.
Depending on your mortgage type, you may qualify for different stimulus programs and options given by your lender. For example, Fannie Mae and Freddie Mac cover conventional loans, whereas the Dept. of Agriculture oversees USDA loans.
The Homeowners Assistance Fund will also help you cover other bills like your taxes, utilities, and insurance. Additional charges like homeowners’ association fees can also be included in it.
The amount of aid depends on the state you are currently residing in and how much money has been received by the state housing agencies in your state.
General Qualifications Needed
For an individual to be eligible to receive mortgage relief from the government, they must
- Own their home
- Have a mortgage balance of $548,250 or less by 2021
- Be struggling to pay their mortgage due to financial struggles like job loss after January 2020
Lower Interest Rates
Refinancing your mortgage is a good way to take advantage when lower interest rates are being offered. It lets you replace the interest rate you currently pay on your home mortgage for the lower one.
With the HAF, you can avail of lower interest rates or even reduce the principal amount that you have to pay for your home. It can save you up to an estimated $100 to $250 per month in monthly payments.
You can make reduced payments or even no payment at all for a defined period when you choose to avail forbearance. However, after this period, you may have to pay the accrued interest and the skipped amount as well.
Ensure to check your lender’s terms before you start forbearance and whether the repayment terms are suitable to your financial plans. Fannie Mae, FHA, VA, and USDA have made it mandatory for lenders to offer options other than lump-sum repayment using COVID-19 forbearance.
Freddie Mac and Fannie Mae offer 12 months of forbearance, and you may even be qualified for COVID-19 deferral if you cannot pay after the 12 months.
You can also request COVID-19 forbearance with the FHA, VA, and USDA for six months initially, which is extendable.
Maintain Your Credit Score
Lenders generally should not report forbearance to credit bureaus, which keeps your credit score intact. However, it would help if you did not wait until you are delinquent on your mortgage to contact your lender about relief options, as this can negatively impact your credit report.
The Mortgage Stimulus Program that has been released to contain the financial impact of COVID-19 on homeowners will give you relief from various bills and ensure that you don’t have to foreclose on your home in dire times.