Biden signed $ 10 billion in mortgage assistance for homeowners. Are you eligible?

Biden signed $ 10 billion in mortgage assistance for homeowners. Are you eligible?

Millions of people are still at risk of losing their homes due to the economic crisis fueled by the pandemic.

According to census data, more than 10 million US homeowners are behind on their mortgage payments and are experiencing “housing insecurity.” If you are part of this group and your the debt accumulates, the White House set aside $ 10 billion in the recent COVID relief plan to help Americans pay their housing costs.

Efforts are underway to get that money to those who need it most, although experts have warned that the rollout could take some time.

How to get relief

President Joe Biden holds White House press conference

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The $ 1.9 trillion pandemic rescue bill President Joe Biden signed last month – the law that was circulated stimulus checks up to $ 1,400 – also offers nearly $ 10 billion in direct financial assistance to help homeowners pay not only their mortgages, but also taxes, utilities, insurance and homeowner’s association dues.

“This is the first time Congress has included mortgage aid in pandemic relief,” said Bob Broeksmit, president and CEO of the Mortgage Bankers Association. “As a result of this victory, we are now working with members and state agencies to establish dedicated funds that provide additional solutions when clients come out of forbearance.”

Homeowners were able to suspend payments for up to 18 months thanks to the government’s mortgage forbearance program.

“As that window closes, we want families to have the support and flexibility they need to stay in their homes and be successful in the long term,” Broeksmit said last week at his professional group’s spring conference. .

The $ 10 billion in cash, officially called the Homeowners Assistance Fund, will be distributed to states based on a formula that takes into account the number of unemployed residents as well as data on late mortgage payments and payments. foreclosures, according to the National Council of State Housing Agencies.

You are entitled to relief if you own your home and have a loan with a principal balance equal to or less than the compliant loan limits set by Fannie Mae and Freddie Mac, the government-sponsored mortgage giants who buy or guarantee most US home loans. The 2021 loan limit in most parts of the United States is $ 548,250.

Getting money can take time

The money will be channeled to borrowers through state housing agencies.

At least 60% of state grants must go to homeowners whose incomes do not exceed the local median income or the national median income, whichever is greater.

Russell Graves, executive director of the National Foundation for Debt Management, a multi-state housing counseling agency, said he didn’t expect the funds to be available until early 2022.

“There are so many other things that go through these agencies: rent assistance, different types of pandemic assistance,” Graves said. “Frankly, we have never invested so much money in housing in history. The numbers are staggering.”

While waiting, patience will be the key

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Graves recommends that homeowners in need call their lenders or their departments – the companies that handle loans and send out statements – to discuss options, including starting or extending forbearance.

Forbearance allows you to defer your mortgage payments without getting slammed by late fees or hurting your credit score. (Haven’t seen your score in a while? It’s easy now to check your credit score for free.)

Those with federally guaranteed loans – about 70% of America’s mortgage population – have been able to apply for forbearance in the pandemic. Deferred payments are usually added at the end of the mortgage term. The registration window for abstention was recently extended and now ends June 30.

If you’re in the other 30%, you don’t have the same flexibility, says Graves. He suggests calling a housing counseling agency approved by the Department of Housing and Urban Development (HUD). Congress provided $ 100 million for these agencies to help homeowners.

Refinancing Can Be Your Friend

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Another possible remedy for crushing housing expenses is to refinance your mortgage, if you haven’t already.

Mortgage rates recently fell below 3% for the first time in months. Mortgage technology and data provider Black Knight said last week that more than 13 million homeowners are still in a good position to refinance – and reduce their mortgage payments average of $ 283 per month.

The company says the top refi candidates hold 30-year mortgages, have at least 20% home equity, and are up-to-date with their payments. They must also have a credit score of 720 or better and be able to shave at least three quarters of a point (0.75) of their mortgage rate by refinancing.

But you’ll need to determine whether you’re likely to stay in the house long enough for the savings to pay off more than the closing costs of the new loan, which typically range between 2% and 5% of your loan amount.

If that math doesn’t work, forbearance and Homeowner Assistance Fund money can give you the relief you need.

Hopes for a smooth mortgage assistance process

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Graves says the closest example of the new mortgage assistance program was an Obama-era plan created in response to the Great Recession. The Hardest Hit Fund was designed to help states hardest hit by the subprime lending crisis.

At that time, the federal government also distributed the funds through each state’s housing agency. But there were challenges.

“It was done by states in spurts. There were a lot of states that started very slowly and stumbled on themselves because it was new,” Graves said.

He hopes the rollout will be smoother this time: “As it is similar, there should be institutional knowledge in each of these state housing finance agencies so that they can take their original programs and adapt them to the current environment. “

What if you need help right away?

Worried couple sitting at the table with empty wallets

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If your housing expenses are piling up and taking a toll on your budget, there are a number of ways you can give yourself financial leeway now, long before any help comes your way.

If you used credit cards for most of your purchases during the pandemic and you see interest charges escalating, you can replace those expensive balances with just one. debt consolidation loan at a lower interest rate.

Or try to lower your home insurance premiums by shop for a better deal when your policy is renewed. The same price comparison approach works well to get a best price on auto insurance.

You can also earn some extra cash through a fairly straightforward method: a popular app helps you get record stock market returns just by invest your “spare currency”.

About Mary Moser

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