For those who are experiencing financial hardships and are unable to pay a portion or all of their monthly mortgage payments, relief options exist to help you. Even though the government has cut back on stimulus funds and unemployment eligibility, many programs still help homeowners with their housing fees.
Refinance
The CARES Act instructed lenders to suspend fees owed on federally backed mortgages for up to 360 days for families experiencing financial hardships due to the pandemic. Since then, the Consolidated Appropriations Act of 2021 and the American Rescue Plan Act of 2021 are also offering additional relief programs to borrowers who are struggling financially.
Interests rates are meager in the housing market. Refinancing your home could help reduce your high monthly payments if you qualify for a lower interest rate. Real estate prices are at an all-time high, which means appraisal numbers are likely higher than when you bought the home. If this is the case, you may be eligible to drop your PMI (Property Mortgage Insurance) in your monthly installments, bringing the dollar amount down.
You may qualify for a Streamline refinance program if you have an FHA, VA, or USDA mortgage. This Streamline option is similar to a relief option because you may not have to show your credit score or get your home appraised during the process.
COVID Relief Programs
Homeowners experiencing financial hardships directly because of the pandemic are eligible for COVID relief programs to help get them back on their feet. As part of the CARES act, there are multiple provisions to allow borrowers to reconcile their delinquencies and get back on track with their monthly fees so that they aren’t at risk of losing their homes. They include:
- Forbearance – Your monthly payments will temporarily pause while you get your finances in order.
- Loan modification – This option is for borrowers experiencing a permanent change to their finances. The lender will work with them to either lower the interest rate or extend the length of the mortgage so monthly rates will be manageable.
- Refinance after forbearance – Refinancing used to be difficult after a forbearance. Since the pandemic, these rules aren’t as restrictive.
It is impossible to prepare for financial difficulties involving a worldwide crisis. If you are struggling to pay your monthly mortgage installments, don’t panic! There are options to offer you relief, time, and the ability to restructure your payment plans.
