Are you struggling during the pandemic? The federal government is extending relief and protections for many student loan borrowers, renters, and homeowners who are having trouble making payments during the COVID-19 pandemic.
Keep reading to learn more about these important updates that may help you. But, remember the COVID-19 pandemic and relief efforts continue to change and develop. Check our COVID-19 webpage for more information.
Payments suspended for federally-owned student loans
Principal and interest payments on federally-held student loans are automatically suspended through September 30, 2021.
If you have federally owned student loans, you don’t need to contact your student loan servicer or take any action. However, make sure your servicer has your up-to-date contact information and continue to check your mail or email for updates or information about your loans.
Suspended payments through September 30, 2021, will count towards any student loan forgiveness programs, as long as all other requirements are met.
The Centers for Disease Control and Prevention (CDC) has announced an extension to their current order that halts certain residential evictions. The extension stops evictions until at least March 31, 2021.
There are two primary federal protections: forbearance and a foreclosure moratorium.
If you have a mortgage-backed by VA, USDA, FHA, Fannie Mae, or Freddie Mac, you have the right to request an initial forbearance of up to 180 days on your mortgage and a forbearance extension for up to 180 days if you have a COVID-related financial hardship.
For mortgages backed by the FHA, USDA or, VA, the deadline to request an initial forbearance is June 30, 2021.
Mortgages backed by Fannie Mae and Freddie Mac do not currently have a deadline for requesting an initial forbearance.
If you are already in forbearance and need more time:
If your mortgage is backed by Fannie Mae or Freddie Mac: You may request one additional three-month extension, up to a maximum of 15 months of total forbearance. But to qualify, you must be in a COVID forbearance plan as of February 28, 2021, so don’t delay contacting your servicer if you’re having trouble paying your mortgage and are not in a forbearance plan.
If your mortgage is backed by FHA, USDA, or VA, you may request two additional three-month extensions, up to a maximum of 18 months of total forbearance. But to qualify, you must have received your initial forbearance on or before June 30, 2020. Check with your servicer about the options available.
If your mortgage is backed by Fannie Mae or Freddie Mac, your lender or loan servicer cannot foreclose on your home until after March 31, 2021.
If your mortgage is backed by FHA, USDA, or VA, your lender or loan servicer cannot foreclose on your home until after June 30, 2021.
Steps to take if you have trouble paying your bills or meeting other financial obligations
If you have trouble paying your bills/loans or paying on time, there may be a number of options to help, especially if you reach out early to your lenders or creditors.
Contact your lenders, loan servicers, and other creditors
If you’re not able to pay your bills on time check their websites, to see if they have information that can help you.
The CFPB and other financial regulators have encouraged financial institutions to work with their customers to meet their community needs.
If you can’t make a payment now, need more time, or want to discuss payment options, contact your lenders and servicers to let them know about your situation. Being behind on your payments can have a lasting impact on your credit.
Credit card companies and lenders may be able to offer you a number of options to help you. This could include waiving certain fees like ATM, overdrafts, and late fees, as well as allowing you to delay, adjust, or skip some payments.
When contacting your lenders, be prepared to explain:
Your financial and employment situation
How much you can afford to pay
When you’re likely to be able to restart regular payments
Be prepared to discuss your income, expenses, and assets
Work with housing and credit counselors to understand your options
These trained professionals provide advice for little or no cost, and they will work with you to discuss your situation, evaluate options, and even help you negotiate with your lenders and servicers.
HUD-Approved Housing Counselors. The U.S. Department of Housing and Urban Development (HUD)-approved housing counselors can discuss options with you if you’re having trouble paying your mortgage loan or reverse mortgage loan. This may also include forbearance or a modified payment program.
Warning: If you’re considering working with a debt settlement company to address your debts, be skeptical of any company that promises to do it for an upfront fee.
Trouble paying your mortgage?
If you can’t pay your mortgage, or can only pay a portion, contact your mortgage servicer.
It may take a while to get a loan servicer on the phone. Loan servicers are experiencing a high call volume and may also be impacted by the pandemic.
Visit our blog on mortgage relief options for in-depth content to help you understand your forbearance options and avoid foreclosure in light of the coronavirus and the recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act.
If your loan is held by the federal government, your loan payments are postponed with no interest until September 30, 2020.
For other kinds of student loans (such as a federal student loan held by a commercial lender or the institution you attend, or a private student loan held by a bank, credit union, school, or other private entity) contact your student loan servicer to find out more about your options.
Older adults may be impacted by the coronavirus and quarantine procedures in different ways than the general public. There may be government benefits available to older adults who need financial help. Visit benefitscheckup.org for more information and to see if you qualify for any state or local assistance.
Be aware of potential scam attempts
Scammers look for opportunities to take advantage of the vulnerable, especially during times of emergencies or natural disasters. Be cautious of emails, texts, or social media posts that may be selling fake products or information about emerging coronavirus cases.
Buying your first home? You may be thinking the hardest decision you have to make is picking a house. However, the hardest decision you will be making in this process is what mortgage loan to sign for. The main types of loans are: fixed rate, adjustable rate, interest only and reverse.
Federal Housing Administration (FHA) Loans
For first time home buyers, Federal Housing Administration (FHA) Loans may be the best option. This program offers competitive interest rates, allows smaller down payments and has easier qualifications. The typical down payment required with this program is 3.5 percent of the purchase price of the home. FHA mortgage loans also require insurance, but they do offer a refund on it.
Fixed Rate Mortgage
A fixed rate mortgage is also referred to as PITI, Principal Interest Tax Insurance. With this mortgage everything is included: principal, tax, interest and insurance. For example, if you have a fixed mortgage, you don’t have to worry about forking over extra cash during tax season because you already paid this tax along with your mortgage. Usually a fixed mortgage is for 30 years, but you can also get a 15 year mortgage, depending on your finances. If you do qualify for a 15-year mortgage you can expect a lower interest rate, but higher monthly payments.
An adjustable mortgage has lower payments at the beginning of the loan. You can get this mortgage for 15 or 30 years. During this time, payments can be adjusted upward; as the market changes so do your payments. This type of loan comes with more risk because your payments change regardless of whether your income increases.
Interest Only Loan
An interest only loan usually takes 5 or 10 years to pay off, during this time your entire payment is going to pay off the interest. It’s a waste because although you are making monthly payments, you are not paying off your home. The only positive aspect about this loan is that it allows customers who expect to increase their income in the future to take out a bigger loan than they can currently afford. This type of loan comes with a high risk.
Reverse mortgage is especially made for those over the age of 62 and it was created through the government program HUD. These citizens get a portion of their equity and receive a payment every month. To become a part of this program there is no income or credit requirement. However, the cost to enroll in this program can be more than $8,000. Also, once the borrower dies, the bank settles the debt with the heirs.
A Debt Free American Dream
Achieving the American Dream without getting further into debt is possible. Regardless of which mortgage you sign for make sure you know the details. The key to avoiding traps is knowledge. Be realistic and buy a house within your means.
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