Everything You Need to Know About Biden’s Homeowners Mortgage Relief Stimulus Program

The American Rescue Plan is one of the best things to happen to Biden-led America seeing as he provided American families with fiscal relief during the pandemic’s hard times. 

One part of the rescue plan was the Biden’s Homeowner mortgage relief stimulus program, which was created to help families continue to pay their mortgages, but at a decreased rate since employment was greatly affected by the pandemic.

According to a press release from the Oval Office, homeowners with federally-backed mortgages meaning VA, FHA, or USDA loans, will be able to alter their home loans, decreasing their monthly interest and principal payments by at least 20 to 25 percent.

This article explores the answer to the question “How do you get mortgage relief?” including everything you need to know about Biden’s homeowner mortgage relief stimulus program. Read to the end!

Biden’s Homeowner Mortgage Relief Stimulus Program

Suppose you’ve lost your job or there is suddenly a reduction in your income. It’s understandably difficult to keep up with mortgage payments, particularly with an above-average mortgage rate that keeps your payments inherently high.

Luckily, Biden’s mortgage stimulus program in 2021 can help. Depending on your current financial situation. Several lenders are offering forbearance for as long as Covid is a national concern. Approximately 4 million homeowners are still eligible for this program despite rising rates. 

To find out your options. If you’re confused about where to begin, start by contacting your mortgage loan servicer; this is the establishment where you make payments, and its name will be on your latest mortgage statement.

Your servicer will help you understand your choices and determine whether or not this mortgage relief program is right for you.

How the Homeowner Relief Stimulus Program Works

Homeowners with government-backed mortgages that have been negatively affected by the pandemic will now receive special assistance, especially if they are looking for a job, re-training, finding it hard to catch up on back taxes and insurance, or are continuing to experience difficulties.

The Homeowner Assistance Fund (HAF) aims to prevent mortgage defaults and displacement of homeowners going through financial difficulties after January 21, 2020. Money from the HAF might be used to assist homeowner’s insurance, mortgage payments, utility payments, and other stipulated purposes. 

The law categorizes funds for homeowners who have experienced incomparable hardships, leveraging national and local income indicators to maximize the impact.

On the other hand, the relief stimulus program lets borrowers negotiate reductions to their monthly payments of up to 25 percent. The mortgage modifications apply to loans backed by the Federal Housing Administration, the U.S. Department of Agriculture, and the U.S. Department of Veterans Affairs. People with loans backed by Fannie Mae and Freddie Mac already can negotiate 20 percent cuts to their payments.

This brings alternatives for homeowners with mortgages backed by VA, HUD, and USDA closer in alignment to alternatives for homeowners with mortgages backed by Freddie Mac and Fannie Mae.

Here’s a brief breakdown of what they’ll look like for FHA, VA, and USDA borrowers.

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  • FHA Loan Relief

Homeowners can decrease their monthly interest and principal costs by 25 percent with FHA loans. These alterations also include prolonging the loan’s term up to 30 years at the current market rate.

  • VA Loan Relief

VA borrowers see a 20 percent mortgage payment decrease. Though in a few cases, larger cuts might be possible. Servicers might also prolong VA loan terms by up to 40 years total.

Spreading repayment over a prolonged period of up to 40 years can help further decrease a borrower’s monthly mortgage payments. However, they might end up paying total interest over the life of the loan.

  • USDA Loan Relief

USDA borrowers are also eligible to decrease their monthly payments by 20 percent. Servicers can offer term extensions, interest rate cuts, or what’s referred to as a “mortgage recovery advance,” which will help borrowers cover outstanding mortgage payments (if they have any).

How Do You Get Homeowner Mortgage Relief?

To apply for Biden’s homeowners mortgage stimulus program, you’ll need to contact your loan servicer, and that’s the establishment you send your mortgage payments.

Your servicer is usually not the same lender you initially applied with (particularly if you have a Freddie Mac or Fannie Mae-owned loan).

Furthermore, you still have time to apply for mortgage forbearance if you haven’t yet done so. FHA, USDA, and VA borrowers can register for a forbearance plan through September 30, while those with Fannie- and Freddie-owned loans have a longer time. In both situations, forbearance is available for up to 18 months total.

A mortgage refinancing is a final alternative to reduce your mortgage interest rate and payments. Homeowners who have lost their job or have financial troubles might not qualify to refinance, in which case a loan modification might be the only option.

But for those who are eligible, a refinance is usually the first plan of action.

Mortgage Relief Stimulus FAQS

Is the Mortgage Relief Program Legit?

Although the Covid pandemic is declining, several homeowners can still take advantage of Biden’s homeowners mortgage relief stimulus program. If you have a government-backed mortgage, you can request an initial loan forbearance and suspend your payments if you’re going through financial hardship. 

Ask your loan servicer about forbearance alternatives and apply for mortgage assistance precisely through your state’s housing finance agency.

Who Qualifies for the Mortgage Stimulus Program?

You might qualify for one of several mortgage stimulus programs, depending on the kind of mortgage you have, even if your property value is low compared to your mortgage balance.

Can the VA Help with Mortgage Payments?

Yes, the VA can help service members and veterans who find it difficult to make their mortgage payments. The association provides housing counselors who will help you figure out the best course of action and work with your mortgage servicer to set your payment plan on the right track. Furthermore, the VA can help with mortgage payment troubles even if the Department of Veterans Affairs doesn’t back your current mortgage.

The Bottom Line

Whether your loan is backed by the federal government or a private body, the one thing that isn’t advisable is to stop making payments. 

It would help if you reached out to your lender or servicer to let the company know that you’re having difficulties making payments. Failure to reach out to your lender could result in numerous negative consequences, such as extra charges, delinquent credit reports, and possible foreclosure and eviction.

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