The Biden administration announced on Friday that it will provide assistance to borrowers who have fallen behind in their mortgage payments due to the COVID-19 pandemic, in an effort to help prevent mortgage foreclosures.
President Joe Biden said that for homeowners with loans guaranteed by the Department of Housing and Urban Development (HUD), Department of Agriculture (USDA) and Department of Veterans Affairs (VA), the administration would offer a 25% reduction in the monthly principal. and interest payments. This is to ensure that they can afford to stay in their homes and continue to build equity.
If you’re struggling to make your mortgage payments after the coronavirus pandemic, refinancing your home loan is another option. Check out Credible if you want to see what’s available for mortgage refinancing and how you can lower your monthly payments.
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The administration’s announcement follows previous government assistance offered to homeowners. At the end of June, the administration extended its moratorium on foreclosures for the last time until July 31 and the window of registration for mortgage forbearance until September 30. He also added up to three months to his forbearance plan option for certain borrowers with mortgages guaranteed by the Department of Housing and Urban Development, the Department of Agriculture and the Department of Veterans Affairs.
If you are having financial difficulty and want to see what your options are, refinancing your mortgage might be something to consider as it could help you save hundreds on your monthly payment. Visit Credible to compare multiple lenders at once and see which one is right for you.
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The Biden administration is now offering borrowers loan modifications and payment reductions to help them stay at home.
“Many homeowners will need more help due to the loss of income from the pandemic,” the administration said in a statement. âFor example, due to the economic crisis caused by the pandemic, some homeowners are earning less than before the pandemic. “
The administration has explained that its 25% cut in principal and interest payments will lead to fewer foreclosures in the coming months and aligns these government-guaranteed loans with the options offered for Fannie Mae and Freddie Mac loans.
Over the next few months, the administration will launch the following mortgage relief options for mortgages guaranteed by the Federal Housing Administration (FHA):
- COVID-19 Autonomous Partial Recovery Claim: This option is for homeowners who can resume their current mortgage payments, offering them a 0% interest subordinate lien to repay missed payments that can be repaid at the end of the mortgage, such as when the house is sold or refinanced.
- Change in COVID-19 recovery: If homeowners cannot resume their monthly payments, mortgage agents can extend the term of the mortgage to 360 months at the market rate, with the goal of reducing their monthly mortgage payments by approximately 25%.
Another option for lowering your mortgage payments and helping you save money is to refinance your home loan, especially as interest rates are near historic lows. Visit Credible to see the options available and get prequalified without affecting your credit score.
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For the USDA and VA options, the administration came up with new alternatives such as lower interest rates, term extensions and mortgage collection advances with the goal of reducing payments by around 20%.
Homeowners with FHFA-guaranteed mortgages may already receive help choosing to defer missed payments at the end of their mortgage, change their loan terms, extend their mortgage up to 40 years and more, which could potentially reduce their payouts by up to 20%. .
Borrowers should contact their mortgage lender or service agent to find out what options are available to them. They can also contact Credible to speak to a mortgage expert and get all their questions answered.
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