In times like these, it is easy to lose hope about maintaining homeownership and making a home purchase a reality. The good news is, many government programs in the U.S. are available for both home buyers and homeowners struggling during the pandemic. The following are some government aids you can consider leveraging on depending on your situation.
Covid-19 Mortgage Relief
Most homeowners are eligible for mortgage forbearance. This means you can reduce your mortgage payments or even pause making payments for a limited time while you fix your finances. Note that you are still obliged to pay any missed payments.
Homeowners can be eligible for forbearance if their mortgage is federally backed. Another requirement is that you are experiencing financial hardship due to the pandemic. Note the initial forbearance lasts between three and six months though you can ask for an extension.
For mortgages backed by Freddie Mac or Fannie Mae, there is currently no deadline for the application of forbearance. Homeowners can request additional three-month extensions up to two times. If eligible you can enjoy up to 18 months of forbearance.
For mortgages backed by the Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA), United States Department of Agriculture (USA), or Veterans Affairs (VA), the initial forbearance deadline is June 30, 2021. You can also request up to 18 months total of forbearance extension if qualified.
Before your forbearance ends, your service provider will get in touch to discuss how you can repay your missed payments. You have the option to repay this over time. You can also pay the missed payments after selling or refinancing your home.
If you plan to refinance your mortgage, first you will need to pay at least three successive mortgage payments on time. After that, you can refinance the whole loan amount. This will include your other missed payments if any.
Down Payment Assistance Programs
Many first-time homebuyers are having a hard time coming up with the 20% down payment required by most lenders. The good news is, down payment assistance programs enable qualified first-time homebuyers to make homebuying a reality. To qualify, the first requirement is that you haven’t been a homeowner in the last three years.
You also should not have any investment or rental property under your name to qualify. The down payment assistance can be run by a nonprofit or your local or state housing authority. It helps to do due diligence since each grant or loan has its own requirements.
There are basically eight down payment assistance program options you might qualify for. These are the following:
1. USDA Loans
This is the type of loan for buyers looking for houses in rural or suburban areas. USDA loans enable eligible buyers to make a home purchase with no down payment. Working farms are not included in the properties you can buy with a USDA loan.
2. FHA Loans
These are government-backed loans perfect for buyers with low credit scores. You can buy a house for as little as a 3.5% down payment. Buyers with credit scores as low as 500 can qualify provided you can put down at least 10% down payment.
3. VA Loans
These are for active service members, qualified veterans, and their spouses. You can enjoy zero down payment loan backed by the U.S. Department of Veterans Affairs (VA). Although guaranteed by the VA, private banks and mortgage companies are the ones who issue VA loans.
4. HomePath Homes
The properties sold by HomePath homes are foreclosed houses of former owners on a Fannie Mae-owned mortgage. You can enjoy low down payments. The closing costs are also another reason why many people want a HomePath property.
5. Community Seconds
This is a Fannie-Mae-approved second mortgage. Buyers can use funds from local, start governments, and housing nonprofits to put down a down payment. You can even enjoy help with the closing costs and minor renovation costs.
6. HUD Home Programs
HUD sells foreclosed homes perfect for low to moderate-income families. You can qualify for a house with 3.5% down payment. It is advisable that you invest in a home inspection before making a home purchase.
7. Chenoa Fund
Chenoa Fund provides up to 3.5% down payment to all states except New York. You can enjoy an FHA 30-year fixed-rate mortgage. There are no income limits for this downpayment assistance program.
8. Government-sponsored Entities
Fannie Mae and Freddie Mac offer mortgage programs to first-time homebuyers. It is possible to enjoy a 3$ down payment.
These are but some of your options in case you need help buying a house or paying for your mortgage during the crisis. This goes to show that the government is doing what it can to help low to middle-income families afford homeownership during these challenging times. Whether you need a house or needs help paying for your mortgage, you can consider these programs as your aid.