About 52% of Americans still say that they’re being financially impacted by the coronavirus pandemic, according to survey data from TransUnion. While some of those affected have been able to find new jobs or rely on unemployment benefits to see them through, 75% are worried about paying their bills.
That may be especially true with Congress failing to pass any of the proposed additional relief packages over the summer. In the interim, the $600 enhanced weekly unemployment benefits expired and the $300 boost spurred by President Donald Trump’s executive order only lasts six weeks.
Although unemployment benefits have been trimmed, there are other programs still operating that can help Americans stay current on their bills and loans. Below, CNBC Make It rounded up a list of resources and information that may be helpful for those struggling financially right now.
A federal eviction moratorium put in place at the beginning of the coronavirus crisis in the U.S. expired at the end of July, but the Centers for Disease Control and Prevention issued an eviction moratorium that runs through the end of the year. It applies to individuals expecting to earn less than $99,000 and couples expecting to earn less than $198,000 in 2020 who can demonstrate they cannot pay rent due to the coronavirus and that they already “used best efforts” to apply for aid. However, many of the details are still being ironed out.
Here are some resources to consider for renters:
If you are worried about eviction, it is important to know your rights. It is illegal for your landlord to kick you out of your home for nonpayment of rent without first going through your state’s formal eviction proceedings, including giving you notice that you are being evicted.
The Federal Housing Finance Agency announced in August that multifamily property owners with mortgages backed by Fannie Mae or Freddie Mac that enter into forbearance programs need to inform tenants of their rights. Additionally, while in forbearance, landlords must agree not to evict tenants for not paying rent.
Laws vary drastically depending on the state and even the city you live in, but the formal eviction process can take weeks or months. During that time, you can stay in your home. And you should, Cea Weaver, statewide campaign coordinator for the Housing Justice for All coalition, previously told CNBC Make It.
Local housing nonprofits or rental assistance programs may be able to help.
Contact a local tenant’s organization or legal aid society to get free help if you’re facing eviction. Relief organizations are local and you can search for a tenant’s organization in your area.
Legal Services is an independent nonprofit that helps low-income households with issues like eviction.
Here are some resources to consider for homeowners:
First, figure out if your mortgage is federally backed, as that may entitle you to more protections. You can use tools developed by Fannie Mae and Freddie Mac to find out.
If your mortgage is held by a private lender, here’s a list of mortgage relief programs offered by 12 major banks, as of July 2020.
If you’re struggling with your mortgage payments, the Consumer Financial Protection Bureau offers a Find a Counselor tool, which provides a list of counseling agencies that can help advise on loan terms, credit issues and foreclosure.
The U.S. Department of Housing has a database of approved organizations that offer foreclosure avoidance counseling.
About 10% of Americans, 22.3 million, reported they sometimes or often didn’t have enough to eat within the past week, according to the Household Pulse Survey for the week ending August 31. The Center on Budget and Policy Priorities estimates that up to 17 million children are living in households where they can’t get enough food.
Apply for the Supplemental Nutrition Assistance Program, better known as SNAP, through your state agency. Eligibility requirements vary by state, but typically your household has to be at or below 130% of the poverty line. For a family of three, that’s a gross income of about $28,200 a year.
Young families may qualify for the Special Supplemental Nutrition Program for Women, Infants and Children, popularly known as WIC. To qualify, you generally need to have been deemed at “nutritional risk” and have a gross household income at or below 185% of the federal poverty level. That’s just over $37,000 annually for a family of three.
Food pantries, such as those supported by Feeding America, may be able to help. The organization, which supplies 4.3 billion meals each year through food pantries, has a helpful lookup tool that shows its network of 200 food banks and 60,000 pantries and meal programs around the country. In many cases, you do not have to be eligible for SNAP in order to qualify for pantry services.
The Homeless Shelter Directory, FoodPantries.org and FreeFood.org also have addresses, websites and contact information for soup kitchens, food pantries and food banks by city and state.
Little Free Pantries, a grassroots mini pantry movement where neighbors stock pantry items for those in need to take, may be another option.
If you have school-aged children, many schools are offering free grab-and-go meals to students. Additionally, some states have been approved to offer the Pandemic EBT (P-EBT) assistance in August and September. The program provides families with a voucher to purchase groceries to replace the breakfasts and lunches their children were missing with schools operating virtually.
If you’re worried about paying your utility bills, contact your provider. While some providers’ Covid-19 specific programs ended in June, other companies extended their assistance. You may be able to defer utility bills through the assistance programs most companies offer year round, including major providers such as ConEd, Duke Energy, FirstEnergy and PSE&G.
Call your provider directly to determine what options are available to you right now. Assistance varies by company.
The Low Income Home Energy Assistance Program (LIHEAP) is a federal program for low-income families that helps with energy bills. While income eligibility requirements vary by state, generally a four-person household earning less than $36,400 qualifies. You can call the National Energy Assistance Referral (NEAR) hotline toll-free at 1-866-674-6327 to get information on where to apply for LIHEAP.
UtilityBillAssistance.com provides a state-by-state breakdown of available grants, programs and even charities where you may be able to apply for payment assistance.
If you’re struggling to pay your phone bill, the Federal Communications Commission has a program called Lifeline that provides discounted landline or cell phone service to low-income families.
The federally funded Temporary Assistance for Needy Families (TANF) program can provide assistance with basic needs such as housing, food and utilities, as well as offer services focused on child care, job training and transportation. Each state runs its TANF program differently, but you can look up each program by state to determine what types of assistance are offered and if you qualify.
Credit cards and loans
Major banks, including Capital One, Chase, Citi and Wells Fargo, are encouraging any customers facing economic hardship to enroll in payment assistance programs. These are not automatic, so you will need to enroll each auto loan, personal loan or credit card that you want help with.
In addition to suspending payments temporarily, you may be able to sign up for a hardship plan, which could mean lower interest rates or smaller fees and penalties for a time.
If your bank doesn’t have a formal program, the National Consumer Law Center recommends sending hardship letters to lenders to see what your options are. The NCLC provides this sample hardship letter.
The coronavirus relief package passed in March, known as the CARES Act, allowed federal student loan borrowers to temporarily suspend payments and dropped interest rates on federal loans to 0%. These protections were set to expire Sept. 30, but President Trump signed an executive order in August that extends the payment pause through January 2021. The CARES Act only provides payment suspension for federal loans owned by the Education Department. These protections do not apply to private loans.
Through the end of the year, if you want to suspend your payments, make sure you turn off the autopay feature on your federal student loans. If you have lost your job or experienced a change in income, you may want to consider enrolling in or recertify your income-driven repayment plan.
To help enforce the protections granted under the CARES Act, the National Student Legal Defense Network created template letters you can send to your loan servicer if you want to continue paying your loans and have those payments applied to the principal and if you’re seeking a refund of any payments you have made since March.
If you’re not sure if you have a federal student loan owned by the Education Department, you can look it up on the National Student Loan Data System website or by calling 1-800-4-FED-AID.
If you’re a resident of California, Colorado, Connecticut, Illinois, Massachusetts, New Jersey, New York, Vermont, Virginia or Washington, you may be able to suspend private student loan payments. These states reached agreements with several of the largest private student loan servicers and are allowing borrowers to request a 90-day forbearance. You can apply for this forbearance by contacting your loan servicer.
If you’re not covered by any of these protections, you can reach out independently to your loan servicer to see if there’s any assistance they can offer. Navient, for example, is offering short-term forbearance for at least a month for qualified borrowers who request it after July 1, 2020.
As many as 12 million Americans may have lost health insurance since the start of the coronavirus pandemic, according to a report published in August by the Economic Policy Institute. That’s because many Americans get their health insurance through their employer, so high levels of unemployment are affecting access to health insurance.
If you’ve lost your job and your health insurance, don’t simply sign up for coverage offered under Consolidated Omnibus Budget Reconciliation Act, better known as COBRA, without doing your homework. This can be an expensive option because it keeps you on the same plan you had when you were employed, but instead of your employer covering a portion of the cost, you’re on the hook for the entire amount yourself.
Check out your state’s health insurance marketplace for less expensive options. You have two months, 60 days, after you lose coverage to enroll in a marketplace plan.
Depending on your situation and where you live, you may qualify for Medicaid. This is a federal program that provides health coverage for low-income families and children, pregnant women, the elderly and people with disabilities.
There are also health centers around the country that offer low cost and no cost health care services. The Health Resources and Services Administration has a locator tool to help find a clinic in your area.
If you don’t need to see a doctor in person, several telemedicine services have been offering free health care during the pandemic.
For those struggling to afford their prescription medications, PhRMA has a Medicine Assistance Tool that provides information about assistance programs. RxAssist.org also maintains a comprehensive directory of drug assistance programs.
Also check out Free Drug Card, which is a prescription assistance program that’s accepted at most major pharmacies and can save you up to 75% on medication costs.
For those facing unemployment, child care may not seem like an essential expense. But it may be difficult to return to work or find a new job without it. Many states and local municipalities offer subsidies and grants that can help families pay for child care.
Check out Childcare.gov’s rundown of child-care resources by state.
Local child-care resource and referral (CCR&R) agencies can also provide referrals to providers as well as information on how to get help paying for care. Child Care Aware offers a helpful lookup tool by ZIP code.
Early Head Start (for infants to children up to 2 years old) and Head Start (for children ages 3 to 5 years old) are federally funded programs generally available for families at or below the poverty level. You can find and apply for a center near you by using the the Head Start Locator or by calling 1-866-763-6481.
Some child-care providers may allow families to pay on a sliding fee scale based on their income. If you’re looking for child care, you can ask providers if they offer this, or if they have payment plans or other assistance programs.
If you’re a member of the military, you may be eligible for fee assistance or other discounts. Child Care Aware has a list of providers and resources.
The post A guide to resources that can help you pay bills now, from rent to health care appeared first on AAOA.
Original Source: american-apartment-owners-association.org
If you’re like the majority of homeowners in the U.S., you make your mortgage payment monthly, with the idea that someday you’ll own your home outright. As you continue to pay off your total balance, your home equity rises and you become one step closer to owning your home.
The downside is, mortgages, like any other type of loan or line of credit, come with interest. That means you pay the total balance owed, plus the annual interest rate applied to your mortgage loan. Additionally, your lender also assigns specific payment schedules and other terms to your loan, some of which you might find favorable, others not so much. That’s where refinancing comes in.
What does refinancing mean? In the most basic sense, refinancing is a way to alter your mortgage terms by replacing your old mortgage with a new one that is better fit for your financial situation. A lower interest rate, more manageable payment schedule, a shorter loan term, or consolidating multiple mortgages are just a few of the ways refinancing your mortgage can be beneficial.
In this post, we’ll answer some important questions, such as, “what does refinancing mean?”, “when is refinancing a good idea?”, and “what are the pros and cons of refinancing?”. For fast answers on the subject of refinancing, use the links below to navigate ahead. Or, read end-to-end for a complete overview.
What is Refinancing?
Pros and Cons of Refinancing
What is Refinancing?
Refinancing, also known as “ a refi”, is a way for borrowers to restructure their mortgage, auto, personal, or other loan type for more favorable terms. During the mortgage refinance process, you might make one or several of the following adjustments to your mortgage:
Secure a lower interest rate
Switch to a longer or shorter loan term
Change from an adjustable-rate mortgage to a fixed-rate mortgage
Cash-out some of the equity you’ve built in your home
Consolidate multiple mortgages into a single payment
Sounds pretty good, right? It can be. Anytime you’re dealing with changes to a loan, it’s a good idea to read the fine print, take a close look at the pros and cons, and really understand what happens when you refinance.
What happens when you refinance?
When you refinance a loan, whether it be a mortgage, auto, or some other line of credit, you’ll need to start by paying off your original loan, which you can do with the help of your refinanced one, after you’ve been approved for a new loan, of course. Once you have settled up with your original lender, you’ll be left to pay off your new loan according to the payment terms outlined by your new lender.
Am I eligible for a refinance?
Think back to when you applied for your original mortgage — you likely filled out an application, they checked your credit score and lending history, assessed the property, and proposed a mortgage option for you based on your financial profile.
The process for refinancing is essentially the same. The new lender will consider your credit score, lending history, the value of your home, how much you want to borrow, and your income and assets before approving you for a new mortgage. Ideally, your finances would be in a shinier state than when you got your first mortgage, and you’ll likely be asking to borrow less money, therefore, a refinanced mortgage could offer you a more agreeable interest rate or loan terms.
When it comes to determining eligibility, it’s ultimately up to your lender to decide. According to Rocket Mortgage, homeowners looking to refinance should consider the following criteria before applying:
How long you’ve owned the house: Generally, you must have the title for a minimum of six months.
Your credit score: Your lender is ultimately the one who decides what they consider to be a “creditworthy” score, but there are some basic benchmarks you can use to help. A good credit score is considered 670 and higher on the FICO scale and 660 and higher on the VantageScore model.
Your current home equity: The general rule of thumb is that homeowners should have a minimum of 20 percent home equity in order to qualify for a refinance. 20 percent is also the minimum equity needed if you want to get rid of your mortgage insurance.
Other debts: In addition to assessing your credit score and other financial metrics, lenders will typically consider your other debt obligations before approving you for a new loan. Take a look at how you’re managing your current debts before applying for a refinanced mortgage.
Closing costs: When you close on a loan, you’re typically responsible for paying closing costs, including, appraisal fees, title fees, credit check fees, and more. Before applying for a refinance, take a look at your monthly budget to determine whether or not you can afford to pay the closing costs on a new loan. ProTip: Use our budgeting calculator to help!
Financial details: Part of the loan application process involves lenders taking a look at the greater picture of your finances, such as, your income and assets, homeowner’s insurance, title insurance, etc. Make sure you have this information handy to make the refinance process more efficient if you choose to proceed.
Types of mortgage refinancing
Now that you know the basic refinance definition, it’s time to dig a little deeper. It probably comes as no surprise to you, but it’s important to know that there’s no one-size-fits-all refinance. There are several different types of mortgage refinancing that depend on the outcome that you’re looking for.
Rate-and-term refinancing: This type of refinance only adjusts the rate and/or term length of the loan.
Cash-out refinancing: Allows borrowers to adjust the mortgage length and/or term, plus, it increases the amount of the loan. Cash-out refinances are generally used when homeowners want to borrow extra money to make home improvements or other big purchases.
Cash-in refinancing: This is basically the opposite of a cash-out refinance. With cash-in refinancing, you’d pay down more of the principal balance to decrease your loan amount, generally in exchange for a lower mortgage rate.
Note: Another reason some homeowners choose to refinance is to consolidate their debts; instead of making mortgage payments to separate lenders for multiple mortgages, you could refinance and lump all of your mortgages into a single loan.
Pros and Cons of Refinancing
Like any financial decision you’ll make in your lifetime, it’s a good idea to consider the pros and cons of your decision. With that said, let’s take a look at some of the benefits and risks associated with refinancing.
The advantages of refinancing are simple: making your mortgage terms work better for you. That could mean getting a lower interest rate, which would translate to interest savings, you could secure more manageable monthly payments which might work better for your budget, or you could adjust your loan terms to better suit your lifestyle and financial situation.
Penalty fees: Some mortgage lenders impose penalty fees if you pay off your mortgage before the term ends. These fees vary by lender, but could potentially add up to thousands of dollars.
Closing costs: As we mentioned, there are several closing costs associated with refinancing. Keep these costs in mind as you weigh your options.
Longer loan length: Should you choose to extend the length of your loan term in favor of lower monthly payments or some other benefit, you’ll be stuck paying off your mortgage longer, which could be problematic for certain homeowners.
So far, we’ve answered “what is refinancing?”, “what happens when you refinance?”, “what are the types of refinancing?”, and “what are the pros and cons of refinancing?”. If you still have some lingering questions, we’re here to help by answering these refinancing FAQs.
Does refinancing hurt your credit?
One of the costs of refinancing is that it may impact your credit temporarily. When you apply for a loan, your lender will check your credit score , conducting something that’s called a hard credit inquiry. Hard credit inquiries can drop your credit score by a few points, but it won’t impact your score forever.
Bottom line: Refinancing can hurt your credit score temporarily. However, if the savings and benefits are worth it, a quick dip in your score probably isn’t something to be too concerned about, especially if your credit is in good standing.
Is refinancing a good idea?
It depends. Everyone’s financial situation is different, so it’s important to take a close look at your current situation, assess whether you’re eligible for refinancing, and really understand what it means to refinance.
When is refinancing worth it?
Refinancing may be worth your while if you can qualify for a lower interest rate or secure better loan terms than you started with. Some financial experts say that refinancing can be a good idea if you can lower your interest rate by at least two percent.
How do I calculate the break-even period?
Something to consider when you’re refinancing your mortgage is how long it will take you to reap the benefits of your new loan after considering closing costs. Use the worksheet below to help you anticipate your break-even period.
There are plenty of nuances to know about refinancing. As you consider whether it’s the right move for you, let’s recap some important points:
What does it mean to refinance?: Refinancing a loan is when you pay off your original loan and take out a new loan, ideally with more favorable loan terms like a lower interest rate or more manageable payment schedule.
When is it a good idea to refinance?: That depends on your unique financial situation. Refinancing can help you save money on interest and offer other important benefits, but it’s important to consider the benefits and risks in the context of your own finances.
To learn more about where your finances stand, check out the Mint app to set financial goals, glean insight into your financial health, and more.
The post What Does Refinancing Mean? Refinance Your Mortgage appeared first on MintLife Blog.
Original Source: blog.mint.com
The Paycheck Protection Program (PPP) has an aggressive timeline and applicants are struggling to understand how the process works; the confusion specifically revolving around the new and expanded definition of “payroll costs,” which will be used to calculate the maximum loan amount you can receive.
Original Source: blog.bernardbenefits.com
The mortgage industry (and interest rates) have a somewhat complicated relationship with the rest of the overall economy. Generally speaking, when the economy is doing very well, the Federal Reserve will start raising interest rates. This can help to try and ward off inflation which is not great for the economy. Conversely, when overall economic conditions are poor, the Federal Reserve will LOWER the interest rates, in an attempt to spur economic growth. Since the interest rates on most mortgage products are (directly or indirectly) tied to the overall Federal Reserve interest rate, these actions have a pretty significant impact on mortgage interest rates.
Mortgage rates can fluctuate daily or even hourly, so it’s good to have a basic idea of what you want to do and what might make you want to refinance. With mortgage rates at historic lows, let’s take a look at what that means and whether you should refinance while rates are low.
Mortgage rates are at historic lows
The mortgage market is a fairly complicated market with several different types of mortgages available. So when you hear that mortgage rates are at “historic lows”, it’s important to understand what type of mortgage is being talked about. Usually, the 30-year fixed mortgage is the loan product that is considered the “standard” mortgage. So if you hear about rates “dropping”, you’re usually hearing about the 30-year fixed. It is true that usually (but not always!) rates for different types of products rise and fall together.
(SEE ALSO: What is a “Good” interest rate?)
It was not uncommon in the 1970s or 1980s to see mortgage rates with double-digit interest rates. Since that time, interest rates have generally steadily dropped, to a low around 3.5% in 2012. Mortgage rates fluctuated in the 3-4% range for the next several years before rising to around 4.5% in 2018 and 2019.
The recent coronavirus pandemic has affected the housing market and sent rates on the 30-year fixed mortgage down under 3.5%, around the lowest those rates have ever been.
Should you refinance to a 30-year mortgage?
As the name implies, a 30-year fixed mortgage will lock in your interest rate for the duration of your loan. You’ll have 360 monthly payments, all of the same amount. The exact amount you pay will depend on the amount of your loan, the duration and the interest rate. You can use our Loan Repayment calculator to find out the exact amount of your monthly payment. Keep in mind that that monthly payment amount will not include your property taxes or home insurance. Your lender may require that you set up an escrow account, or else you’ll need to make sure to budget for those expenses on top of your monthly mortgage payment.
The 30-year fixed mortgage will usually give you your lowest monthly payment. In fact, even if you currently have a 30 year fixed mortgage, you will likely save on your monthly payment by refinancing now. That is because of 2 reasons – the rates are likely lower than when you first got your mortgage and because you’ve paid down your mortgage balance so the amount you’re refinancing is less.
Should you refinance to a 15 or 20-year mortgage?
Another option to consider when refinancing is to refinance to a 15 or 20-year mortgage. A mortgage with a shorter term (like 15 or 20 years) will usually have a lower interest rate than the 30-year fixed mortgage. However, because the shorter term means there are fewer payments, your payment may still go up.
If you’re currently on a 30-year mortgage, you’ll likely (but not always) find that the monthly payments on a 15 or 20-year mortgage will be higher. The good news is that your mortgage will be paid off 10 or 15 years sooner! Overall you’ll pay quite a bit less in interest.
An example of refinancing to a shorter-term mortgage
To illustrate the types of choices you have with refinance, let’s look at an example. Our fictional homeowner bought her house 5 years ago with a mortgage of $250,000, and took out a 30 year fixed mortgage. Her monthly principal and interest payments have been $1,267 per month, and after 60 payments, her mortgage balance is now $228,305.36 with 25 years remaining.
She’s looking to refinance with today’s low rates. We’ll say that her closing costs will make her new loan payoff amount $230,000. Again using our Loan Repayment Calculator, here are some options she could consider:
A 30 year fixed loan at 3.5% – monthly payments would be $1,033.
A 20 year fixed loan at 3% – monthly payments would be $1,276.
A 15 year fixed loan at 3% – monthly payments would be $1,588.
You can see that refinancing to another 30-year mortgage would drop her payments by $234 each month. That comes at a cost of adding 30 more years to the total time it takes to repay. With a 20 year loan, her payments only go up $9 per month but she shaves 5 years and tens of thousands of dollars of interest over the course of the loan. A 15-year loan would pay even less interest but at a cost of increasing the mortgage payment by $321 each month.
Of course, every situation is different but hopefully, this can serve as a guideline to help you as you make your own decisions about refinancing.
The case against refinancing
Even though mortgage rates are at historic lows, refinancing is not right for everyone. Here are a few cases where it might not make sense to refinance, even if today’s interest rates are lower than the rate on your current mortgage:
You’re not sure if you’ll be in your home long term. Refinancing does come with some upfront costs, and if you won’t be in your home long enough to pay them back, it might not make sense
Your credit score or financial situation has taken a recent hit
You want to take advantage of some of your home’s equity with a home equity line of credit.
You don’t have enough money to pay the upfront closing and other costs associated with a refinance. If this is the case, see if it might make sense to roll those costs into your new loan.
For even more information about the pros and cons of refinancing, check out our list of 8 refinancing tips
The post Should You Refinance Your Mortgage While Rates Are Low? appeared first on MintLife Blog.
Original Source: blog.mint.com
Find an undesirable Credit Auto Loan in Canada. Leave A reply cancel answer There are many choices to consider, your neighborhood bank, your insurance carrier, bad credit financing solutions, and peer to peer lenders. If you’re a current consumer, your neighborhood bank is the very first stop because it is much more likely that their […]
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