Last month, U.S President Joe Biden signed a new American Rescue Plan Act of 2021, which aims to aid struggling Americans hardly hit by the coronavirus global pandemic. This relief bill includes a $10 billion Homeowner Assistance Fund, which basically helps individuals to pay for their mortgage and other housing-related bills.
The Homeowner Assistance Fund (HAF) will provide financial support for a mortgage, rent, taxes, utilities, insurance, and homeowners association dues. It is expected to relieve the financial burden of those individuals unable to pay their rent, mortgage, and other housing-related bills after losing a job due to the pandemic.
How to qualify for Homeowner Assistance Fund?
All homeowners experiencing financial hardship since January 21, 2020, are eligible to receive HAF. You will also be qualified if you have a home loan with a principal balance or at conforming loan limits set by government-sponsored mortgage giants Fannie Mae and Freddie Mac.
According to Yahoo News, the money will be funneled through state housing agencies. While full details on how to access the HAF have not yet been announced, eligible homeowners will likely undergo an application process under each state or any eligible housing finance agencies.
It is also likely that the fund would be sent directly to a homeowner's mortgage company, taxing authority, or utility company to make sure qualifiers will use it for its purpose.
Experts Warning
While the $10 billion worth of mortgage assistance sounds like a good plan, experts warn that it may take many months before the eligible homeowners get the funds into the hands of those who need it simply because it is being disbursed.
National Foundation for Debt Management Russell Graves said that he is not expecting the funds to be made available until early 2022.
"There are so many other things going through these agencies: rental assistance, different kinds of pandemic assistance," Graves told Yahoo News.
"Frankly, we have never put so much money toward housing in history. The numbers are staggering," the multistate housing counseling agency boss added.
What to do while waiting for the HAF?
Graves suggests that homeowners should seek a forbearance with their lender while waiting for the mortgage assistance budget.
A forbearance is a special agreement between the lender or borrower to delay or "hold back" a foreclosure while the borrower still finds ways to fund the mortgage. It also allows lenders to postpone mortgage payments without getting charged with late fees or reflecting on your credit score.
He recommended homeowners give their lenders a call to discuss options, including having or extending forbearance.
Another solution would be refinancing your mortgage. Mortgage technology and data provider Black Knight recently reported that at least 11.1 million homeowners can still refinance and eventually lower their monthly mortgage payments by an estimated amount of $277.
Before doing so, you have to consider if you'd be willing to stay in the home long enough to pay off the new loan's closing cost, which usually starts at two to five percent of your loan amount.
