We are committed to making sure that you can receive the funding you need to make your purchase or refinance possible.
In one way or another, we have all been affected by the Coronavirus pandemic. As a result, the Senate passed the CARES Act, which provides direct and fast economic assistance for American workers. However, you may still not completely understand what the CARES Act is and how it may be affecting your finances. This may be especially true if you are hoping to qualify for a home loan or refinance.
If you are looking to refinance your home loan or hoping to qualify for a mortgage, the SeanZ Team can help!
What is the CARES Act?
In response to the economic fallout due to the COVID-19 pandemic, the President signed a $2.2 trillion stimulus bill on March 27, 2020. The spending was divided up, some of it in one-time cash payments to individual Americans, some to increased unemployment benefits, some to small businesses and large corporations, and finally some to local and state governments.
Additional Provisions of the CARES Act
There are some additional provisions of the CARES Act. For those with student loans issued by the federal government, they have an automatic six-month stay, which extends until September 3oth. This provision excludes borrowers with Federal Family Education Loans and those who have privately held student loans.
For 2020, retirees are no longer mandated to take the required minimum distributions. This may prevent ‘locked in losses’ for individuals who can let their investments sit to let them recover. If you have already taken your required minimum distribution, you have the option of putting it back within 60 days of the issuance.
How the CARES Act Can Affect Your Loan
If you have a federal student loan that is in forbearance, you may have a more dificult time qualifying for a home loan. When a mortgage lender gathers information on your monthly payments, and you have a loan in forbearance, the payment information is often not reported. When this occurs, the lender will usually use 1% of the outstanding loan balance as an estimated payment. If your student loan debt is high and you’re on an income-driven repayment plan, you may end up having an estimated payment amount that is higher than what you pay each month.
When this situation occurs, the higher payment amount could raise your DTI so much that you cannot get preapproved for a loan, or you could get approved for a much lower loan amount that you would otherwise have been able to get.
Contact the Better Rate Mortgage team
If you are hoping to qualify for a home loan or refinance and have questions, contact Better Rate Mortgage. During these uncertain times, even the home loan process has been somewhat affected. But we will help you navigate any situation. Ask your mortgage expert for more details about which loan will work best for your circumstances. We are committed to making sure that you can receive the funding you need.