On the heel of news reports that many military families are struggling financially, more organizations and consumers have been calling for additional support targeted towards veterans and their loved ones. Even before the events of the past year, the road to homeownership was compounded by several roadblocks for veterans, including lower credit scores, higher debt levels, and higher spousal unemployment. With a high degree of uncertainty and access to very little information on what help is available to them, veterans are seen as one of the groups that are struggling the most to get on – and stay on – the homeownership ladder. Whether you are a veteran in your first home or a seasoned pro worried about making your mortgage payments during this time, there are things you can do to avoid filing for bankruptcy and stay in your home.
Check If You Qualify For Forbearance
The new federal law, Coronavirus Aid, Relief and Economy Security (CARES) Act sets out emergency financial measures for veteran homeowners who cannot afford their mortgage payments during this time. According to the CARES Act, veteran homeowners with federally backed loans can apply for mortgage forbearance until June 30th, 2021. Homeowners who have done the forbearance arrangement on or before June 30, 2020, can also get a six-month forbearance extension. However, it should be noted that this relief simply defers your mortgage payments for a specified time. Veteran homeowners are still liable for their mortgage payments once the forbearance period expires.
Ask Your Lender For A Loan Modification
Veteran homeowners who are not using federally backed mortgages may also be able to ask their lender for a loan modification. Loan modifications allow the homeowner to extend their loan term in exchange for smaller more manageable monthly mortgage payments. For veteran families where a spouse has lost their job or their household income has declined during the pandemic, this could be a hugely helpful move to avoid foreclosure. More recently, the announcement was made that VA loans were eligible for loan modifications.
During the loan modification process, homeowners can add their missed payments, plus any legal charges to their remaining balance, and calculate new monthly payments using a new loan term. There are certain criteria, however. For instance, you must have made at least 12 monthly payments since closing and not requested a modification in the last three years. If you are considering this option, it is a good move to get an idea of your new monthly payments before speaking to your lender. The VA loan mortgage calculator can help you input your remaining loan amount and new proposed loan term to get an idea of your new monthly payments if you are approved. The VA allows loan modification extensions up to 360 months, as long as it is 10 years or less from your original maturity date.
Maximize Your Entitlement To First-Time Veteran Homeowners Assistance Programs
Many veterans are unaware of the financial aid programs available to them when buying a home. Veterans who are short on cash can capitalize on Dollar Homes, which are homes that have been foreclosed and are available for sale by the government. Thanks to the pandemic and recent financial stress families have faced, there are now also financial aid programs available to help veteran homeowners avoid foreclosure. According to the U.S. Department of Veteran Affairs, veteran homeowners can request a mortgage deferment for up to 360 days if they have a federally backed loan.
Military aid societies like the Air Force Aid Society and Army Emergency Relief are also offering financial assistance to service members in the form of emergency grants and zero percent loans. They are aimed at covering the cost of rent/mortgage expenses, childcare costs, or other emergency financial costs for veteran households. They hope that by granting financial assistance where needed, they can help service members navigate a time where money is tight – and stay in their homes. To apply for aid, veterans need to apply online or through the America Red Cross Society.
There is also financial counseling available to service members and their spouses. If you are having trouble managing your finances during this time, Military OneSource financial counselors can be a great source of advice to get you to stay on track and in your home.