If you’re like many of us, you’re spending a good amount of time watching the news to find the latest on stay-at-home orders and what the government is doing to lead us out of the COVID-19 nightmare. You’re also likely spending hours scrolling through local, state, and federal websites to try and figure out what sorts of things you might put to use to get you through this financially.
To be certain, there are thousands of people working extra hard to find avenues to get you relief as soon as possible. And while there are a million glitches and bottlenecks, there are a ton of programs that can help. Ultimately, we’ll get through this, and all get on with our lives.
In the meantime, read carefully what’s being offered! Pick up the phone – even if that means waiting on hold – to have someone personally answer the questions that you have!
Here are a few of the things that have piqued our interest:
There are many localities, states, counties, and federal agencies that are trying to provide some sort of wage relief for those missing their regular paychecks or finding themselves unemployed. We wrote about that recently, and there are still more questions. For most of you, seeking relief means applying for unemployment through the State of Virginia. Here in Virginia that’s considered taxable income, much like a regular paycheck. So, remember that come 2020 tax time.
It becomes more complicated when you start looking at special relief.
Congress approved a stimulus payment for every American who met certain criteria. Most individuals who received stimulus got up to $1,200 from the Treasury Department. That check, unlike your unemployment, is not considered taxable income. It’s also protected funding for those who are going through bankruptcy. And contrary to what your Facebook friend told you, it is not an “advance” on your 2020 tax refund. It doesn’t count as “disposable income” and won’t affect your ability to access other sources of financial assistance.
So that’s good news.
If, however, you applied for or received “Pandemic Assistance,” that money IS taxable. This is similar to regular unemployment, and is available through both Virginia and through the Federal CARES Act. The Federal Pandemic Unemployment Compensation program can provide up to $600 per week, but the state will determine your eligibility and the exact amount you receive. And, again, it’s taxable.
Now – your mortgage.
There are many elected officials who are clamoring for a temporary pause on any and all evictions and foreclosures. But that’s not yet any sort of law or signed into any of our relief programs.
Most lenders, however, are surprisingly sympathetic to what people are going through right now, and are willing to work with borrowers and homeowners to give them some relief. The most common method is something called “forbearance.”
Forbearance is a temporary pause in your monthly payments. Your lender may offer forbearance in lieu of demanding you keep up those payments, in the hope of avoiding a foreclosure during this crisis.
What most elected officials are advocating is simply pausing your monthly payments and letting you pick them back up when you’re able to return to work. The federal government has mandated that some sort of forbearance be made available to homeowners. But various lenders differ on how they wish to make up those missed payments.
Some lenders may simply add those missed payments onto the back end of your loan. If your mortgage was going to be paid off in June of 2030, then you’ll be asked to pay for July, August and September of 2030 to catch up those three lost months of 2020. Some lenders may temporarily increase your monthly payments until the forbearance period is paid off. Few, if any, will simply forgive the months that you can’t pay.
Some lenders – and this is where the fine print comes in – will gladly offer you forbearance while you’re out of work, but will ask that you make up those payments as soon as you begin working again. If you missed 3 months due to the coronavirus, start back at your job on July 31, and your mortgage is due on August 15, then your August payment will be four month’s worth of mortgage payments.
Not many people seeking relief right now have that sort of nest egg saved up.
So, talk to your lender and determine what sort of forbearance or relief is being offered. Pick up the phone and talk to someone at your bank or lending institution!
And remember to double check that small print!