Key Takeaways
- Mortgage relief can reduce or pause payments through forbearance, loan modification, or refinancing.
- Start by contacting your lender early, since many relief options work best before you fall behind.
- Use forbearance for short-term hardship, but plan for how you’ll repay missed payments when it ends.
Mortgage relief programs provide hope to homeowners struggling to make their mortgage payments due to unexpected events like job loss, medical bills, or economic downturns. Mortgage assistance refers to a variety of options such as loan modifications, forbearance agreements, and refinancing opportunities. By easing financial burdens, both aim to make mortgage payments easier to manage.
In this article (Skip to...)
- Mortgage relief meaning
- Finding mortgage assistance
- Types of mortgage relief
- Grants to help pay mortgage
- Mortgage assistance scams
- FAQ
What is mortgage relief?
Mortgage relief includes a variety of initiatives and measures designed to assist homeowners dealing with financial struggles in managing their mortgage payments. These difficulties can stem from unexpected life events, such as job loss, illness, or other economic hardships that reduce a homeowner’s ability to stay current on their mortgage payments. Mortgage relief aims to offer homeowners temporary or permanent options to prevent foreclosure, helping them reduce financial losses while remaining in their homes or paying off their mortgage.
Talk to a lender about your options. Start here
Where to find mortgage assistance grants and mortgage relief programs
You can find mortgage assistance grants and mortgage relief options through government programs at the state and federal level, non-profit organizations that specialize in housing assistance, and services provided directly by lenders or mortgage servicers.
Your first step in exploring mortgage assistance grants, whether at the federal or state level, should be the Department of Housing and Urban Development (HUD). HUD.gov provides a valuable resource with a complete list of HUD-approved housing agencies in every state.
You should also look into local homeowner assistance funds and housing counseling services available in your area.
Speak with a lender about your options. Start hereHow does mortgage relief work?
Mortgage relief works by adjusting the terms of a homeowner’s mortgage agreement to address and alleviate financial stress. The process typically begins with the homeowner reaching out to their lender or a housing counselor to discuss their situation and explore available mortgage assistance options.
For example, consider a homeowner struggling with unemployment due to an economic downturn. They could apply for a forbearance program through their lender, temporarily suspending mortgage payments while they seek new employment. During the forbearance period, interest may still accrue, but the homeowner avoids foreclosure.
Once they secure a new job, they work with their lender to resume payments and discuss options for repaying the accrued amount, possibly extending the loan term to keep monthly payments manageable.
Mortgage Relief vs. Mortgage Assistance
Mortgage relief: Helps you change or temporarily pause your current mortgage terms to avoid foreclosure. Examples include loan modifications, forbearance, and refinancing.
Mortgage assistance: Provides outside financial help or guidance (like grants, interest-free loans, or counseling programs) to support homeowners without altering the loan itself.
Both can work together to help borrowers stay afloat, depending on your finances, loan type, and program eligibility.
Types of mortgage relief programs
A number of mortgage assistance options may be available to homeowners when they encounter financial challenges. By understanding the specifics of each type of mortgage relief option, you can identify the best course of action to alleviate mortgage-related financial stress.
Review your options with multiple lenders. Start hereMortgage loan modification
A mortgage loan modification involves altering the terms of your existing home loan to make the monthly payments more manageable. Options will vary by lender, but they can include:
- Changing the type of loan
- Extending the loan term
- Reducing mortgage interest rates
- Lowering the monthly payment
Modifications are intended for homeowners who wish to keep their homes but are struggling with their current mortgage payments, typically due to a significant change in their financial situation. The goal of a loan modification is to achieve a monthly payment that the homeowner can afford over the long term.
Mortgage loan refinance
Refinancing your mortgage replaces your existing mortgage with a new loan, often to secure a lower interest rate or change your repayment term. A refinance can lower your monthly payment, shorten your loan term, or let you tap home equity for large expenses. Some refinance programs target homeowners under financial strain and offer more flexible terms to reduce payment pressure. Homeowners with conforming loans backed by Freddie Mac or Fannie Mae also have two specific mortgage relief refinance options.
Fannie Mae RefiNow
Fannie Mae’s RefiNow program is designed to assist homeowners who may not have been able to refinance their mortgage under conventional criteria. RefiNow offers a minimum 0.5% interest rate reduction and covers home appraisal fees if needed.
To qualify, borrowers must have:
- Fannie Mae-backed mortgage
- Household income is at or below 80% of the area median income
- History of on-time mortgage payments
Freddie Mac Refi Possible
Similarly, Freddie Mac’s Refi Possible program is designed to help low- to moderate-income homeowners refinance their mortgages. Refi Possible reduces monthly mortgage payments and interest rates, with a minimum interest rate reduction of 0.5%. Furthermore, Refi Possible allows borrowers to roll closing costs into the loan amount, which makes the refinancing process more affordable.
To qualify, borrowers must have:
- Freddie Mac-backed single-family mortgage
- Household income is at or below 80% of the area median income
- Timely payment history
Streamline Refinance
Homeowners with government-backed FHA, VA, and USDA mortgages can opt for a Streamline Refinance. This loan option functions similarly to a mortgage relief refinance because you might qualify even if your primary residence has negative equity, which some borrowers refer to as being “underwater” on the loan. And a Streamline Refinance has other benefits, too.
A Streamline Refinance also typically requires less paperwork because you often won’t need to re-verify income and employment or get a new appraisal, and government-backed loans often come with below-market mortgage interest rates and lower closing costs.
- FHA Streamline Refinance: You can qualify after you make at least three consecutive on-time payments on your current FHA loan, and you may still qualify even if you made those payments while in forbearance under HUD rules.
- VA Streamline Refinance (IRRRL): You can use an IRRRL even if your current loan is delinquent, but the lender must confirm that you have resolved the cause of the delinquency and that you can afford payments on the new loan.
Mortgage forbearance
Mortgage forbearance is an agreement with your lender that temporarily reduces or pauses your mortgage payments for a specified period. It can be helpful during short-term financial hardship, offering you time to recover without the immediate threat of foreclosure. When the forbearance ends, you are responsible for repaying the missed payments, and your lender will usually present repayment options to help make that amount manageable.
Fast Fact: Relief Options Don’t Always Hurt Your Credit
Forbearance itself typically does NOT damage your credit score, as long as it’s approved by your lender. Missed payments without a plan will.
Financial aid
Distressed homeowners may be eligible for a variety of mortgage relief programs with their lender. Each type is designed to address specific financial challenges homeowners might face. Here’s a closer look at some of the options:
Interest-free loans
Mortgage assistance loans are an affordable choice for homeowners in need since they offer short-term financial help without the burden of interest payments. Interest-free loans must be repaid over time, but the absence of interest may significantly decrease the total amount due.
Waiving fees
Lenders may offer to waive certain fees associated with mortgages, such as late fees, application fees, or even some closing costs for refinancing. This mortgage relief option reduces the overall financial burden on the homeowner, making it easier to manage mortgage payments or the costs of refinancing.
Second mortgage or equity loan
If you have home equity, a second mortgage or home equity loan can give you a lump sum of cash for urgent financial needs, including mortgage payments. This option can offer short-term relief but also increases debt, so review the rate, payment, and repayment terms before proceeding. Mortgage assistance options vary by program and location, and eligibility often depends on your income, hardship, and home equity.
Loan counseling
Loan counseling services can assist struggling homeowners in reviewing their options and planning their next steps. A housing counselor can help you create a budget, evaluate available mortgage relief programs, and gather the necessary paperwork to apply. If you need to work directly with your lender, a counselor can also help you communicate and negotiate with them. Many of these services are offered by HUD-approved counseling organizations.
Grants to help pay mortgage
Mortgage assistance grants may be harder to find than they were during the height of the coronavirus pandemic, but some programs still offer help. If you face financial strain from job loss, rising living costs, or another hardship, review the mortgage assistance grant options below to see what may fit your situation.
Speak with lenders about your options. Start hereHomeowner Assistance Fund (HAF)
The American Rescue Plan Act created the Homeowner Assistance Fund (HAF) in 2021 to help homeowners avoid foreclosure and catch up on housing payments. Eligible homeowners can use HAF funds to pay past-due mortgage payments and other housing costs, including homeowners insurance, property taxes, utilities, housing association fees, partial claims, and some home repairs. The U.S. Department of the Treasury oversees HAF at the federal level, while states administer their own programs, and availability varies by state. Check the Consumer Financial Protection Bureau (CFPB) and your state’s HAF website to confirm whether the program still accepts applications and what costs it covers.
State mortgage assistance grants
There may also be state-specific mortgage assistance available, with some offering grants and others offering deferred loans. Look into the options in your state and see if there are any extra resources at the county or city level. The best place to start is by visiting your local housing finance agency. For example:
- Mortgage assistance in Texas: Explore assistance through the Texas Department of Housing and Community Affairs (TDHCA) for mortgage relief and grants.
- Mortgage assistance in Florida: The Florida Housing Finance Corporation (FHFC) offers various programs to help homeowners manage mortgage payments.
- Mortgage assistance in Illinois: Contact the Illinois Housing Development Authority (IHDA) for information on available mortgage assistance programs.
- Mortgage assistance in Michigan: Residents can seek help from the Michigan State Housing Development Authority (MSHDA) for mortgage relief and financial assistance.
HUD counseling agencies
A HUD-approved counseling agency in your state may know which mortgage assistance grants are available in your community. Housing counselors can point you to local government and non-profit programs that offer help, and many HUD-approved agencies also provide free foreclosure prevention counseling.
What to do when you can’t pay your mortgage
Missing a mortgage payment can feel overwhelming, but you still have options and can take action. Start early, act quickly, and focus on steps that protect your home while you work through the short-term hardship.
Call Your Lender Before You Miss a Payment
Lenders often have relief options you won’t see online, and they prefer helping you avoid foreclosure. Reaching out early increases your chances of qualifying for forbearance or a modification.
Review your budget
Review your income, bills, and spending to see where you can cut expenses or redirect funds toward the mortgage. A detailed budget can help you prioritize essentials and uncover quick savings. This review can also help you pull together documents your lender may request when you apply for assistance.
Explore mortgage assistance grants and mortgage relief programs
Explore mortgage assistance grants and relief programs available through federal and state agencies, your lender, and local nonprofits. Many nonprofits also provide counseling to help you compare options and fill out applications. Use these resources to find programs that suit your hardship and eligibility.
Consider legal advice
Get legal advice if you face foreclosure, have a complex financial situation, or need help understanding your rights. A real estate or bankruptcy attorney can explain options such as negotiating with your lender, using foreclosure prevention tools, or considering bankruptcy as a last resort. Legal guidance can help you choose next steps with a full understanding of the tradeoffs.
Watch out for mortgage assistance grant scams
Scammers often target homeowners worried about missed mortgage payments, so treat unsolicited offers and “too good to be true” deals as warning signs. Legitimate mortgage assistance programs, especially federal ones, will not ask for money upfront. If a website or offer looks suspicious, report it to the Consumer Financial Protection Bureau, and look for official program information on sites and email addresses ending in “.gov” rather than “.com” or “.net.” If you’re considering refinancing, ignore unsolicited lender pitches and choose refinancing lenders based on your own research.
FAQs about mortgage assistance grants and mortgage relief
Speak with a lender about your options. Start hereEligibility for mortgage relief varies by program but typically includes homeowners experiencing financial hardship due to job loss, medical expenses, or economic downturns. To find out if you’re eligible, review the specific criteria of the mortgage relief program you’re interested in.
To qualify for mortgage relief or a mortgage assistance grant, you’ll need to demonstrate financial hardship and meet the criteria set by the lender or government agency offering the relief. This often involves submitting documentation of your income, expenses, and the reasons for your hardship.
Depending on the program’s specifics and how lenders report it, mortgage relief may have different effects on credit scores. While some programs may not impact your credit score, others might. It’s important to ask how a relief program may affect your credit score before you enroll.
If you’re three months behind on your mortgage, your lender may initiate the foreclosure process, and you’ll likely receive a notice of default. However, it’s important to contact your lender or mortgage servicer as soon as possible to discuss mortgage relief options that can help prevent foreclosure.
You can find more information about available mortgage assistance grants and mortgage relief through your lender, government agencies, non-profit organizations, housing counselors, and online resources.
Bottom line on mortgage assistance grants
Facing financial hardship can be overwhelming, but mortgage relief and mortgage assistance grants are available to help homeowners regain control and ensure stability.
If you’re an existing homeowner looking to reduce your monthly payment, compare refinancing options from various lenders to discover the best fit for your situation. Start your path to financial recovery by clicking the links below and taking the first step towards securing your home’s future.
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