Get Your *FREE* Money From The Government!

I hope you had a great second week of quarantine! The Government recently released a bunch of stimulus programs to help individuals and businesses who might be affected by the Coronavirus. I wanted to give you an overview and quick break down of the different benefits that might affect you.

Note: I am not a certified financial advisor, the information presented is based on my own understanding and may be inaccurate. Please do your own research first!

Get $1200… For Free!

The Government released a $2 trillion dollar (!) stimulus package, giving every adult $1200 and every child $500… but only if you made under $75,000 (AGI) in 2018 (2019 if you filed your taxes already)). It phases to 0 if you made over $99,000.

If you happened to have a bad year in 2018, you can get the money, but you’ll have to pay it back if you do well in 2020. So it could be good to get it if you want the funds, just know that it might be a hassle. You can check out what you can get with the calculator below!

Delay Mortgage Payments!

I’ve never heard the word “forbearance” used more times in my life than in the past week. Lenders with federally-backed mortgages (i.e. conforming loans that get sold to Freddie Mac and Fannie Mae) are required to help out borrowers by allowing them to delay their payments if they are affected by the Coronavirus.

This means that owners of 1-4 unit residential properties can call their lender and get into a forbearance program, which allows them to defer payments for 120 days and another 120 days if the issue isn’t resolved by then. The terms of the forbearance can differ depending on the lender.

Some will require you to make extra payments to make up for the missing payments during the forbearance period, and other lenders will require you to catch up on all of the missing payments at once!

Either way, you need to call your lender BEFORE you stop making payments. If you don’t contact them, then they will claim that you’re late on payments and will hurt your credit score.

To be honest, so far, it seems like the forbearance programs seem like a hassle and aren’t worth applying for. Especially if you have to make up all of the missing payments at once at the end of the forbearance period.

FYI, most owners in the Bay Area have large mortgages, which means that the banks hold them in their own portfolio. Since these Jumbo loans aren’t Federally-backed, they may not be required to help you with a delayed payment plan.

Get $10,000…For Free?

Finally, if you’re a small business owner and are impacted by the Coronavirus, you can apply for an SBA loan. These small business owners should have either employees (on payroll) or have hired contract workers in the past (1099, i.e. photographers, general contractors, etc…).

You can apply for the lesser of 2.5 times your regular monthly expenses (which you need to document) or $10,000 (which you just need to ‘affirm’). The loan is relatively cheap, at just 3.75% interest, and is potentially forgivable if you spend it on approved things, some of which include paying rent, employee wages, and the interest on mortgages (for your business).

Seeing as how this is a “forgivable” loan, it seems like a great deal Airbnb arbitrage investors who may be seriously impacted by the lack of guest stays due to the Coronavirus!

The catch is that the whole fund is only $10 Billion, and it goes on a first-come-first-serve basis. The loan payments are automatically deferred for 6 months, so you don’t need to worry about payments (if it’s not forgiven) until late September.

There’s a lot of documentation for this program, and if you’re interested in learning more about it, I recommend reading it yourself here.

(Highlights are by MeetKevin of YouTube fame, go watch his video about the program if you want a deeper summary)

How Long Will This Last?

The Coronavirus has hit us like a ton of bricks. So far, there are no signs of slowing down. Our initial shelter-in-place mandate is about to end next week, but there’s a strong possibility that it might continue for a few more weeks. How will businesses respond and what other stimulus programs will the Government create for us?

Stay Liquid To Ride Out The Storm

It’s during this time that liquidity becomes extremely important. Having cash-in-hand allows you to pay for your bills as you weather the storm. If you happen to own an investment property with a lot of equity in it that you’d like to draw some cash from, give us a call to see if we can help you with a cash-out-refi with no points.

Schedule a call here!