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Why Stimulus Checks: Everything You Need to Know About Stimulus Checks

Stimulus checks are direct deposits that the government makes into American bank accounts in order to stimulate the economy during financial turmoil such as The Great Recession.

When will stimulus checks arrive? What’s the difference between cash stimulus checks and electronic stimulus checks? How much can you expect to receive in your stimulus check? How do you cash a stimulus check?

These questions and more are answered below, so read on to learn everything you need to know about stimulus checks!

How will Stimulus Payments Work?

In essence, stimulus payments will be checks you’ll receive directly from your employer. In most cases, they’ll arrive in two payments: one on January 31st and another on March 31st.

If you earn an annual salary of $100,000 or less (and pay federal income taxes), you’re guaranteed to get a stimulus check for $400 sometime in February.

And if you live in a state that’s received an exemption waiver from President Obama—meaning it has a balanced budget—you can expect to see $300-$600 even more shortly after tax day.

When Will Stimulus Payments Arrive?: The stimulus payment system is still being worked out by Congress and hasn’t been finalized yet. But as things stand now, stimulus checks should start arriving in early February.

According to CNN Money, they should be mailed out starting on February 2nd with everyone receiving their first check within 21 days of that date.

Where Should I Receive My Stimulus Payment?

The money will come directly into your bank account, so you’ll have to make sure that it is up-to-date. As of December 2009, more than half of all American households had switched their primary bank accounts from a local branch to an online or retail bank, according to The Pew Research Center’s Internet & American Life Project.

Many Americans expect they’ll receive their stimulus checks by direct deposit. But getting paid that way means setting up a new account if your old one isn’t online—and then making sure everything with that account is correct and current before May 1, 2010.

For example, do you want to get paper statements? Do you want them sent to your home address or somewhere else? Do you want overdraft protection? Are there any fees associated with using ATMs outside of your bank network? (Many banks charge customers for using ATMs that aren’t theirs.)

There are many decisions to be made when choosing how to receive stimulus payments.

When Do Stimulus Payments Go Out?

If you haven’t already, start checking for stimulus payments in your bank account.

These payments usually arrive about two weeks after you apply. Keep in mind that sometimes it takes a few days for direct deposit payments to show up on your statement, so if you don’t see anything by next week, give it another day or two and then check with your bank.

If you still don’t see any sign of stimulus funds, call your financial institution immediately—you might have been given incorrect information about when and how you would receive your payment.

Federal stimulus checks usually get sent out within a month of applying; but some states are better than others at getting these checks into people’s hands. In California, for example, stimulus payments were distributed much more quickly than they were in Florida.

Why Are There So Many Different Stimulus Payment Amounts?

The amount of money you receive depends on how much income you earned in 2009. That income level, in turn, determines how much you’re eligible for through any one of a number of tax credit or rebate programs.

The stimulus checks are part of a series of bills that provide benefits and tax credits worth hundreds of billions of dollars. To receive your stimulus check(s), you’ll need to know if it’s a direct deposit or paper check, and how many payments you can expect based on your income levels.

The more money you make, typically speaking, the more benefits there are available to you. If you were expecting $300 and only received $200, call up your bank and ask why.

Don’t forget to look at all sides of the stimulus check payment equation; not only do some people get extra stimulus checks because they owe back taxes or other penalties, but others will actually get less than they anticipated because their taxes have been reduced by new laws passed as part of health care reform legislation (the Recovery Rebates Tax Credit).

For example, families with children who earn between $75,000-$95,000 might end up owing additional taxes come April 15th due to an extension of child-related tax breaks that offset health care costs. It pays to understand how all these elements work together before getting upset about where your stimulus check ended up!

What Happens If I Already Paid Off My Mortgages?

On August 2, 2010, President Obama signed a $26 billion dollar foreclosure prevention program that will give eligible homeowners a tax-free stimulus check.

What happens if you already paid off your mortgage? Should you take advantage of this homebuyer’s tax credit? When should you claim it on your taxes?

How do I make sure I get my stimulus check before they run out? This is all we need to know about how stimulus checks work and what happens if you’ve already paid off your mortgages. If you haven’t heard yet, federal stimulus checks are arriving in mailboxes across America.

To qualify for a stimulus check, there are certain criteria your bank or mortgage company must meet:

1) The homeowner must have taken out their first loan after January 1st 2009;

2) The property must be located in an area where unemployment rates are at least 10% higher than normal;

3) The homeowner must not have made any payments (principal or interest) on their loan since September 2008;

4) Homeowners can only receive one stimulus check per primary residence.

If You Haven’t Paid Off Your Mortgage, Can You Still Receive A Check For The Same Amount Of Money As Other Homeowners?

If you haven’t paid off your mortgage, it may sound like a good idea to request a stimulus check. However, keep in mind that if you haven’t paid off your home yet and receive a stimulus check, that same amount of money will be subtracted from your home’s value when you come time to sell.

In essence, many homeowners are receiving checks that aren’t worth as much as they think they are. If you’re planning on moving or selling your home soon after getting stimulus funds, it’s probably not in your best interest to accept these checks. But if you’re planning on staying put for a while, go ahead and sign up for them.

The government won’t penalize you for accepting stimulus checks even if you still have an outstanding mortgage.

Are There Special Circumstances Under Which An Alternative Repayment Agreement Might Be Granted On A Mortgage Owned By Fannie Mae Or Freddie Mac?

Loan servicers are generally prohibited from entering into any type of alternative repayment agreement (APA) with borrowers who are delinquent on their mortgage loans, including those loans owned by Fannie Mae or Freddie Mac.

That said, there may be some limited exceptions. For example, if a borrower is going through a financial hardship and has already completed an Affordability Analysis as part of their loan modification application process, then you may want to consider reviewing his/her situation for possible consideration of an APA.

However, such circumstances must be extremely rare as it is inconsistent with our servicing guidelines and poses reputational risk. Further guidance in situations where an APA might be considered can be found in NMS No.

Are All Homeowners Ineligible For A Loan Modification Eligible To Participate In The HAMP Program?

As we mentioned above, not all homeowners who are delinquent in their mortgage payments and could benefit from a loan modification are able to participate in HAMP. That’s because not all borrowers with federally related mortgages (mortgages backed by Fannie Mae or Freddie Mac) are eligible for HAMP.

Instead, these borrowers need to pursue a different path toward avoiding foreclosure. If you have any questions about whether you’re eligible for a loan modification through your lender, contact them directly.

In many cases, your lender will conduct an examination of your home loan situation and help you work out an alternative plan that isn’t considered part of HAMP—but may be better suited for your particular financial situation.

However, it’s important to note that even if you aren’t eligible for HAMP assistance, there are still options available to you. For example, if your home is valued at less than $729,750 ($938,000 in Alaska), there is another government program called Home Affordable Foreclosure Alternatives (HAFA).

HAFA offers several alternatives to foreclosure including short sales and deeds-in-lieu of foreclosure. Even if you don’t qualify for either program it’s still worth looking into as it can potentially save you thousands of dollars over time compared to going through a full-blown foreclosure process.

Who Can Help Me Understand The New HAMP Rules And Get Started Under The HAMP Program?

If you’re one of those homeowners who don’t think they can meet their mortgage payment, a counsellor can help you work out a repayment plan with your lender. If you are facing imminent foreclosure or have been served with foreclosure papers from your lender, your counsellor will advise you on whether you qualify for HAMP and help get you started under the program.

For more information about HAMP and how it works, visit www.makinghomeaffordable.gov 
The first step in getting help is finding a housing counsellor near you.

To find a housing counsellor, go to www.hud.gov/offices/hsg/sfh/hcc/hcs Click on Find Help and enter your zip code or address in the search box provided.

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