Take advantage of regulatory changes
Although many physicians won’t qualify for direct payments via the Coronavirus Aid Relief and Economic Security (CARES) Act (the $1,200 payments to individuals start phasing out once income hits $75,000 and disappear entirely for those making more than $99,000), there are other provisions in the stimulus bill that may help physicians. The bill, for example, boosts state unemployment payments by $600 per week for the next 4 months, meaning qualified workers could receive an average of nearlyper week, depending on their state, and there are new provisions providing unemployment payments to self-employed and contract workers.
The CARES Act also includes a break for federal student loan holders. Under that rule, you can skip your payments through September without incurring additional interest. Physicians in the loan forgiveness program will still get credit for payments skipped during this program.
Separately, the IRS has extended the tax deadline from April 15 to July 15, which means not only do you not have to file your taxes until then, you also don’t have to pay any taxes you owe until mid-July. The deadline for first quarter estimated tax payments has also moved to July 15. (If you’re expecting a refund, however, you should file ASAP, since the IRS will typically issue those within a few weeks of receiving your returns.)
Tap your home equity – if you’re planning to stay put
If you have good credit and still have some income, you might consider refinancing your home mortgage or opening a home equity line of credit. Interest rates have fallen recently amid economic turbulence, so if you haven’t refinanced recently you may be able to shave your monthly payment. If you need cash, a cash-out refinance, home equity line of credit, or a reverse mortgage (available if you’re over age 62) are among the lowest-cost ways to borrow.
“With interest rates so low, there can be a lot of benefit to refinancing and leveraging your house, especially if you’re planning to stay there,” says Jamie Hopkins, a director at the Carson Group. “The challenge is if you’re planning to move in the next few years. There’s a real risk that the housing market could go down in the next couple of years, and if you’re planning to sell, there’s a risk that you might not get back what you borrowed.”
Communicate early with your bank or landlord
If you don’t have the income to refinance, and you think you’re going to run into trouble making your housing payment, you should let your bank or landlord know as soon as possible. The CARES Act allows homeowners with federally backed mortgages to obtain a 180-day postponement of mortgage payments because of COVID-19 financial hardship, with the potential to extend for another 180 days. It also bans eviction by landlords with federal mortgages for 120 days.
Even if you don’t have a federally backed mortgage, you should still get in touch with your lender. Many mortgage servicers have their own forbearance programs for borrowers who can prove a temporary financial hardship. (Some banks are also waiving fees on early withdrawals on CDs and giving cardholders a reprieve on credit card payments.) Commercial landlords are also working with struggling tenants, so you may also be able to get some relief on your office lease as well.
“All of the lenders are setting up helplines for people affected,” says Amy Guerich, a partner with Stepp & Rothwell, a Kansas City–based financial planning firm. “The best thing you can do is contact them right away if you think that you’re going to have a problem vs. just letting the bills go.”