#Unemployment #Insurance #Can #Cover #Your #Mortgage #Payments
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Mortgage payment insurance unemployment
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Unemployment Insurance Can Cover Your Mortgage Payments
Thinking about buying a home but nervous about doing so in today’s economy? Do you already own a home and are worried about what would happen if you lose your job? You may want to consider unemployment mortgage insurance.
Thinking about buying a home but nervous about doing so in today’s economy? Do you already own a home and are worried about what would happen if you lose your job? You may want to consider unemployment mortgage insurance.
Also known as job loss mortgage insurance, this sort of policy will cover your mortgage payments if you become involuntarily unemployed. Unlike traditional private mortgage insurance (PMI), which protects the lender in the event of default, unemployment mortgage insurance actually pays your mortgage and helps you stay in your home.
At least, it does up to a point. And there are a lot of wrinkles to consider. But if you’re presently employed and feeling financially exposed in your mortgage, or are thinking of buying a home but would like more security before committing, unemployment mortgage insurance is something you may wish to investigate.
Not available to all occupations
For starters, you have to meet certain qualifications to be eligible. First off, you have to be working in a fairly stable occupation – if you’re an autoworker or newspaper reporter, you probably won’t be able to qualify, even if you’ve got 30 years on the job. You also have to be in a wage-earning, W-2 receiving occupation – independent contractors and the self-employed are not eligible, nor are military personnel, retirees from any occupation, or persons under 18 or over 60 years of age.
You also have to complete a waiting period before the insurance takes effect, usually 30 days or more after beginning coverage – if you lose your job sooner than that, you won’t qualify.
While some policies may guarantee your entire mortgage, it’s more common for them to cover your payments for a limited time, usually six to 12 months. That probably won’t pay off your mortgage, but it may provide time for you to obtain new employment. Maximum payments also vary – one policy may only cover a maximum of $750 a month, another may pay $2,000. Either way, you may still have to make up the difference if your policy amount doesn’t cover your full monthly mortgage payment.
Offered by insurance companies, lenders, builders, others
Job loss mortgage insurance policies are offered by a variety of entities. In addition to regular insurance companies, they may also be offered by home builders, banks, credit unions and other lenders, real estate agencies and realty associations. Bank of America offers a program that combines unemployment, medical and life insurance protection for your mortgage, while the Keller Williams real estate company offers job loss mortgage insurance through the Rainy Day Foundation. The California Association of Realtors offers its own program; check with your own state realtors group to see what they may offer.
Costs and coverage vary, of course, and a lot has to do with the size of your mortgage, your credit history and all the other factors that come into play when applying for the mortgage itself. But figure to pay at least as much as you’d pay for private mortgage insurance (protecting the lender) on the same loan if you’ve got less than 20 percent equity in the home.
If you’ve already got a home, unemployment mortgage insurance can add to your peace of mind, although at a price. If you’re home shopping though, you might want to ask yourself if you really should be buying a home if you’re uncertain about your long-term employment prospects. But if you think your position is generally solid but like the idea of having some added security, job loss mortgage insurance may be something for you to consider.
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