Mortgage Unemployment Insurance

[Jun 26, 2009.]

 

Buying a home can be stressful and exciting at the same time. But the prospect of losing a job not long after taking out a mortgage can be downright scary. Mortgage unemployment insurance is one way to ease the impact of a job loss on being able to make monthly payments on a mortgage.

Mortgage Unemployment Insurance Basics

A homeowner who loses his or her job often has to rely upon savings or severance pay to make monthly payments on a mortgage. But with mortgage unemployment insurance, all or part of the amount would be covered for a specific period of time. Some policies may also cover homeowners becoming disabled or dying in an accident. The number of monthly payments that would be made on a mortgage varies from lender to lender. But it is not uncommon to see policies that offer payments for only six months.

Mortgage Help for New Construction

Because of rising unemployment, which is around 9.4%, some home builders have gotten in on the mortgage unemployment insurance game. Some home builders pay $450 to $900 per customer for the insurance coverage, according to the Las Vegas Review-Journal. Among the builders who have offerd mortgage unemployment insurance recently are Toll Brothers, Lennar, Pulte Homes, and Ryland Group.

In many cases the coverage only kicks in if a homeowner loses his or her home within the first two years of closing on the property. Policy holders also may have to wait at least 30 days after a layoff to file a claim. People who quit a job or get fired won't have their mortgage payments covered. Also, people who are self-employed or independent contractors probably won't qualify.

Mortgage Loan Help

People building new homes aren't the only ones getting mortgage unemployment insurance. Various companies have offered these policies for years. As more people become interested in this coverage, more companies are adding it. Even some realty companies are offering the insurance.

The Long Job Hunt

Although these policies can be a life saver for some homeowners, for others the limited time period for getting help with monthly mortgage payments is a drawback. In the current tough job market it is taking many job hunters longer than six months to find a job. So if they have job loss insurance that only last for that length of time, they could face financial difficulties as soon as the policy stops paying out.

Anyone interested in unemployment mortgage insurance should ask about it when shopping around for a loan. The search for the right mortgage loan can be started here.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.