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What is mortgage unemployment insurance?

[Jan 26, 2011.]

 

A job layoff can happen to anyone at any time. As of December 2010, 14.5 million Americans were unemployed and the number of those who were considered long-term unemployed for 27 weeks or longer was 6.4 million, according to the Bureau of Labor Statistics. Many unemployed folks are also homeowners and have found themselves unable to pay their mortgage loans after being downsized. If you believe that your job is in jeopardy, you may want to think about getting mortgage unemployment insurance.


Monthly payments on a mortgage


When it comes down to it, your mortgage lender doesn't really care if you lose your job. The mortgage company expects you to make monthly payments on a mortgage whether you have a job or not. Default on those payments and you could end up losing your home to foreclosure.


Keeping a roof over your head


In a stronger economy many financial experts would probably tell you not to spend money on mortgage unemployment insurance. But the rules of the game have changed, and getting this type of insurance policy could be the only thing that keeps you in your home in the event of a job loss. This type of policy generally pays if you lose your job because of a layoff or because your company went out of business. You won't be covered if you quit, retire or are fired.


Collecting payments


Once you file a claim, you may have to wait several months before receiving a payout. Then, the monthly payments on the mortgage may be sent directly to the mortgage company and may last for about six months or so. Different insurers offer different types of policies, so you might find one that also offers additional cash that can be used for other bills and expenses. It is important to review all the terms of a mortgage unemployment insurance policy so that you know exactly how it works.


Finding an insurance policy


Some banks offer mortgage unemployment insurance policies to new mortgage loan customers. If you buy a property from a home builder the company may offer coverage to you as part of the deal. You also might be able to attach a rider to your existing homeowners insurance policy to get this additional coverage. Also consider shopping around online to compare policies from different companies.

 

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.

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