Buying and moving into a new home is one of life’s great experiences, especially if you’re buying your first home. From getting that pre-approval to the “yes!” response on an offer to closing and moving in, every step is exciting. And while the process is engaging and fun, it’s important to prepare for moving day […]
What Is Job Loss Mortgage Insurance & Do I Need It?
Life is unpredictable. From illness to divorce to job loss, many factors can take a toll on your income that can leave you struggling to pay your monthly mortgage payments on time.
If you have lost your job and are unable to make your monthly mortgage payments, job loss mortgage insurance can help cover those payments until you get another job.
Here is what you need to know about job loss mortgage insurance and if it is right for you:
Job Loss Mortgage Insurance Will Help Pay Your Mortgage
When unemployment strikes, job loss mortgage insurance will pay your monthly mortgage payments for a specific amount of time. These policies are designed to help prevent you from losing your home if you are laid off.
If you lose your job, understand that your policy may not kick in immediately and there will be a maximum monthly amount and time that your mortgage will be paid during unemployment.
Job Loss Mortgage Insurance Only Covers Involuntary Job Loss
The important thing to remember about job loss mortgage insurance is that it will only cover involuntary job loss, such as being laid off. If you retire, quit, are fired for misconduct, or your contract expires job loss mortgage insurance will not cover you. If you die, job loss mortgage insurance may also cover your mortgage.
If you must leave your job for medical reasons, your job loss mortgage insurance policy will not cover your mortgage. However, in some cases some policies may cover disability but the cost varies depending on your occupation.
If you have already paid off your home, you do not need job loss mortgage insurance.
Talk To Your Mortgage Provider About Your Options
Job loss mortgage insurance is not for everyone so do your research before deciding to purchase a policy. Understand what policy covers what for how long and for how much. For example, it can cover some, if not all, of your principal, interest, taxes, and insurance. Again, this depends on the policy you take out.
Talking to your mortgage provider will go a long way in getting you the information you need to make an informed decision. For example, if you have already paid off your home, you do not need job loss mortgage insurance.
If you have fallen behind on your monthly mortgage payments, talk to your lender immediately. They can help you discover options to help you get back on track. As always, take the monthly cost of job loss mortgage insurance into consideration when creating your homeowner budget.