With the uncertainty the job market has brought to many over the last several years, mortgage unemployment protection insurance has become more popular. While people are fearing the chance of getting laid off, they are more hesitant to take out a mortgage and then not being able to pay it and losing their home. This insurance has strict eligibility requirements, however, so it may not be for everyone.
Unemployment Protection Insurance, unlike mortgage insurance, is designed to help the buyer rather than the lender. Although it does help encourage reluctant home buyers, so this insurance indirectly benefits lenders as well. Mortgage unemployment protection insurance does what you might think it does – protects the buyer if they are unable to pay their mortgage due to a job loss until they can get back on their feet.
Before looking into purchasing this insurance, you need to first realize who this insurance is made for and what the strict guidelines for acceptance are. This type of insurance is truly for full time employees who find themselves laid off or fired. It will not cover people who are fired with cause, have seasonal jobs, are self-employed or those who do not receive a W-2. It will also not cover you if you voluntarily quit your job.
Who Qualifies for Unemployment Mortgage Protection?
For those who do qualify, remember that you will need to pay premiums on this insurance just as you do with other insurances. For instance, factors that affect your premiums are your age, your health history and current health, and your employment history and how long you have been at your current job.
If you decide this is something for you, make sure you do all the research you can beforehand to make sure you know what the benefits and downfalls that this insurance has to go with it. You first need to find a trusted insurance agent who will be able to sit with you to show you all the details of the insurance. You want to look at the duration of the insurance if you ever need to use it. Most companies will pay your mortgage for up to six months. A few may go up to a whole year. Decide if the duration is long enough for you to be able to find another job and be able to take on your mortgage payments by yourself again.
What’s Your Status?
Also check the conditions of the insurance and consider your current job situation. Some of these policies require that you hold them for at least six months before even being able to use them. If you think you are in jeopardy of being laid off soon, the insurance may not even wind up benefiting you. Plus, you usually have to disclose this information to the insurance company before purchasing such an insurance. If the insurance company deems you as too much of a risk, your application is not likely to be accepted.
Final Verdict On Mortgage Insurance
Overall, mortgage unemployment protection insurance can be something that can make those who qualify more comfortable when purchasing a mortgage loan. The need of this type of policy has much to do about your job situation. I’m sure there are many that in 2008-20009 that lost their job wished that had taken out this type of policy. If you feel about the job situation then I would probably pass.
Source: goodfinancialcents.com