Unemployment Insurance - The latest to lure home buyers
Are you jobless and don’t know how to keep up with your mortgage payments? Well, ask your lender if he’s offering mortgage unemployment insurance. This is a kind of insurance policy especially being offered by home builders and real estate agents in recent times. The purpose of such a policy is to help one meet his monthly payments when he’s unable to find a job at the earliest.
What does the insurance policy cover?
The policy usually covers monthly mortgage payments between $1800 and $2500 for a maximum time period of 6 months. The policy covers property taxes and homeowners insurance as well. The coverage however depends on the market in your area of residence.
There are buyers who’re even getting back their mortgage payments as refund provided their appraised value falls short of their home sale price after they’ve stayed in their homes for 3 years or so. And last but not the least, certain companies are allowing home buyers to walk away from their properties in case of job loss or if they’re just behind on their loans.
Buyers who simply walk away don’t need to worry about their mortgage payments at all! But then doesn’t it affect their credit? Well, it surely does but the impact isn’t as bad as a foreclosure on their homes.
Who’s providing the coverage?
Currently there aren’t many builders or lenders out there who’re offering mortgage unemployment insurance. The major builders are Lennar Corporation, Pulte Homes Inc., The Ryland Group Inc. and Toll Brothers Inc. Their programs are being administered by a non-profit organization named Rainy Day Foundation.
Do you qualify for the insurance?
Being a home buyer, you may qualify for mortgage unemployment insurance if you’ve lost your job within the first 2 years after loan closing. Besides, there are builders who’d offer such policies only if you have applied for a loan from lenders associated with them.
How much do you need to pay?
The cost of purchasing the insurance policy may vary from one lender to another. Usually the costs are around $650 and are likely to be charged as part of their closing costs. The insurance costs may be paid by your seller or your builder as per negotiation with you.
Before I end this post, I’d like to share my thoughts with you guys…the mortgage unemployment insurance policy looks good for homeowners who’re jobless now when unemployment rate is the highest over the past 26 years and homes aren’t even selling. But how many people are able to find a job within a short span of 6 months? Not many, isn’t it? So, the insurance doesn’t seem much effective for those who’re unemployed for months. Coming up with programs for the jobless and the distressed is a good sign but we need more effective solutions to the mortgage crisis….what do you say?