It does not matter how long you are into paying your mortgage, if you cannot keep it up then you are at risk of losing your home. You could have paid faultlessly for 10 years and then have to take time off from work after becoming ill or suffering from an accident. You could perhaps have been made redundant and so have lost your income altogether. In just a few months you could lose what you have built up if the lender chooses to take you to court for repossession. You can however choose to protect against the unknown with mortgage payment protection insurance.
By covering your monthly mortgage repayments you would not have to give a thought to juggling payments around or even worry about finding the money when the mortgage was due. You would have an income to fall back on that is tax-free. This would be the sum of money that you insured against when taking out the policy. Your premium would take this into account along with your age and the level of cover you wanted for your mortgage. You would be able to go out and look for work again with complete peace of mind that your mortgage is being taken care of.
Mortgage payment protection insurance can be taken out to suit your personal circumstances. You might want to cover against accident, sickness and unemployment together. However you could only want to safeguard against the fact that you might become ill or suffer an accident. You could decide you only need protection against unemployment only and with a specialist provider you can just protect against this.
When you take out the mortgage with the lender on the high street they will usually try and talk you into taking out protection for the loan. Never fall into the trap of thinking that because they gave you the cheapest rate of interest on the mortgage that they will give you the lowest protection policy. In the majority of cases adding payment protection onto the cost of borrowing can boost up the loan considerably. In some cases the protection is calculated over the entire mortgage and then added onto the borrowing and then interest is added on top.
Shopping around for your mortgage payment protection insurance is essential as this is the only way to compare quotes and the terms and conditions. It is the only way to get the cheapest premiums, and the savings can be huge. You do have to compare the conditions of the cover as these tell you when your policy would begin to payout and when it would end. All cover pays out for a fixed period only and then expires. Usually you can find a policy that either pays for 12 or 24 months. Providers also ask you to wait a period of time before you are able to begin claiming on the policy, this can be between 30 and 90 days. However check the small print as some providers will back date to the first date of unemployment or of being incapacitated.
The United States is going through one of the worst economic periods in history. Unemployment rates are skyrocketing, home values are plummeting, personal incomes are slumping and home foreclosure rates are through the roof. Millions of responsible homeowners are having difficulty with their monthly mortgage payments and are at risk of foreclosure. However amongst the gloom and despair there is hope. Economists and politicians alike have realized that one of the biggest keys to turning around the US economy will be to support housing prices. In order to support housing prices, steps were needed to help homeowners avoid foreclosure and stay in their homes. In order to do this, mortgages would need to be refinanced or restructured to lower monthly mortgage payments to the point where troubled homeowners could afford them.
In recent weeks, President Obama and his administration have designed and implemented a number of programs that are intended to help responsible homeowners to lower their monthly mortgage payments and avoid home foreclosure. The largest and most significant program to be implemented is the new Making Home Affordable program. This program has two main components. The first component is the Making Home Affordable refinance program. The second part of the program is the Making Home Affordable loan modification program. The two components target homeowners in different situations in an attempt to help as many responsible homeowners as possible. It is estimated that up to 9 million homeowners across the United States will be helped by this program.
Making Home Affordable Refinance Program
The first part of the program is the mortgage refinance plan. There are four main qualifications to determine who may be eligible for this program. First, the home loan to be refinanced must be homeowner's primary residence. Second, the homeowner must be current on their mortgage. Being current means that the homeowner has not been more than 30 days late on their mortgage payment over the past 12 months. Third, the loans to be refinanced must be held by Fannie Mae or Freddie Mac. Finally, the amount owed on the mortgage must be approximately the same amount or less than the current home value.
If the homeowner passes these four qualifications, then they may be eligible for the refinance program. The refinance program will lower interest rates for most homeowners by placing them in a 15 year or 30 year fixed rate mortgage. This will not only lower monthly payment for most homeowners, it will also provide for a fixed monthly payment for the life of the loan. This will greatly assist those homeowners who are currently in an adjustable rate mortgage, as well as homeowners currently in an interest only loan. So this program really targets long term viability and stability for homeowners. For homeowners who do not qualify under this program, the second part of the program may be an option.
Making Home Affordable Loan Modification Program
The second part of the Making Home Affordable program is the mortgage loan modification program. There are again four main qualifications to determine if the homeowner will be eligible for a loan modification. First, the home must be the homeowner's primary residence. Second, the amount owed on the mortgage must be less than $729,750. Third, the homeowner must be having difficulty paying their mortgage due to a significant increase in monthly payments, a significant reduction in income, or a significant financial hardship. Finally, the mortgage must have been received prior to January 2009.
Homeowners who pass these qualifications may be eligible for the loan modification program. What this program will aim to do is lower the monthly mortgage payments by either reducing the interest rate on the loan or by reducing the principal amount of the loan. The aim is to have the total monthly mortgage payments, including taxes and insurance, to be equal to 31% of their monthly income. This will be done primarily from the reduction of interest rates down to as low as 2%, but may also include lengthening the terms of the mortgage or even forbearing principal at no interest. The interest rates will be set for five years, as which point there may be an increase until the rate reaches a set interest rate cap. So the program will create immediate relief for homeowners and will also have long term stability and viability measures built in.
So as you can see, there is hope for homeowners across the US. President Obama and his administration are working diligently to help homeowners avoid foreclosure and save their homes. By taking these measures, the White House is aiming to support our economy and help protect individuals and families across the nation. The Making Home Affordable program will not help everyone in need, but it is a major step in the right direction for our country.
Both Simon Burgess & Benjamin Hauck are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Simon Burgess has sinced written about articles on various topics from Mortgage Insurance, Finances and Income Protection Insurance. Simon Burgess is Managing Director of the award-winning , a specialist provider of. Simon Burgess's top article generates over 74000 views. to your Favourites.
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