A Guide to Handling Mortgage Payments For the Unemployed

Unemployment and Mortgage Payments

Suppose you lose a job but still have monthly mortgage payments to make. Unfortunately, few people can keep up with their mortgage payments from unemployment benefits, and if your benefits run out before you find the next job, the situation is likely to become desperate.

The risk of losing your house is perhaps the biggest financial risk an average American would ever face. Let us look through the steps you can follow to reduce the chance of foreclosure.

Step #1. If you think in advance, you can insure yourself against unemployment through various mortgage protection programs offered by insurers. Sometimes home-builders even throw in free unemployment insurance to entice you to buy the house from them.

A mortgage protection works as follows. If you lose your job within a specified time after buying the house (typically 2 years), you will be covered for the full amount (as long as it is under the limit) of:

• mortgage
• tax
• and home insurance payments

The limit varies depending on your situation, but it is generally in the range of $2,000 to $3,000 per month.

Unfortunately, no insurance currently available will cover you for the full life of the mortgage (e.g., 30 years). Nor will it cover you in the case of an extended unemployment. This means job loss insurance should be considered a sales gimmick rather than a serious solution.

Step #2. If you just lost your job, you should immediately account for all your funds to understand how long you can afford to make mortgage payments. Don’t forget to count your severance payment, unemployment benefits, and any savings you have accumulated. If you have enough money to last for at least 6-8 months, and you feel optimistic about finding a job, by all means give it a try. Just make sure you move to step 3 with at least 2-3 months to spare before your money runs out.

Step #3. Once you are at a point where you cannot make payments soon, contact the lender as soon as possible. Don’t wait until your mortgage is delinquent! The earlier you start on this step, the better the chance to come out of this unharmed.

The goal is to buy extra time, which is hopefully enough for you to find a job.

Your first option is to request your lender to spread out your mortgage payments over a longer time.

Another way to buy time is to request a change in mortgage terms. For example, you may want to negotiate with the lender a lower interest rate or to freeze the interest rate on an adjustable rate mortgage. This will reduce the payments, and your current savings might last you a bit longer.

If your house value is high enough, you may be able to refinance it with a cash-out. The cash you receive could be enough to take care of monthly payments for a long time – just make sure to spend it wisely!

Step #4. If you’ve reached a point where the mortgage is delinquent, you still have a chance. Certain mortgages qualify for “partial claim” arrangement with the Federal Housing Administration, which provides you with an interest-free loan from the government that covers all your missed payments, up to 12 months. This loan does not have to be repaid until you sell the house or pay off the mortgage. It is a great deal, so you should definitely go for it if you qualify.

Furthermore, you can continue negotiating with the lender. However, you have to be careful since once you are delinquent, the lender might simply take all the partial payments you send them, and still foreclosure your home. It is really worth hiring an expert to help at this point.

Annapolis Mortgage Rates

Perhaps you are looking to move to Annapolis for its’ quaint setting, yet close proximity to many amenities. Those looking to trade the equity in their home for a larger residence may find our services useful. At Annapolis Banking Rates, you can compare current Annapolis mortgage rates from our network of lenders.

For the first time home buyer looking to settle down in Annapolis, we also have educational resources to explain the different types of loan programs available. We could help you learn the difference between adjustable and fixed rate Annapolis mortgages, so you can choose the one that is right for you.

Compare Rates of Annapolis, MD Mortgage Lenders

As compared to the past 30 years, current mortgage rates are at historic lows, but always talk with multiple home loan lenders to learn what interest rates are available to you. Mortgage Interest rates change on a daily basis and working with the best lenders will help you know when to take advantage of the lowest rates available for you.

Annapolis Banking Rates can connect you with right mortgage lenders that will offer you the best rates based on your current credit score. If you are looking for a local Annapolis mortgage lender, send us your information today and we will help you compare rates.

Annapolis, MD Mortgage Rates and Your Credit Score

Your credit report and credit score will greatly affect your ability to get a home loan in Annapolis as well as get a low mortgage rate. With so many changes in the Mortgage Industry, banks and mortgage companies have a more difficult time getting money or credit to help borrowers with low credit scores. If you have a low credit score, especially lower than 600, you may want to quickly get a copy of your credit report and see where you can improve your score. You can do this yourself, or look to Credit Improvement companies who will legally help you remove old accounts, mistakes, and other problems off your credit report and help you increase your credit scores.

• For a Free Credit Report, we recommend you visit GoFreeCredit.com
• For help with improving your Credit Score, you can visit GoLookOnline.com

Types of Mortgage Loans

There are many types of mortgage loans. Whether Annapolis, MD homeownership is a dream youre working toward, or youre looking to add to your property investments, Annapolis Banking Rates can help you find the best mortgage rates. The most popular types of mortgages are:

• Fixed Rate Mortgages
• Adjustable Rate Mortgages (ARMs)
• Refinance Mortgages

No matter what type of mortgage seek, we connect you with lenders who offer adjustable rate mortgages or fixed rate mortgages, and if youre looking to refinance you Annapolis, MD mortgage loan, we can help you, too.

Interest Rates

One of the most confusing aspects of Mortgage rates is understanding the difference between an advertised Interest Rate and the APR, or annual percentage rate. The APR is the actual interest rate that you will pay on a mortgage loan including fees. This makes it easier to compare rates that do not have fees with rates that may include fees or points. The APR was intended to make this comparison simpler, but instead, it often adds to the confusion. Just keep in mind, that the Annual Percentage Rate is likely to be different than the advertised mortgage rate because of the additional fees.

The overall range of mortgage rates are determined by the interest rate Mortgage Bonds or Mortgage Backed Securities. Mortgage rates are based on long-term investment strategies. The supply and demand of the Mortgage Bonds and Securities are the strongest factor for influencing the overall range of the rates. The lower the demand, the higher the supply and the lower the rates.

Search for Mortgage Rates in Annapolis.