YOU ASK:

Does FHA mortgage insurance make payments if I lose my job?

WE ANSWER:

No, an FHA mortgage insurance policy will not make payments in the event that you are unable to pay for your mortgage (as in the case if you lose your job). This is in the sense that the payments will not be credited on your behalf.

What the FHA mortgage insurance will protect is the investment of the lender on the loan. Thus, it will pay the remaining mortgage but this does not mean that you are off the hook. You will still face forfeiture, as well as a possible deficiency judgment that may attach your other properties and will ruin your credit score.

This means that you will have to get another outside insurance to cover for the eventuality that you lose your job and will not be able to make the monthly payments.

This is done by getting a mortgage protection insurance, particularly a mortgage protection insurance for unemployment. This is an optional coverage but is ideal in providing you with peace of mind so that your investment and your house remains your own.

This is the insurance protection that will kick in and protect your interests so that you don't have to be worried about forfeiting all your hard-earned money and your house just because you are unable to keep up with your payments.

There are some eligibility criteria for this.

  • You must be able to demonstrate that you have been faithfully paying your monthly amortizations for at least the last five years.
  • There may also be a period in which, after you have filed for a claim due to unemployment, that you are expected to pay for the mortgage before the insurance will start the payments.
  • There are also limits as to the number of months the insurance will pay.

Depending on the type of coverage you choose, the insurance will pay from six to 12 months of your mortgage payments.

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