How much mortgage protection do I need?
The answer to this question is different for every family and budget. The mortgage protection plans we help families with are customized to their unique home, family, and financial situations.
A mortgage protection plan will be an important financial safety net; when a loved family member dies unexpectedly, some mortgage protection is better than no mortgage protection.
Money won’t replace a loved one, but it solves the immediate financial needs following the death of a family member.
What happens if I don’t have mortgage protection?
When you choose NOT to have a mortgage protection plan, you are choosing to place your family at financial risk when you die. Knowing you have a mortgage protection plan in place provides peace of mind for you and your family.
MORTGAGE PROTECTION INSURANCE BUYS YOUR FAMILY TIME
A mortgage protection policy will give your spouse, partner, or family time to make the right financial decisions.
Mortgage protection allows your family and loved ones to make the right financial decisions, to sell a home if needed and get the equity out of the home, to sell the home at the right time, and not be rushed into a quick sale. Getting rushed into a quick home sale rarely gets you the best price for your home!
How does mortgage protection help my spouse, partner, and loved ones?
Mortgage protection allows your spouse, partner, or family to grieve properly after your death.
We frequently help people, who have suffered through the recent loss of a loved one. They are suffering emotionally, they are trying to cope with the sudden loss of a loved one, and they are concerned about what will happen to them and their families, financially, in the coming years.
A mortgage protection plan takes the financial worries from the family, so they can grieve properly and support each other throughout the grieving process.
YOU SHOULDN'T HAVE TO GRIEVE AND WORRY ABOUT LOSING YOUR HOME
At your funeral, your family should not have to be worrying about losing your home.
How can we help you get mortgage protection?
There are three ways we help people with mortgage protection.
The plan we develop together will depend on your age, your health, your mortgage amount, your mortgage term period, your income, your family size, your other expenses, and what you are trying to achieve with this protection.
FULL PAYOFF OPTION (FPO):
If you have a $150,000 mortgage, this mortgage protection plan would guarantee $150,000 immediately upon your policy issue date. This will be the more expensive option of the three general plans we help people with.
FRANK & SANDY DIFFERENT INCOME FPO EXAMPLE
Frank and Sandy have a $150,000 mortgage. Frank makes $120,000 a year, and Sandy makes $36,000 a year. Frank wants the entire mortgage paid off when he dies, so he buys a $150,000 mortgage protection policy on himself. With Sandy’s income being $36,000 a year, Sandy cannot afford to stay in the home when Frank dies. If Sandy dies before Frank, Frank can afford the mortgage payments, so Frank decides not to get a mortgage protection policy on Sandy.
Frank and Sandy asked us “how much mortgage protection do I need?” We discussed their budget and options and Bob selected an affordable $150,000 FPO.
This FPO does exactly what Frank and Sandy want it to do. It keeps them both in the home should one of them die unexpectedly. Frank can afford the mortgage payments if Sandy dies, so he needs no mortgage protection insurance on Sandy.
Sandy cannot afford the mortgage payments if Frank were to die, so Frank buys a mortgage protection plan that pays the entire mortgage for Sandy when he dies. In both scenarios, their home is protected.
You only need the whole mortgage amount on your loan if you die tomorrow. One of the challenges with mortgage protection is we don’t know the day we will die. This makes it difficult to know exactly what amount to insure your mortgage for.
If this option fits into your budget, then we highly recommend it. If money is tight in your budget monthly, we recommend one of the next two options.
PARTIAL PAYOFF OPTION (PPO)
Many homeowner households are two income provider families. Both spouses or partners have jobs and contribute to household expenses and the monthly mortgage payment.
When one spouse or partner dies, the income from their employer stops immediately. This is when most families get in trouble and lose their home to foreclosure or are forced to make a rapid sale.
Our mission is to get people into affordable mortgage protection that protects their homes. If we can pay off part of the mortgage with a PPO, this allows the surviving family members to stay in the home after the death of a loved one.
BOB & MARY PPO EQUAL INCOME EXAMPLE
Bob and Mary have been married for 13 years. Bob is 59 years old, and Mary is 53 years old. Bob and Mary both have jobs and each earn $65,000 a year. They have a combined household income of $130,000 a year. Bob and Mary have a $187,000 mortgage, with a monthly payment of $1,634.
Bob asked us “how much mortgage protection do I need?” We discussed his budget and options and Bob selected an affordable $100,000 PPO.
One day, Bob was in an auto accident on his way to work and dies immediately from his injuries.
Without mortgage protection, Mary cannot afford to stay in the home. Bob and Mary always had a tight budget, but they could afford $100,000 worth of mortgage protection insurance.
Shortly after Bob’s death, a check arrives from the insurance company for $100,000.
Mary used this $100,000 to apply towards the mortgage loan. She then refinanced the home for the remaining $87,000. Her mortgage balance and payment was cut by 53%, allowing Mary to have an affordable mortgage payment and stay in the home after Bob’s death.
MORTGAGE PAYMENT PROTECTION (MPP)
A mortgage payment protection policy is a mortgage protection policy that pays your mortgage payments for a specified period. This protection is useful for families that will not stay in the home following the death of a loved one, or families who want a financial safety net, so their loved ones have time to make the right financial decisions.
PAUL & RITA YOUNG FAMILY MPP EXAMPLE
Paul and Rita have been married for seven years and have two children, a three-year-old boy and a five-year-old girl. Paul is 39 years old, and Rita is 35 years old. They have a $147,000 mortgage with a $1,000 a month mortgage payment. Paul makes $47,000 a year, and Rita makes $43,000 a year.
Paul and Rita asked us “how much mortgage protection do I need?” We discussed their budget and options and they selected an affordable $36,000 MPP.
Money is tight, but Paul and Rita wanted to have a mortgage protection plan in place. They are young and healthy and know their mortgage balance will decline in the coming years, leaving them with more equity in their home.
Paul and Rita have income replacement life insurance provided through work, but want mortgage protection they own and control, separate from their work owned life insurance benefit.
They have enough to live comfortably but not a lot of extra disposable income. Paul and Rita get a $36,000 mortgage protection plan to cover three years of their mortgage payments if one of them should die unexpectedly.
This will provide an affordable plan that will fit into their budget and will protect each of them when the other one dies. It allows the surviving spouse to make wise financial decisions and not have to worry about losing their home.
THE WORST TIME TO MAKE A DECISION IS...
Psychologists say the worst time to make any decision, especially a financial decision, is right after a traumatic event. Losing a spouse or partner is a traumatic event. Making financial decisions during this period is not advised.
By protecting your mortgage payments for a period of one to three years, you have an important financial safety net for the surviving family members. It allows them to grieve properly, to attend your funeral, and not worry about making the mortgage payments, allowing them time to make the best financial decisions for their family and loved ones.
FLOYD & ROSEMARY RETIRED COUPLE MPP EXAMPLE
Floyd and Rosemary have a $67,000 mortgage on their 3,817 sq. ft. home. Floyd is 74 years old, and Rosemary is 72 years old. Their home is worth $389,000. They have a $673 mortgage payment. When either Floyd or Rosemary die, the other does not want to stay in the home in the following years. The house is too big, it is expensive to maintain, and the taxes are high. They also have a lifetime of memories attached to the house that would make it difficult to remain there and be reminded of their loss daily.
Floyd and Rosemary asked us “how much mortgage protection do I need?” We discussed their budget and options and they selected an affordable $8,076 MPP.
Floyd and Rosemary have lots of equity in their home, but have a limited monthly income with their social security income. They have money in the bank, but not enough should an emergency pop up.
Floyd and Rosemary get a mortgage protection policy for each of them that will cover one year of mortgage payments. This will allow them not to have to worry about the mortgage at their funeral and make the mortgage payments in the coming year as the house is sold.
Floyd or Rosemary will sell their house when one of them dies and downsize to a $180,000 home that is about 1,600 sq. ft. in a senior community. They can sell their home, buy a new home, and still have over $142,000 of income for future expenses.
SENIOR MORTGAGE PROTECTION (SMP)
The mortgage payment plan (MPP) is very popular with the seniors we work with. Many seniors do not want to stay in their home after the death of a loved one. This occurs for many reasons:
- Too many memories associated with the home
- The payments are too high
- The taxes are too high
- The maintenance and upkeep is too much
- They have loved ones in other parts of the country they want to be closer to
- They want to downsize homes
- They want to get an apartment
- They have specific health challenges
MPP plans are very popular with our senior clients!
WE ONLY USE THE BEST INSURANCE COMPANIES
We work with clients to find an A-rated insurance company that will protect their home that they will qualify for and that will easily fit into their budget.
How much mortgage protection do I need is an important question to ask. Mortgage protection is not a one size fits all insurance plan. Every family is unique, every family has different income levels, and every family has different budget restrictions.
DO YOU WANT TO SAVE MONEY?
If you have a current mortgage protection policy, call us to see if we can save you money or get you more coverage for your current payment!
At buymortgageprotection.com, we are experts at guiding families through this process and finding them the perfect mortgage protection plan. Call us today or fill out our free quote form to find out what mortgage protection plan is right for you.