How Do I Protect Myself from the Possibility of a Future Mortgage Crisis?

If you are a risk-averse borrower, you can minimize the risk of mortgage default by getting a Mortgage Payment Protection Insurance (MPPI) plan that covers monthly payments when you are not able to complete your monthly payments. A MPPI will guarantee repayment of your mortgage loan if you face uncontrollable hardship that affects your ability to repay, such as the loss of employment or if you are otherwise forced out of work due to disability. Additionally, in the event of your death, the original value insured under the mortgage protection insurance will still be paid to your beneficiaries.

Property owners should consider the following factors when choosing a MPPI:

  • Insurance Coverage. An ideal plan's coverage would include a total payout that would cover all of the expenses related to your mortgage, including repayments and interest.

  • Waiting Period. A shorter period between the time when a claim has been filed and the insurance payout will reduce the duration of your financial distress.

  • Insurance Provider. An ideal insurance provider should have a well-respected and established brand.

  • Risk Factors. Different property owners have different needs. An ideal plan should factor in your health and lifestyle expenditures.

The process for applying for a MPPI is relatively quick and straightforward. MPPI also offers discounts for married couples. However, the application process includes certain minimum requirements. For example, property owners need to be 65 or younger and have full time, continuous employment.

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Government programs may also provide you with monetary assistance if you face force majeure incidents that prevent you from making your mortgage payments, but these programs often have long waiting periods and stricter criteria that may deny your claims for assistance. Therefore, risk-averse property owners should instead purchase a MPPI.