Extended Unemployment

These days, we all seem to know someone who is looking for work, laid off because of the bad economy. However, some people have been looking for a long, long time. Most people have a few months' worth of expenses saved up to cover them if they lose their job. However, most people don't expect to be out of work for 6-12 months, as many people recently are dealing with. We all also know to cut our budgets to the bare bones. We have some more help for those trying to survive an extended unemployment.

Getting By Better

Home Equity
This may be the time to tap into your home's value. Look at it this way, if you don't have the money to pay the mortgage, you face losing your home. If you tap into its equity, you may be able to afford to cover payments until you're back on your feet.

Retirement Funds
If you can't cover the mortgage or rent by tapping into your home's equity, you could consider taking money out of your retirement funds. It's certainly not something consumer counselors recommend, but as a last resort, it may be your only option.

Hardship Loans
Some employers offer a hardship loan, so if your spouse is still employed, you may want to go to his/her boss to see if you could qualify. In this case, they provide money up-front, and it is deducted over time straight from your spouse's paycheck.

Bright Idea!

Try placing a call to your creditors. If you make them aware of your circumstances, they may agree to suspend or reduce payments for the short term. But be sure to call BEFORE the bills are due. You won't often find help if you've already allowed your accounts to fall behind.

Not laid off yet, but anticipating it? There are steps you can take that will help you protect some of your assets. One of those steps is mortgage unemployment insurance, which promises to protect your home.

Here's how it works: If you lose your job, the contract would kick in and pay for your mortgage. However, the coverage varies from policy to policy:

>>All or part of your mortgage may be paid
>>There may be a waiting period, or limit on total number of months covered.
>>Generally, the job loss must be out of no fault of your own.

While the product has been around for years, it's entering the mainstream now that more companies are offering it.

Experts say the cost of the insurance varies from company to company, and depends on the price of your loan. Typically, for a one hundred thousand dollar house, expect to pay about 50 dollars a month.

So, who's a candidate for this type of insurance? Financial planner, Todd Battaglia says it's best for a homeowner without six months of expenses in a rainy day fund or a household with one wage earner. "I would suggest that probably the best use of it would be for a two to three year time frame until you get that cushion of savings built up," says Battaglia.

Bright Idea!

Where can you find this type of protection? Ask your bank, credit union, mortgage lender, or real estate agent. Also, make sure you compare plans.

Paying Less for Your Home Loan

Even if you've landed a low mortgage rate, you will likely still end up paying huge amounts of interest over the life of your loan. In fact, if you stay in your home long enough to pay off a typical 30-year mortgage, your interest payments will probably end up being substantially more than the actual cost of your home.

But experts say you can reduce the interest you pay. Peter Miller, publisher of "Realty Times" has the following advice:

Before You Buy, Refinance

Get it right the first time. "The best way to save interest is to get the right mortgage in the first place," Miller says. How? Check your credit rating, shop around for the best rate and choose a company that won't charge a penalty for paying off the mortgage early. (Read on for specifics about your credit rating.)

Consider a shorter term. You may want to see if you can afford a 15-year mortgage rather than a 30-year mortgage. The monthly payments would be more, but your long-term interest bill would be much less.

After You Buy

Pay more each month. "Even payments as small as $50 or $100 a month can significantly reduce the term of your loan," Miller says. "As your income goes up, you simply add to your monthly payment, or you can send in a complete extra payment when you have the money," Miller says.

Examine your statements. Experts say that you should send any overpayments in a separate check, and that you should always double-check your mortgage statements. "It's very important to look at the number and make sure that the extra money that you paid in was, in fact, credited to reducing the principal of your debt," Miller says.

Caution: Some people shouldn't prepay their mortgages. Don't start prepaying if you haven't:

Already contributed to your tax deferred investment plans
Paid off higher interest credit cards
Set aside some emergency savings.

Read more smart consumer tips and strategies
from Fox11 Eyewitness News Online

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