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Life Insurance Will Save Your Family

Life insurance is a policy that will provide money for your children, you or your spouse in the event of your death or your spouse’s. Its purpose is to replace some or all of the income lost when one of you passes away. Without it, if you or your spouse dies, whoever is left will have to figure out a way to replace that lost income–all while going through the tragedy of losing a loved one.

LIfe insurance is for:

  • Couples in which one is working and the other isn’t. It will provide for the non-working spouse if the earner dies.
  • Families in which one parent stays at home. It will provide for the children and non-working spouse if the earner dies, and will cover funeral, medical costs and childcare if the non-working spouse dies.
  • Families where both parents work. Yes, this too. It will help cover losing a large chunk of the family’s income.

1. The Funeral

The average funeral costs more than $6,000. A life insurance policy will at least cover this cost, so you can concentrate on remembering your loved one, instead of haggling with the funeral director.

2. Medical Expenses

If you or your spouse passed away from an illness or accident, that might mean there are medical bills left behind to pay–and they could reach into the tens of thousands of dollars. Having adequate life insurance means that you won’t have to declare bankruptcy because of outsized debts. (Medical bills are the leading cause of bankruptcy in America.)

3. The Mortgage

If your family is currently paying the mortgage on your home, you’ve probably calculated how much house you can afford based on your current household income, whether that includes one or both of you working. If an income earner dies, adequate life insurance will help you make payments on or even completely pay off the mortgage on your home, so you can avoid taking a loss selling the home in a crunch and uprooting you and your family.

4. Living Expenses

Everyone will feel the pain if one income is suddenly taken away from the family, but this is an especially important item for spouses who are stay-at-home parents, or even spouses who have unequal incomes. Adequate life insurance will cover living expenses so that even if the surviving spouse decides to start working again, they can do so carefully and deliberately–instead of in a panic. If the surviving spouse was out of the workforce, this will give them time to get more education or training to reenter the workforce if needed. Speaking of …

5. Schooling and Childcare

If your life insurance is adequate, it will enable you to keep contributing to your children’s college fund and/or allow your children to continue to go to their school if you are paying for private school. It can also help cover childcare if you go back to work, or, as mentioned above, keep you afloat while you go back to school and help pay for classes.

Notice We Said ‘Adequate’

Just being signed up for a life insurance policy isn’t enough. You should review your policy to figure out if it will cover everything you, your spouse or your children need in the event of the death of a provider. Some insurance policies pay out $30,000 or less, which won’t cover everything we’ve listed here–not by a long shot. You might need to switch to another policy, or sign up for additional coverage. Calculate how much insurance you need
 
 

Popular Refinance Programs for Owners With Equity

Posted: 18 Oct 2012 10:29 AM PDT

Interest rates have been hovering near all-time lows for weeks now, and many people are watching reports on both how low rates are as well as “new” refinancing programs such as the HARP refinance for underwater borrowers.

But what if you don’t currently owe more on your mortgage than your house is worth? Can you still refinance?

Of course.

In fact, in many circumstances it will actually be easier to refinance if you have equity in your home.

When considering refinancing, the first step is to identify your goal. Do you just want a lower monthly payment? Do you want to get cash in exchange for some of the equity you have built up in your home?

Once you have identified your goal, the second step is to learn more about the refinance program that will best match your needs.

Conventional refinance

If your loan is backed by Fannie Mae or Freddie Mac, it is considered a “conventional” loan. Refinancing a conventional loan is the most common refinance option. Highlights of conventional refinance programs include:

  • Appraisal required
  • Full employment and income verification
  • Employment history of two years
  • 620 credit score
  •  
  • Popular to go from 30-year term to 15-year term
  •  
  • 95 percent loan-to-value with mortgage insurance, 80 percent without
  • Lender credit allowed to cover closing costs

FHA streamline refinance

The FHA streamline refinance program is designed for people who currently have a Federal Housing Administration (FHA) loan and just want to lower their monthly payments. If you have done an FHA streamline refinance in the past, you may still be eligible to do another FHA streamline as long as it benefits you financially. Highlights of the FHA streamline program include:

  • No appraisal required
  • No income verification
  • No credit score verification required by HUD, but payment history will be considered
  • Low fixed rates
  • Lender credit allowed to cover closing costs

VA streamline refinance

The VA streamline refinance is a popular program for veterans or active-duty military personnel who have a Veterans Affairs loan. Similar to the FHA streamline, the VA streamline is designed for people who want to lower their monthly mortgage payment without getting cash out. Highlights of the VA streamline program include:

  • No appraisal required
  • No income verification
  • No credit score verification required by HUD, but some lenders may set minimum score requirements
  • Low fixed rates
  • Reduced funding fee requirement (0.5 percent)
  • Lender credit allowed to cover closing costs

Cash-out refinance

In the event that you want to convert part of your home’s equity to cash, there are programs called “cash-out” refinance programs. FHA, VA and conventional loans all have different cash-out refinance requirements, but generally speaking, here are some highlights of what to expect:

  • Appraisal required
  • Full income and employment verification
  • 620 credit score
  • 85 percent loan-to-value for FHA; 80 percent for conventional; 100 percent for VA
  • Lender credit allowed to cover closing costs

While rates are low, it will often make sense to refinance — whether you want to get cash out of the equity of your home or just lower your monthly mortgage payment.  In each of the above scenarios, one thing sticks out regardless of which program you’re interested in …

Lender credit allowed to cover closing costs”

Let your lender pick up the tab for you!

Related:

Justin McHood is America’s Mortgage Commentator and lives in the Phoenix, Arizona area. You can find Justin on Facebook, Twitter, and LinkedIn. He is happy to answer any mortgage-related questions that you may have.

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

 

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