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HOME MARCH 2020 8 Could you pay your mortgage on one income? (StatePoint) — For many people, getting married and buying a house is still part of the American Dream. That's reflected in the numbers. The homeownership rate among married couples in the U.S. is 80 percent, according to recent data reported by Statista. But what if something were to happen to you or your spouse? Would the person left behind still be able to afford the mortgage? In today's world of dual-income families, the answer could easily be "no," which would make a sad situation even worse. Not only could a family lose their home, but a disruptive move could also mean that chil- dren would have to change schools and leave friends behind. One way to protect against this scenario is with a life insurance policy, which can be used to pay off a mortgage so that the sur- viving spouse and family members can enjoy the home they love and have stability at a critical time in their lives. There are generally two types of life insurance: permanent life insurance and term life insurance. Both provide financial resources to help take care of loved ones, but there are some important differences to consider. Permanent life insurance can last for a person's entire life. Term life insurance, by contrast, is offered for a limited period of time, such as 10-, 20- or 30-year periods. It's generally more affordable and you can choose the duration based on your circum- stances. For example, if you still have 20 years left to pay on your mortgage, you might want to purchase a 20-year plan, so you know your family would be able to keep making payments, or even pay off the house early, in the event that something happened to you. The death benefit from both permanent and term life insurance can also provide help for expenses related to maintaining the home, as well as other daily living expenses like food, medical care, utilities, car payments or even a child's future col- lege tuition. "People often think about getting life insurance after they buy a house, because they wouldn't want their family to risk los- ing their home if something were to hap- pen to them," said Lou Colaizzo, senior vice president of Life, Erie Insurance. "But life insurance can provide even more than that. It can help replace a spouse's lost income — essentially, it can protect the family's stan- dard of living." Colaizzo says the amount of life insur- ance needed depends on several factors, including a person's salary and the number of years to retirement. Experts recommend talking with an insurance agent to ensure you have the right coverage based on your individual circumstances and to make sure your family — and their ability to keep their home — are protected. 10 acronyms homebuyers need to know (StatePoint) — PMI, APR, LTV — these unfamiliar acronyms don't need to bewil- der or intimidate uninitiated homebuyers. To help you negotiate the homebuying process like a pro, Freddie Mac is sharing definitions of 10 key acronyms you'll encounter as you meet with lenders, make a down payment and pay back your loan. 1. APR (Annual Percentage Rate): The APR tells you the annual cost of borrowing money based on the loan amount, interest rate and certain others fees. Use it as the bottom-line number to shop and compare rates among lenders. 2. FRM (Fixed-Rate Mortgage): The most common type of mortgage, an FRM, has an interest rate that doesn't change, giving you stability over the life of the loan. 3. ARM (Adjustable-Rate Mortgage): An ARM usually offers lower monthly pay- ments at the outset, but after three, five or seven years, payments change with interest rates and reset periodically. 4. LTV (Loan-to-Value): The LTV ratio equals the amount of money borrowed divided by the home's appraised value. It shows how much of your home you own versus how much you owe, and lenders use it to help evaluate the risk and terms of your loan. 5. DTI (Debt-to-Income): Calculated by lenders to assess your ability to manage monthly payments and repay debts, DTI is the percentage of your monthly income that goes toward your monthly debt pay- ments. 6. PMI (Private Mortgage Insurance): For homebuyers making down payments that are less than 20 percent of the home purchase price, PMI is a required insur- ance that protects lenders from losses if borrowers are unable to pay their mort- gage. PMI is typically incorporated into monthly mortgage payments. 7. P&I (Principal and Interest): This is the portion of your monthly mortgage pay- ment that goes toward paying off the money you borrowed to buy your home. For most homeowners, P&I make up the major- ity of your monthly mortgage payment — but not all of it. 8. PITI (Principal, Interest, Taxes and Insurance): Together, principal, interest, taxes and insurance make up your total monthly mortgage payment. Calculating your total monthly payment is essential for giving you a more accurate picture of the cost of homeownership than P&I alone. 9. UPB (Unpaid Principal Balance): The amount of principal still owed on a loan is referred to as UPB. On a typical monthly mortgage payment, a portion of your payment is applied to the interest and a portion is applied to the principal. The following month's interest is based on your UPB. To check how much of your payment is going towards your principal, take a look at your amortization schedule. 10. HOA (Homeowners Association): Twenty percent of America's homeowners live within a community governed by an HOA. Before buying in such a community, get a handle on how much its HOA fees are, what they cover, and how often payments are due. Typically paid monthly, quarterly, or annually, HOA fees may cover services such as trash removal, lawn care, pest con- trol and maintenance for common areas. For more homebuying educational tools and resources, visit myhome.freddiemac. com. It's easy to feel adrift in a sea of unfamil- iar technical acronyms. But, studying your vocabulary now can mean greater confi- dence when it's time to make one of the most important purchases of your life. viafilms / iStock via Getty Images Plus Do you know what you would do if you suddenly had to make mortgage payments on one income?

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