Is Mortgage Insurance the Latest Incentive to Attract Buyers?

President Obama announced last week from the G20 Summit that the recession has turned a corner. With rescue packages in place for struggling homeowners, interest rates as low as they’ve been in years and the stock market performing favorably, we are hoping he is right. A little spring sunshine in our economy may be just around the corner.

However, with the jobless rate the lowest it has been in 26 years, consumers are not motivated to buy a home out of fear of losing their jobs. Builders have identified this as the number one issue in selling new construction. Not having the resources to pay a mortgage due to a lay off ranks among the top anxieties in the United States today. Developers have stepped up to the plate and are now offering targeted incentives to overcome this obstacle.

Free upgrades like granite countertops, swimming pools and finished landscaping are a nice touch, but seem to have no impact on a buyer’s decision. These finishes are practically expected in today’s market and major developers recognize this.

Major builders are offering to pay for the buyer’s mortgage unemployment insurance as an added amenity to overcome the buyer’s fear of losing a job. Typically, this policy is valid in case the homeowner loses his or her job within the first two years of the purchase date. Up to six months worth of payments can be made while the buyer looks for a new job. The estimated cost of the insurance is around $450 to $900 per customer. 

This is definitely a bold marketing move and numerous builders are adopting this strategy daily. As with any sales promotion, time will tell how effective this program will be.