The Home Front
I had fibromyalgia for over 20 years before I was diagnosed at age 36. I just thought the pain was normal, something that everyone had, so there was no reason to talk about it. Only when I started having trouble with daily life functions—holding utensils, getting dressed, etc.—did I go to the doctor. When my doctor limited my work hours to 40 a week, I could see the future of my employment clearly: it was going to end.
And end it did. I was out of the workforce for a good while, trying to hold on to my home and my investment property, until my mortgage lender hired me to be a mortgage lender for a branch of a nation-wide bank. As a mortgage lender, I have learned a thing or two about what I coulda, shoulda, woulda done to protect myself had I known then what I know now.
Most important, someone with FM must act while still employed and still eligible for various types of insurance and loan products. Once you become unemployed, your options are more limited and you may face some unpleasant decisions at a stressful time of your life.
General Suggestions
1. First, discuss your situation with a Certified Financial Planner knowledgeable about insurance. Find out how to prepare and protect your assets, including your house.
2. Read the fine print of your employer’s insurance policies, particularly for group disability, and find out what other insurance you have or can sign up for.
3. Do not believe that you will be covered by workers’ compensation insurance, even if it is the job that is aggravating or causing your medical condition. Workers’ compensation insurance companies will most likely deny your claim, and your only option will be a protracted legal battle when you are at your sickest and most vulnerable.
Protecting Your Home
You have two aims here: 1) to keep your home if you can no longer work, and 2) to access the equity in your home while you are still working. The following steps will help you:
1. If you own your home and are still working, now is the time to take out a home equity line of credit. Many lenders offer these lines for close to free. Do not use it, just set it aside in case you need it. Remember that if you draw on your line, you will have a monthly payment to make, so be prepared to offset this expense by cutting back in other areas. "Everyone who has a mortgage should have a line of credit, just in case," said Paul Johnson, CPA, PFS, CFP ® and President of Tax Management Systems Inc. in Fairfax, Virginia.
2. Refinance to a mortgage that has disability insurance. While the terms of different products may vary, generally speaking you can choose a plan that will cover your mortgage principle and interest payments for six to twelve months. If you bought or last refinanced your house when interest rates were at or near all-time lows, you may find that your monthly payment is slightly higher due to today’s higher interest rates, but you may sleep better at night knowing you have the greater long-term security this type of loan can offer. Most of these products will not require a doctor’s note. And a word of caution: when applying for this loan (or any type of insurance for that matter), only answer the questions as asked. Do not volunteer any information that might compromise your application.
3. Check the fine print on your credit cards. You may find that one or more of them already offers mortgage payment assistance in the event of illness or job loss. If so, make sure you understand the details.
4. Find out if your state offers mortgage or rental payment assistance in the event of job loss. Many states do offer loans to middle- and low-income individuals and families who experience job loss. Look into it before you actually need it (and hope you never do). Make sure you understand the program guidelines. For example, some states will only help you if you apply before the foreclosure process has begun. Remember, treat this as a straight job loss situation.
5. Understand under what conditions you can receive unemployment benefits. If you fear you will lose your job, make sure you still qualify for this assistance, and apply immediately upon losing your job.
6. Take in a boarder or get a roommate. Do not wait until you have lost your job. Be proactive in getting a roommate you get along with, instead of waiting until you so desperately need a roommate or boarder that you are willing to tolerate the intolerable just for the extra money each month.
7. If you can no longer afford your home, consider moving in with relatives or friends and renting your home out for additional income. For example, if your monthly mortgage payment is $1,500 a month, but you can rent it out for $2,500 a month, it may be in your best interest to temporarily relocate until you are back on your feet. Remember that moving costs money and comes with a good deal of stress, and factor that into your decision.
8. If you are already living paycheck to paycheck, lose your job, and have health issues on top of it all, you may have to sell your house. "A friend of mine had diabetes. He sold his house and rented it back from the new owner. His monthly payment was higher, but he was able to get his equity out of the house and he now has the flexibility to move if his health deteriorates," said Bob Williams, a veteran realtor in Washington, DC. "When you are ill, stability is important. Most people would not want to sell their homes but if they were already living paycheck to paycheck they may have no choice."
9. If you lose your job and cannot make the next mortgage payment, call your lender before you miss a payment. Again, discuss it as a straight job loss situation. The lender will assess whether you will have the ability to pay any arrearage back once you find a new job. Lenders have an incentive to help you avoid foreclosure and may offer alternatives, such as adding a certain number of monthly payments to the back end of your loan or find some other alternative that is mutually agreeable.
10. Lastly, if you have fibromyalgia and are still working, you may consider becoming a real estate investor. You may not need your investment property to make money for you immediately. But you will need it to make money for you if and when you are unable to work. At that point, your rental income may more than cover your mortgage and you will make a little money each month. Or, you may find that the property has increased in value, and if you ever need to, you can sell it for a profit.
Insurance
1. While you are still working, get disability insurance of your own, in addition to any program offered by your employer. "Most people do not even know what is offered by their employer, and they should," said Abby Tor, an insurance specialist with Northwestern Mutual Financial Network in Rockville, MD. "If you lose your job, you may be able to convert some group insurance policies to an individual policy. In terms of getting your own disability policy, insurance companies look at functionality—how do you function on a day to day basis? Even if you have a pre-existing condition, your medical records may indicate that it has stabilized and you can still qualify for the insurance." (Do not go out of your way to volunteer medical information not specifically asked for.)
2. If you have fibromyalgia and are married, Tor emphasized that it is even more important to make sure your spouse has all the proper insurance coverage that may be needed.
3. Consider converting your term insurance to whole life insurance. Tor stated, "You might not be able to get insurance when the term is over, so convert it to whole life, which can also be used as a retirement vehicle because it pays dividends and has a cash value you may need to use."
While everyone should be savvy about saving for their future, those of us with a chronic medical condition have to be extra protective of ourselves and our assets. It is frightening to look at what the future may hold for us individually, but the only way to avoid the worst of it is to prepare and protect yourself while you are in the best position to do so—and generally speaking, that is while you are still healthy and employed.
Now get crackin’. You have a lot of work ahead of you.
Diagnosed with FM three years ago, Jessica White—also known as "Ms. Mortgage Maven"—is a mortgage lender for a national bank and can do loans nationwide. She can be reached atjessica@msmortgagemaven.com or (866) 588-0120 x 2221.
