Lay off concerns making you nervous about buying- there is a "cure" for that!

As of May 2010, Calgary's unemployment rate reached 7.50%, a statistic not seen for years.

While other industries and services are similarily challenged during a recession, the Oil and Gas industry can be unsettling when the economy is looking up.

During a recession, small oil and gas exploration, production and service companies' ownership and management team have to work hard for contracts, trim costs, look for effeciencies, and worry.

When there is an up-tick in the economy, the heavy cash-laden "big boys" of the industry are looking for acquisitions.  What does this mean?  For a surviving small company ownership and management, a buy-out is welcome relief after a tough economic session.  A buy-out maybe coming.  What does a buy out mean?   Often the junior company employees are at a disadvantage.  The big company has economies of scale with people ready to fill in redundant positions within a small company.  The small company contracts, software, technology and in some cases, key staff are taken over.  Someone gets left out.

So, you are thinking of buying in economic conditions like this?  Your internal little voice maybe saying, "Are you NUTS?"

Part of you is drawn to a buying decision because rates are low, there is a great selection of homes, and some decent pricing.   Do you wait?

Buying now means your cash savings are going to be reduced......perhaps to nothing:  after making your down payment , paying closing costs, and the odds and ends that are bought when you have a new home- what is left?

The pride of a potential new home is swamped by fear.   What if I get laid off?

How long will it take to find a new job:  one month, two months, three months?

Meanwhile, the most Employment Insurance pays is $457 per week, averaging $1980- less income tax.

How do you pay bills and a mortgage payment then?

Well, if you are unemployed, are you moving in with family with free rent; or, will you have to pay rent or the existing mortgage payment you have on your existing home?  Will those costs disappear?   You are still left to pay expenses while unemployed with that Employment Insurance of $1980- less income tax.

But, what if during your unemployment during those one, two, three months, your mortgage payments were made with involuntary job loss coverage?

Do your budget.                                                                  NOW                                "What if?"

Your monthly net pay today is:                                   $ __________                  EI is max*1         $  1525

ADD Other income per month                                  $  ___________ ............  same over here  $  _______ 

LESS Your rent, or mortgage and tax now             $  __________                   property tax *2?  $  _______

left over is                                                                     $  __________                   left over is            $ ________                            

*1 EI is maximum 55% of $43,200 average annual earnings, less marginal tax rate estimate 23%.

*2 property tax may be negotiated as part of coverage.  This could be $zero also.

KEY:  the coverage for the mortgage payment is NOT taxable income.

WATCH:   this program is for involuntary job loss for those covered by EI that receive a separation slip with "lack of hours" as a reason for issuing the separation slip. A full year of same employer employment is needed to qualify.   It does not cover separation for disability (we have other options for that), maternity (that's ineligible), voluntarily termination or termination for cause.   It's a Lay Off coverage. 

In the event there has been a formal corporate annoucement you are being laid off before your mortgage takes effect, there is no coverage.  If you have been notified your are being laid off, then it's like asking for collision coverage on a vehicle that just got into an accident.

MORAL OF THE STORY:  If job rumours are making you hesitant about making a purchase decision, there is a protection option for you.

 Ask me for more details.   This could be a great home buying process for you.