Remember that in the event that he does get laid off, you're income bracket will then make you eligible for many govt. programs. One of those programs is financial help to get an education. It's terrible to go thru a job loss, but it can also turn into time spent for you to both make a better life while you're eligible for all the aid. There's no shame in accepting help when you honestly need it. And don't kid yourself in thinking it's a hand-out. Many of your DH's taxes paid into those programs. So turn this hardship into an opportunity for you and your husband.
You have 2 kids, so you should easily qualify for food stamps and medicaid, and maybe even supplementary income (maybe). I know here in FL, there's program that can only be used once in a lifetime, and it's a grant in the form of a check, up to $1,000, and is meant to be used for mtg payments, electric, etc. You do have to prove hardship, but in your case that will be easy. It's not a program that is "common knowledge". You have to ask about it. My relative found out about it because she knew somebody at the welfare office. Without that, she would have never known. But now you know, so be sure to ask.
Also you mentioned being able to move into his grandmother's, so at least you won't be homeless. But it's possible that you could talk to your mtg company, explain the situation, and make arrangements for at least temporary lower payments. Most are willing to do this, so there's a good chance you won't have to move anywhere. But remember, don't wait. As soon as the lay off comes, and I hope it doesn't, get on the phone and call.
I know you're scared. I've been there, and it's horrible to say the least. But it hasn't happened yet, and maybe it never will. But if it does, you've at least gotten some good advice here, and maybe it will help you if you feel prepared. I'm sure you'll at least feel a little more in control if you have a plan, along with some knowledge where to turn for help (start making calls now). If the worst does happen, do take that opportunity to get help for that education that the both of you need. There's no doubt in my mind you'll get financial aid for school. Of course you'll struggle, but you'll know it's only temporary, and the end results make it so well worth it!
Hoping the best for you and your family!
Theresa
be sure to keep us posted. we're always here to "lean on"!