Without dispute, investment in private home ownership is the largest single investment for most Americans. Systematic and timely payments made over a prolonged period of time builds equity. A mortgage secured for the purpose of purchasing a home, usually takes years of payments to finally satisfy. As these payments are made, equity, or a greater portion of the real value of the property, is acquired. In a very real sense, equity is real money in the form of the value of a home owner’s real estate. Simply put, the larger the number of payments made; the larger the portion, (the equity) the buyer owns of that home.
It is normal and standard in most places to insure ones car, against loss or damage. It is also prudent to protect the life and health of yourself and your family through various forms of insurance. Understand, the purpose of purchasing insurance is to protect yourself, or your investments from as much risk and damage as possible; for a reasonable price. Equity in your home is another asset, as is good health, automobiles, etc… In circumstances which create a down turn in conditions creating a negative economy, protecting that hard earned equity may be crucial. Home equity insurance could be one of your best decisions.
Home equity insurance insures your home against declining values in real estate markets. It protects the homeowner from losses in the event a sale is required and executed in a down market. Such protection is not built into the home owners insurance policies because, it is not insurance per say. Neither is it part of a structured mortgage. However, it has elements and compliments of both financial instruments. Equity insurance protects the home owner’s portion of the worth of their property, should its value decline.
To learn more about this type of protection, read “Home Equity Insurance: A pilot project”, written May 3, 2003, through Yale University. In this study, the why and what are answered very well. With these questions answered, they were able to develop the how, and helped create a product with strong commercial appeal offering home equity protection; a way for the consumer to protect against losses.
To gain additional information concerning policies and options;
· Contact your personal insurance agent or agency.
· Contact your homeowner associations and home owner’s insurance agent.
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