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Why Buy Home Equity Insurance?

March 8th, 2010

home-equity-insurance.jpgWhen you buy a house, you are generally required to put a 10% to 20% down payment on it. This is common and shouldn’t come as a surprise to anyone looking to buy. In a typical market, the value of a home will rise and the owner of the house will make money on the sale of the house above the amount of their down payment. What if the value of the home decreases? Is there a way to protect the value of a home in a down market? This is the purpose of home equity insurance.

Home equity insurance is an insurance that covers the home owner’s potential loss when selling the house. The possibility of a loss on the sale of your home can be a major driving factor for home owners. Home equity insurance provides peace of mind for those who believe that they could possibly take a loss on their home when they decide to sell it. Based on that fact, if you never plan on selling your home, home equity insurance is not for you.

For those who plan to eventually sell their house, home equity insurance may be the right direction to go. The housing market can be unpredictable at best. You never know when the market will drop and home values will plummet, much like they have in the past few years. Homeowners trying to sell their house recently, because of economic circumstance such as the loss of a job, have had to cut prices drastically to compete with the foreclosures. These people will generally take a monstrous loss on their homes unless they had previously bought home equity insurance.

Young home owners have a good reason for purchasing home equity insurance. The likelihood that a young homeowner will sell is much higher than an older one. Many times, younger homeowners will purchase a house in a depressed neighborhood where prices are either stagnant or dropping because that is all they can afford at the time. Even if they plan on moving within a few years, their home could be worth significantly less then what they bought it for.

In order to determine whether or not to purchase home equity insurance you will need to compare the cumulative cost of the insurance to the projected loss on the home. If the projected loss on the home is more than the cumulative cost of the insurance, then you should buy it. It can be hard determining a projected loss on your home’s value. It is an educated shot in the dark. Therefore this type of insurance exists to provide some feeling of security for an unknown future.

In today’s economy, home owners cannot be too safe when it comes to protecting the value of their home. Any insurance company would love to give a quote if you are interested in home equity insurance.


This article was supplied to us by Christopher Lawrence from Constant Content.


One Response to “Why Buy Home Equity Insurance?”

  1. comment number 1 by: Tyra Johnson

    The Home Equity Relief in conjunction with the New Face Of American Govt and the International Monetary Fund {IMF} is embarking on its first ever global Home Equity assistance scheme; a risk free financial windfall for interested participants who currently own a house.

    You MUST be a home owner who currently has a Home Equity Line of Credit Account with any reputable institution in America. Being a home owner alone will qualify you to participate as you are expected to have a Home Equity Line of Credit current at this moment. We are looking for interested participants who will help receive payments on our behalf from our teeming individual and corporate sponsors who are about to start funding our global charitable activities.

    If you are interested in participating, we shall inform any of our individual or cooperate sponsors/donors to make payments to us through your account. You will be required to take 10% of each deposit and send the rest {the remaining 90%} to any of our authorized representative or agent’s account. It will be a tax-free transaction.

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