How to Protect Your Biggest Investment

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So you bought a new home, congratulations! Like most Americans homeowners, you have just made what is likely to be the single biggest investment you are likely to make in your lifetime. Being a homeowner is an important cornerstone of the proverbial “American Dream”. For many people, homeownership is the culmination of years of saving, planning and sacrificing in order to fulfill their vision of owning a home and putting down roots and establishing themselves as an important part of their communities. 

Depending on the market or region in which a homeowner decides to put down those roots, they will expect to see a return on their investment, hopefully, sooner rather than later! For many purchasers, homeownership is an important part of their retirement plan, as well. They hope to build wealth through homeownership and then cash in and downsize their lifestyles once they stop working in the hopes of having a comfortable retirement. 

These are some pretty high stakes when you really think about it. You want to make your investment in a robust market, hope that your home appreciates in value at a good pace, and you hope that some unforeseen disaster doesn’t come along and completely derail your plans. And this is why when you’re shopping for any homeowners insurance kittanning pa it is so critically important to have a very well designed policy. 

When closing on the purchase of your new home or property, it is important not to look at your lender’s requirement to have homeowner’s insurance as just another bothersome bill. In truth, having the right homeowner’s insurance policy is the key to protecting the value of your biggest investment and protecting the wealth you plan to accumulate for your future hopes and dreams. 

Let’s consider the real reason that insurance is so important. Now, you may think that insurance is important because your lender will not sign off on your loan unless you get a policy. And you would be right. But why require you to get insurance? You applied for a loan, your credit is great and you have a good income and expect to easily be able to repay the mortgage loan as agreed. So why should the bank care if you have insurance or not? 

It’s pretty simple. The lender knows that no matter how well-paid you are, if the house goes up in flames next week, you’re not likely to have $300,000 (or whatever the full purchase price the property in question was) lying around to repay the mortgage loan or rebuild a whole new house. Otherwise, why would you need them in the first place, right? 

No, the real reason for all types of insurance is to protect you, the policyholder, and your lender from a major financial loss. This Investopedia article explains it very nicely. So don’t skimp on that policy. Make sure that you work with a very good agent so that you understand what’s covered in your policy, what’s excluded, and the standard of quality to which your home will be rebuilt if disaster strikes.

 

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