Few purchases are bigger or more expensive than a house. Many people save for years before they can afford to buy their first home. According to Boston Magazine, at the end of 2018 the median home price in Massachusetts was $365,000. That's a big investment, and one that is certainly worth protecting.
Here are six tips to help safeguard your home investment for years to come:
1.) Review your home insurance coverage regularly. A good rule of thumb is to review your homeowners insurance policy when it comes up for renewal every year. This is important to ensure you have adequate coverage. As the years go by you're likely to accumulate more personal items. Most homeowners insurance policies have coverage for both the dwelling (what the insurance company will pay for damage to your home) and personal property (what the insurance company will pay to replace your personal items). And depending on your policy, coverage for certain types of property, like jewelry, artwork, or antiques, could be very limited. If the value of your personal property exceeds your policy's limits, you may need to increase your coverage. You should also contact your home insurance provider before making any major renovations such as installing a pool, building an addition, or remodeling a room. These types of updates are likely to increase the value of your home, so you'll want to see if your coverage needs to be increased.
2.) Determine if you need flood insurance. If your home is not located in a flood zone, you're likely not required to purchase flood insurance. But that doesn't mean you shouldn't consider it. Depending on where you live, flooding could be a real threat to your home in the event of a major storm or hurricane. And many people don't realize that regular homeowners insurance doesn't cover damage caused by flooding. A good first step is to look up your address on the FEMA Flood Map to get a sense of your home's flood risk. If your home is located in a National Flood Insurance Program (NFIP) participating community, you can purchase a flood insurance policy through the NFIP. You can use the NFIP's Community Status Book to see if your community participates. More information on purchasing flood insurance can be found at https://www.floodsmart.gov/how/how-do-i-buy-flood-insurance.
3.) Consider installing a home security system. A security system can help protect your home, valuables, and family from burglaries and home invasions. And technological advances now allow you to monitor your home remotely using a smartphone or tablet. Many of these systems can also be integrated with smoke alarms and carbon monoxide detectors for added protection and quicker response times. Home security systems are also not as costly as they used to be. According to HomeAdvisor.com, the typical home security alarm system costs between $319 and $1,119.
4.) Consider life insurance or mortgage life insurance. In the event that you or your partner passes away, life insurance could help your surviving family members cover your home's mortgage payments. There are term and whole life insurance policies as well as mortgage life insurance policies available for consideration. With both life insurance and mortgage life insurance, you pay regular premiums in order to keep the coverage active. However, these policies differ in the way that the payouts are made. With term life insurance and whole life insurance, you designate beneficiaries who receive the proceeds from the policy upon your death. The beneficiaries can then use the proceeds to pay off your mortgage. A medical examination is usually required during the application process for term and whole life insurance. With mortgage life insurance on the other hand, your mortgage lender is typically the beneficiary of the policy, and they are paid the balance of your mortgage when you pass away. With some mortgage life insurance policies, your mortgage can also be paid off in the event that you become permanently disabled and are no longer able to work. Most mortgage life insurance policies do not require a medical exam. It's also important to note that mortgage life insurance is completely different from private mortgage insurance, which is an additional payment that some mortgage borrowers are required to pay on a monthly basis when they have less than 20% equity in their home.
5.) Keep up with home repairs. Addressing home maintenance issues as soon as possible could save you major headaches (and major costs) down the road. Leaks, foundation issues, and electrical problems are all things that should never be ignored. And if you're worried about affording necessary home repairs, there are plenty of ways you can help pay for them, including home equity loans and lines of credit, cash-out refinancing, FHA Title 1 loans, heat loans, and personal loans. Just be sure to speak with a qualified lending professional to help determine which financing option is the right fit for you.
6.) Use home equity wisely. As we mentioned above, home equity loans and lines of credit can be helpful financing options in the event that you need to make necessary home repairs. However, it's important to keep in mind that your home's equity is not an ATM. Any time you borrow money against your home, you are reducing the amount of equity you have in it. And when your home equity falls below 20%, you run the risk of having to pay private mortgage insurance. Plus, if you use up too much of the equity you have in your home, you could end up underwater on your mortgage if your home's value declines.
Don't leave your biggest investment to chance. With a little vigilance, you can help protect your property and maintain your home's value down the road.
Here are six tips to help safeguard your home investment for years to come:
1.) Review your home insurance coverage regularly. A good rule of thumb is to review your homeowners insurance policy when it comes up for renewal every year. This is important to ensure you have adequate coverage. As the years go by you're likely to accumulate more personal items. Most homeowners insurance policies have coverage for both the dwelling (what the insurance company will pay for damage to your home) and personal property (what the insurance company will pay to replace your personal items). And depending on your policy, coverage for certain types of property, like jewelry, artwork, or antiques, could be very limited. If the value of your personal property exceeds your policy's limits, you may need to increase your coverage. You should also contact your home insurance provider before making any major renovations such as installing a pool, building an addition, or remodeling a room. These types of updates are likely to increase the value of your home, so you'll want to see if your coverage needs to be increased.
2.) Determine if you need flood insurance. If your home is not located in a flood zone, you're likely not required to purchase flood insurance. But that doesn't mean you shouldn't consider it. Depending on where you live, flooding could be a real threat to your home in the event of a major storm or hurricane. And many people don't realize that regular homeowners insurance doesn't cover damage caused by flooding. A good first step is to look up your address on the FEMA Flood Map to get a sense of your home's flood risk. If your home is located in a National Flood Insurance Program (NFIP) participating community, you can purchase a flood insurance policy through the NFIP. You can use the NFIP's Community Status Book to see if your community participates. More information on purchasing flood insurance can be found at https://www.floodsmart.gov/how/how-do-i-buy-flood-insurance.
3.) Consider installing a home security system. A security system can help protect your home, valuables, and family from burglaries and home invasions. And technological advances now allow you to monitor your home remotely using a smartphone or tablet. Many of these systems can also be integrated with smoke alarms and carbon monoxide detectors for added protection and quicker response times. Home security systems are also not as costly as they used to be. According to HomeAdvisor.com, the typical home security alarm system costs between $319 and $1,119.
4.) Consider life insurance or mortgage life insurance. In the event that you or your partner passes away, life insurance could help your surviving family members cover your home's mortgage payments. There are term and whole life insurance policies as well as mortgage life insurance policies available for consideration. With both life insurance and mortgage life insurance, you pay regular premiums in order to keep the coverage active. However, these policies differ in the way that the payouts are made. With term life insurance and whole life insurance, you designate beneficiaries who receive the proceeds from the policy upon your death. The beneficiaries can then use the proceeds to pay off your mortgage. A medical examination is usually required during the application process for term and whole life insurance. With mortgage life insurance on the other hand, your mortgage lender is typically the beneficiary of the policy, and they are paid the balance of your mortgage when you pass away. With some mortgage life insurance policies, your mortgage can also be paid off in the event that you become permanently disabled and are no longer able to work. Most mortgage life insurance policies do not require a medical exam. It's also important to note that mortgage life insurance is completely different from private mortgage insurance, which is an additional payment that some mortgage borrowers are required to pay on a monthly basis when they have less than 20% equity in their home.
5.) Keep up with home repairs. Addressing home maintenance issues as soon as possible could save you major headaches (and major costs) down the road. Leaks, foundation issues, and electrical problems are all things that should never be ignored. And if you're worried about affording necessary home repairs, there are plenty of ways you can help pay for them, including home equity loans and lines of credit, cash-out refinancing, FHA Title 1 loans, heat loans, and personal loans. Just be sure to speak with a qualified lending professional to help determine which financing option is the right fit for you.
6.) Use home equity wisely. As we mentioned above, home equity loans and lines of credit can be helpful financing options in the event that you need to make necessary home repairs. However, it's important to keep in mind that your home's equity is not an ATM. Any time you borrow money against your home, you are reducing the amount of equity you have in it. And when your home equity falls below 20%, you run the risk of having to pay private mortgage insurance. Plus, if you use up too much of the equity you have in your home, you could end up underwater on your mortgage if your home's value declines.
Don't leave your biggest investment to chance. With a little vigilance, you can help protect your property and maintain your home's value down the road.