How to Buy Home Equity Insurance

Not to be confused with a home equity loan, home equity insurance provides the buyer with peace of mind. Home markets are tricky. You never know when or if the market will drop drastically like it has in the past few years. When a market drops, it is great news for new home buyers but not so great for those who are trying to sell their homes. Home equity insurance will prevent you from taking a loss, but how do you decide whether or not it is worth it to buy.

Instructions

1. Step 1

   Get an insurance quote. This will give you an idea on what you will be paying per month for the insurance. After you get a quote, you can move forward in the decision making process.

2. Step 2

   Ask yourself if you are going to sell your home, or live in it for a very long time. Some people have no intention of selling their home. If this is the case, then there is no need for home equity insurance. In the long run, most homes will gain value. So if you are worried about leaving your kids a home that has decreased in value, don't.

3. Step 3

   Try to figure out how much you stand to lose on your home. Maybe you bought your home when prices were extremely high and you stand to lose a lot. Or maybe you bought it when it was low and you don't think you will lose that much. Just try to get a number that you can use to compare to the cost of the insurance.

4. Step 4

   Add up your insurance cost for as long as you intend to keep the house, and weigh that against your potential loss. If the insurance cost is more, then don't get home equity insurance.