Buying your dream home is one of the best feelings in the world. The idea of owning a piece of property that’s everything you imagined as a young adult creates a true sense of accomplishment. It’s something that be taken lightly, and in the world of risk management, it’s something that a majority of homeowners screw up. Mortgage protection and general risk management are topics that should be top priority after buying that new home.
The truth is, once you’ve closed on that dream home, you’re too concerned about moving in, organizing rooms, and stocking that baller bar you absolutely had to have (trust me, I’ve been there) to think about what lies ahead for you financially. You see, once you close, you’ve assumed hundreds of thousands of dollars of debt and a financial responsibility that can’t be rivaled. In my industry, I find that 90% of homeowners think only about paying their mortgage and forget to budget for the additional protection needed to truly cover their investment.
I like to call it the “Triangle of Protection.”
First, all homeowners get their homeowners insurance from (hopefully) a reputable source. The most common mistake I see is that new homeowners shop purely based on price (yeah I know, you just dumped 90% of your savings into that down payment) and forget to truly dive into their coverage. Be sure to find a homeowners insurance provider that will walk you through protecting your investment line-by-line and piece-by-piece. That way you can make sure you know exactly what to expect in the event of a claim.
Protect Yourself and Your Family
Second, most don’t realize that the #1 cause for foreclosures in the U.S. is actually sickness or injury. An unexpected illness or injury can result in a significant amount of missed time from work, which means you’re not making money, which means you can’t make your mortgage payment. There are extremely affordable policies available that help replace the income that would be lost in the short (and long) term to help you cover your mortgage. Nobody—and I mean nobody—wants to tell their family they have to move back into their tiny one-bedroom apartment because you slipped on the sidewalk on your way to Starbucks.
Finally, if you’re the breadwinner (or not) you want to make sure your family stays in your dream home if you kick the bucket, right? Premature death is a leading cause of financial difficulty and bankruptcy. Everyone thinks it won’t happen to them, but it does….trust me. I see it on a near-daily basis. If you truly want your family to be set, leave some money behind through life insurance to pay off your debts and provide for the income that will be missed. Your risk management professional can help you determine what coverage amount and what policy type is right for you and your family.
Remember, once you close the hard work isn’t over. You need to cover all your financial bases because of the massive responsibility you had just taken on. A chair with one or two legs can’t be balanced and stand on its own. Find a risk manager who’ll help you guard against what can go wrong. Whether it’s homeowners insurance, life insurance or other risk management products. Be sure your family can prosper when things go right.
Still looking for that new home? Talk with our FHA-approved lenders