Since spring hit, home prices are sizzling. Everyone hopes the trend will continue. However, many are a bit fearful another housing crisis may erupt. To calm new buyers, a Dallas-based company has launched a down payment protection plan called +Plus. This is insurance on home equity. If it takes off, many financial experts believe there will be more options to choose from in the future.
The +Plus product allows an individual to insure 20 percent of his or her property up to $200,000. The term lasts for seven years, and no rental properties qualify. Unfortunately, if you sell you house for a loss, it may not be possible to recoup lost equity. The +Plus plan measures a house’s value by a government index. If your particular area sees a drop in home values, and this drop is more than your state’s measured value, you will probably end up with less money.
Despite the small downside, this type of insurance is expected to be popular. It gives the working class peace of mind they will maintain financial control and flexibility of home ownership.
Many people look back to 2009, which was the height of the last housing crisis. Approximately 26 percent of mortgaged homes had negative equity, and millions went into foreclosure. A high number of owners who remained are still short on equity, which has made it difficult to move. If this type of insurance was offered back then, many people would be in a different position. Today, it protects an owner from a downturn in value, especially in areas where prices are volatile. If you want to be your own insurer, you may wish to consider this type of plan.