How to Help Protect One of Your Most Important Assets, Your Home
A home is often the biggest purchase you will ever make. To help protect it, you should make sure your mortgage is “protected”, keep up on preventive maintenance, make sure your home is adequately insured, and keep an eye on the future resale value.
Here are four simple ways to help protect your home for the future.
1. Protect Your Mortgage
Thirty years is a long time, and life is full of surprises. Do you know how you’d make your mortgage payment if you were out of work for several months, if a health crisis drained your savings, or if you or your spouse were to die?
Many families rely on life insurance or annuities to help make sure the mortgage gets paid. They factor in the mortgage balance when deciding what level of benefits they need. You can also use savings accounts and money-market funds to make sure funds are available for short-term needs.
How about your home equity loan? If you have a line of credit, you can use the money for anything you want—to fund vacations, pay off credit cards, or cover other shortfalls. But keep in mind that you’re putting your house on the line. Decide ahead of time how large a monthly payment you can afford, and make sure you stay below that amount.
2. Learn to Love Preventive Maintenance
Cleaning out air filters and testing smoke alarms are no one’s idea of fun, but they could save you big bucks (and headaches) in the long run.
The biggest hurdle is often organization—knowing what to do and when to do it. There are recommendations for how often to do most repair and maintenance tasks. (Clean your furnace or air filter every three months. Test your circuit breakers twice a year. Drain the sediments from your water heater once a year. You may need more or less maintenance depending on your situation.)
A good home-maintenance guide will tell you what you need to do and how often each task should be done. Browse through a couple books at the library or bookstore. Then grab your calendar, and you’re ready to get started. Mark down the date you do each task, then count forward and mark the next “due date.” Follow the schedule and your house will stay in great condition for decades to come.
3. Don’t Skimp on Insurance
If you haven’t taken a close look at your homeowners insurance policy, now is the time. Homeowners insurance is required whenever you have a mortgage. Your house is collateral for the loan, so your lender wants to be sure it’s insured. But you should make sure that the policy fits your needs, too.
See whether and to what extent your belongings and your valuables are protected, not just the home itself. Clarify exactly what the insurance does and doesn’t cover. Take note of the coverage limits on your current policy, and be sure they’re still appropriate. While you’re at it, see if you might qualify for new discounts—especially if you’ve had a theft-protection system installed.
4. Keep the Home’s Resale Value in Mind
Buying a home opens up all kinds of exciting possibilities, but unless you plan to live out your days in that house, you’ll need to keep its future market value in mind.
Watch out for hot housing markets whose prices could plummet suddenly. Be honest with yourself about how much house you can afford. Use a mortgage calculator to help you see how much you can afford. And later on, keep future owners in mind when you renovate. (They might not love that aquamarine kitchen tile as much as you.)
Make This Work for You
- …in 15 minutes or less
- Pick a home maintenance reference book to keep handy
- Check out month-by-month maintenance tips at ManageMyHome.com
- Set up your maintenance calendar (on paper, online, or at your computer—wherever you keep your daily calendar)
- …in 1 hour or less
- Look over your homeowner’s insurance policy (or call your agent); make sure you understand what is and isn’t covered, and increase your coverage if needed
- Learn how life insurance and annuities can help cover your mortgage balance if you should die
- …in the long run
- Mark maintenance tasks on your calendar in advance, and do each one as soon as the date rolls around
- Establish guidelines for what you will and won’t charge to your home equity loan, and decide how high a balance you can afford