Down Payment Insurance Coverage
A Texas-based insurance company, ValueInsured, is now offering a brand new product for home buyers. We’ve all heard of property insurance, title insurance and mortgage insurance. ValueInsured is offering something different: down payment insurance.
According to ValueInsured, you (the buyer) pay them a one-time premium based on the value of your downpayment. You can insure up to 20% of your home’s value, but ValueInsured’s limit is $200,000. The insurance is good for seven years. If within those seven years, you have to sell your home but the value has declined and you’re losing your down payment equity as a result, ValueInsured will pay you back your equity.
Sounds like a no-brainer, right? Well, the catch is that if you do actually have to sell your house at a loss, ValueInsured will not look at your specific house to see how much value was lost. Rather, they will review a state-by-state government index to determine what the value loss is. So you may not actually get back your down payment in full.
And of course, before using any insurance company, you should research them, their qualifications and their rating!