Here’s the good news: Property values continue to rebound after the Great Recession. In fact, Zillow.com reports that as of August 31, 2017, the median home value in the U.S. stood at $201,900—an increase of 6.9% in just one year.

So what’s the bad news? In 2013, the last year for which there are statistics, home mortgage debt was the largest household liability, representing between two-thirds and three-quarters of total household debt.1

Given these statistics, it’s easy to see why so many new homeowners are eager to purchase mortgage insurance from their lenders. That way, if something tragic happens, they can be sure that the lenders will be paid in full and that their families will retain ownership of this valuable asset. 

Be sure to consider all the options.

It’s important, however, for homeowners to realize that there are other ways to protect the lifestyle and wealth of their families. Personally owned life insurance, for example, can perform many of the same functions as mortgage insurance, but it offers greater flexibility. That’s because life insurance gives your beneficiaries the freedom to determine how the death benefit will be spent. Let’s take a look at why that might be important.

You — and your loved ones — may want greater flexibility.

While your family can always use the death benefit to retire the mortgage, there may be more immediate financial needs. With life insurance, they have the option of using the money to pay medical bills, cover funeral expenses, or simply keep the household up and running in your absence. It may also make sense for your loved ones to pay down the mortgage over time, so they can use the insurance proceeds for other purposes and take advantage of the mortgage interest deduction. What’s more, personally owned life insurance is portable, so as long as your policy remains in good standing, you will remain covered—no matter where you live or how many times you move. 

Of course, most people don’t buy a home simply for its value — but now, more than ever, that is an important consideration. If your home — and any equity you have built up — represents your largest financial asset, be sure to weigh all your options and take whatever steps you can to protect it. No matter what you decide to do, there’s a good chance that you — and your loved ones — will sleep better for it.

This educational third-party article is provided as a courtesy by Michael Damon, Agent, (CA Ins. Lic. 0I60938) New York Life insurance Company. To learn more about the information or topics discussed, please contact Michael Damon at 508-321-2101.

1 John C. Weicher, “The Distribution of Wealth in America, 1983-2013,” Hudson Institute, January 31, 2017. https://www.hudson.org/research/13095-the-distribution-of-wealth-in-america-1983-2013

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