If you’re like the average homeowner, your house is your most valuable financial asset. The question you should be asking yourself is: Are you treating it as such?
Here are a few ways you can protect your investment in your home and enjoy maximum peace of mind.
- Get a Good Insurance Policy
Although you aren’t required by law to purchase a homeowner’s insurance policy, almost all mortgage lenders have minimum requirements in place. Even if you’re paying for your house in cash, it’s a wise move to obtain a policy.
A homeowners policy serves three major functions:
- To repair your home and other structures on the property in case of damage
- To repair or replace personal belongings
- To cover personal liability lawsuits
It should not be a surprise to learn that not all policies are created equal, however. You can raise or reduce coverage, purchase add-ons and riders, and choose from a variety of insurance providers with varying reputations.
To get the best possible policy for your needs, work with an insurance broker who isn’t married to a specific company. These professionals can help you comparison shop for insurance policies offered by a variety of providers, and ultimately give you an array of options and prices.
- Invest in Preventive Maintenance
Preventive maintenance isn’t fun or exciting. To be honest, it’s expensive and time-consuming. However, it plays a crucial role in protecting your home.
“You can always hit snooze on routine maintenance, and in fact, without a calendar alert and the threat of disaster, you might be tempted to,” Chels Knorr writes for Homelight. “But just like rotating the tires on your car every 5,000 miles, if you push it too far beyond, you’ll eventually end up on the side of the road with a flat, dumping more money into a tow or new tires than it would have cost to rotate your dang tires in the first place.”
HVAC, appliances, windows, drainage, and roofing should all be focal points of your preventive maintenance plans. If you address concerns before they arise, you’ll end up saving money in the long run. You’ll also enjoy your home more and feel less pressured by the mounting burdens of homeownership.
- Upgrade and Renovate to Add Value
No matter how proactive you are about maintenance, no systems in your home are designed to last forever. At some point, you’ll need to replace or upgrade something.
Take your roof, for example. It protects the rest of the structure from the elements. At some point, it will make more sense to replace your roof than to continue pouring money into the old, deteriorating one. Keep an eye on your roof and replace it before it becomes hazardous.
There’s also a time to renovate aging rooms—especially the kitchen. If you plan to sell your home within the next three years, a cosmetic upgrade of your kitchen will add significant value to your home … and that is definitely a method of protecting your investment.
The key is to choose a redesign that has a broad appeal so you can maximize whatever you choose to spend.
- Avoid Tapping Equity Unnecessarily
As your home’s value increases and your mortgage balance subsides, it’s only natural to be tempted to make use of the growing equity in your home. But you should be wary of tapping equity unnecessarily.
Though your home equity can be leveraged in some strategic ways, you should avoid employing a home equity loan, home equity line of credit (HELOC), or cash-out refinance for such things as splurges (for example, buying a boat), get-rich-quick investment opportunities, purchase of a depreciating asset (like a car), paying for college, or starting a business.
If you decide to tap into your home equity, be sure to take out only a small portion and to use it for intelligent purposes. These may include debt consolidation, home improvements, or the purchase of income-producing real estate.
Maximize Your Largest Financial Asset
The day you buy your house might feel like one of the most financially significant days of your life, but it’s only the start. In order to maximize and protect your investment fully, you ought to make recurring commitments to safeguard your house.
We hope this article has provided you with some useful insights on how you can do just that.