It’s a seller’s market across much of the U.S. thanks to brisk growth in home prices and low for-sale inventory in many areas. While that’s great news for homeowners who want to enjoy the financial benefits of increasing equity—such as refinancing to lower mortgage payments or even take out cash—it’s bad news for buyers, many of whom are afraid to make the largest investment of their lives at what could be the apex of another real estate bubble.
In fact, though the Fall 2017 Modern Homebuyer Survey from ValueInsured revealed that 79 percent of homeowners believe now is a good time to sell, only 57 percent of the 66 percent who are interested in selling think they’ll actually be able to do so within the next three years.
“This dichotomy is caused by greed and fear,” Joe Melendez, founder and CEO of ValueInsured, explained to Reward Expert. “On the greed side of the equation, people realize that prices have recovered, and in some markets, are at all-time highs. However, they also realize that if they want to buy a new house, it’s going to cost them more than the one they just sold. So, they decide to just stay put. That’s the fear element.”
Fortunately, Melendez says there is a way to take fear out of the equation: ValueInsured +Plus Down Payment Protection.
Leveling the Homebuying Playing Field
Melendez was inspired to create ValueInsured after watching thousands of homeowners lose their life savings in the housing crisis as the real estate market spiraled down from its previous high.
“Being in insurance and finance my entire life, I recognized that there was no reason that these people had to lose their money,” he recalled. “For decades, banks—whether Fannie Mae, Freddie Mac, or HUD—have all protected their interests with insurance. They have protection against their exposure on mortgages. So why was it that a consumer couldn’t have the same protections that a lender had? That was the thought process behind creating an instrument that would enable a homebuyer to buy a home on a fair basis on the same playing field as the lenders.”
He brought ValueInsured into formal existence in 2014 and surmounted many challenges in the process of launching his down payment protection product, including mortgage and insurance market changes rolled out as part of The Dodd–Frank Wall Street Reform and Consumer Protection Act.
“We had to comply with all of these changes and wait for them to be implemented,” Melendez added. “It was early in January of 2017 that we officially brought the product into market.”
Today, ValueInsured’s +Plus Down Payment Protection is available in all 50 states through more than a half-dozen different lending partners. Melendez says these lending partners have originated over $25 billion in mortgages, and they’re forecast to originate more than $250 billion in home loans in 2018.
“Our product is solving the fear that homebuyers have today of buying homes that have rapidly increased in value since the crisis,” he said. “They no longer have to worry about buying at the top because now they’re insured the same way the banks are and have the same protection.”
Insuring Your Down Payment
Homebuyers who are interested in safeguarding their biggest financial investment with +Plus Down Payment Protection must get their mortgage through one of ValueInsured’s partner lenders. These lenders include First Heritage Mortgage, Pacific Union Financial, BankSouth Mortgage, iServe Residential Lending, Amalgamated Bank, and US Mortgages.
Put simply, +Plus Down Payment Protection insures your down payment investment in the property. “Let’s say you’re buying your first house today for $300,000,” Melendez explained. “Since you graduated from college, you’ve managed to save $30,000, and now you’re going to put that down on the home. That $30,000 is what we are insuring.”
In order to qualify for +Plus, the home must be your primary residence. You also have to live in the house for two to seven years if you want to make a claim when you sell.
“We didn’t want to insure people who are buying homes to flip them,” Melendez continued. “There is still a big flipper market out there, and we didn’t want to work with those folks. But from years three to seven, if you have to sell, and the market is against you, you can recover up to the full down payment amount that we insured.”
He noted that because homeowners must actually sell their properties in order to make a claim—and not allow them to go into foreclosure—ValueInsured is also protecting the mortgage industry.
“When homes go into foreclosure, they typically have a destruction in value,” he said. “By keeping homes out of foreclosure, because people now have a financial incentive not to default, we’re actually helping to preserve home values.”
Peace of Mind for About $3 a Month
The price for the financial peace of mind homebuyers gain with +Plus Down Payment Protection is surprisingly minimal.
“Today, down payments are fairly low,” Melendez said. “On average, protection costs about $1,000. You don’t even have to pay it at closing. It’s built into the monthly payment of the loan. That works out to something like $3 a month.”