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Downpayment insurance: What is it and do you need it?

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Downpayment insurance: What is it and do you need it?
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You can get insurance on almost anything — computers, phones, trips, your identity, your credit, your pets…and even the downpayment you put on your home!

But should you?

Read more: 5 reasons why home insurers want to give you the boot as a customer!

Is downpayment insurance worth it?

When you save up to buy a home, the last thing you want is to put 20% down and then have the value of your home tank. If the value goes low enough, that could effectively wipe out the money you worked so hard to save for that downpayment.

Such fears have given birth to a new product in the marketplace called downpayment insurance. The pitch is that an insurer will pay off your house if the value of your home collapses to a catastrophic level.

Sounds great in theory, right?

Not so fast. Clark says that what happened last decade with home values was likely a once-in-a-lifetime event.

‘You can’t insure against every possibility in life,’ the consumer champ notes. ‘The odds that housing values are going to tank again? It could happen, but I’m not counting on it.’

Watch the video below to find out what Clark thinks are two better uses of your money.

Read more: Why millennials need life insurance

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Theo Thimou About the author:
Theo is director of content for clark.com. He has co-written 2 books with Clark Howard, including the #1 New York Times bestseller Clark Howard's Living Large in Lean Times.
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