Why Own a Mortgage Protection Plan?
Hey, look at you — buying a home! That’s a big step! A home is one of the most important investments you’ll ever make in your lifetime. So – way to go, you! Alright, so you’ve gone through the endless paperwork, signed more documents than you ever knew existed, and finally got the keys. Now you’re settling into your new home, and maybe it’s occurred to you by now — you’re now in about 50x more debt than you’ve even been in before! And hey — that’s not a bad thing at all! Experts say mortgage debt is among the best kinds of debt to have, but it IS debt, all the same. As long as you keep making those mortgage payments on time every month, you should be good to go… right? Here’s the thing, though: There are certain events that could happen to hamper or eliminate altogether your ability to keep up with those mortgage payments, leading to financial stress, foreclosure, or even bankruptcy. It’s a good idea to educate yourself about what your options are to protect yourself from unforeseen circumstances. So let’s do that. Larry and Mary here are twins. At 30 years old, each of them buys a $250,000 home on a 30-year fixed rate mortgage. Their payments are set at $1500 per month. Mary decides to protect her mortgage with what is known as a… Mortgage Protection Plan. Super creative name, right? She gets a 30-year plan in place to cover her 30-year mortgage at $250k of protection. Larry, on the other hand, decides to spend that money on a subscription to the Cookie of the Month Club. Way to go, Larry. As the years pass, both Larry and Mary marry. Not each other — they’re twins. That would be super weird. They start families, get promotions, and all that good stuff. One day, Larry chokes on the double pistachio chocolate chip from his Cookie of the Month Club and, sadly, dies. This is actually doubly sad, because the money he was spending on that cookie club could have been funding his Mortgage Protection Plan that he never got. So Larry’s wife is now stuck trying to make mortgage payments on her own, which she can’t do now that the family’s income has been cut in half. She slips into foreclosure and the family loses their home, all because Larry had to have his cookies. Now, if he would have gotten the Mortgage Protection Plan that Mary has, Larry’s family would have received the full $250,000 dollars in a tax-free check from their Mortgage Protection Plan. The home would be paid off in full, with money left to spare. In addition, if something goes sideways with Mary’s health, like a heart attack, stroke, or cancer, her Mortgage Protection Plan can be tapped into while she’s still living, giving her crucial money to help pay the mortgage, or any other bills, for that matter, while she’s sick and out of work. Makes a lot of sense, right? Moral of this story: don’t be a greedy, cookie-eating monster like Larry. If you have a mortgage and you’re making monthly payments, do the smart thing and protect that investment with a Mortgage Protection Plan. You’ll rest easy, knowing that your most prized assets are protected. And hey, those cookies were just going to go straight to your hips anyway.