Save for getting married or having kids, there are few commitments you can make that are as big as a mortgage. Nothing says âadultâ quite like signing up for a 30-year loan. Thereâs the whole committing-to-a-large-physical-structure part, but really, itâs the money. Houses are expensive. About a third of the average US householdâs expenditures in 2019 went to housing. In dollars and cents, that was $20,679 a year.
So weâre just going to say it: If youâve got a mortgage, you need life insurance.
Thereâs the obvious reason: the size of that mortgage. With relatively low interest rates, home loans allow us to buy properties weâd spend decades saving for. While a mortgage makes expensive houses affordable, it also puts a lot of debt on the books. If you pass away, your survivors will be on the hook for that debtâbut they wonât have your income anymore.
But as with most things in the world of home ownership, the mortgage is just the beginning. Not to put too fine a point on it, but here are seven more reasons why mortgages and life insurance policies should go hand in hand.
Property taxes
As actor-playright Christopher Bullock once said, âTis impossible to be sure of any thing but Death and Taxes.â It should come as no surprise that even death wonât stop taxes. Thatâs why having cash on handâin the form of a life insurance payoutâcan take a little bit of stress off your loved onesâ plates.
Homeownerâs insurance
Yes, we are in fact stating that you need insurance to pay for insurance. Homeownerâs insurance is a given, whether your house is paid off or not. The unforeseen can be very expensive, after all. You wouldnât let your policy lapse for yourself, and you certainly wouldnât want it to lapse for your survivors. That could lead to untold headaches for them, so make sure they have what they need to make sure this bill gets paid.
Homeownersâ association fees
Love it or hate it, if youâve got an HOA, youâve got their fees. Despite the friendly, optional-sound ring of the word âassociation,â these monthly, quarterly, or annual payments are pretty much unavoidable. So, yeah, add this one to the pile.
Utilities
A house isnât much good if the lights donât turn on. Or the stove wonât light. Or the internetâs out. So remember that if you have loved ones who will be staying in your home, theyâll have an assortment of related bills to cover on their own, every month.
Maintenance
Unless you bought a fixer-upper, a small part of you probably thought, the hard partâs over, when you first walked into your new home. And you were likely divorced from that notion the first time you called a plumber at 2 oâclock in the morning. Itâs a fact that houses need regular cash infusions to keep them running smoothly. From the things that break down, leak out, or start making weird noises, to the parts that desperately need updates, maintenance is realâand can be real expensive.
Emergency fund
This is something of the opposite of credit card debt. Like credit card debt, an emergency fund could cover the categories above, but instead of what youâve spent in the past, itâs for the future. Having this money available acts as insurance against the unknownâlosing a job, unexpected illness, anything that could keep your loved ones from paying the bills.
Credit card debt
Okay, credit card debt isnât strictly home-related. But with utilities, maintenance, and renovations possibly paid on your cards, thereâs a possibility some of your balances are connected to your home. Regardless, your mortgage can help bring the weight of credit card debt into focus. The average 30-year fixed mortgage rate stands at about 3%, while the average credit card interest rate is hovering around a hefty 20%. So if youâre taking care of that low-interest mortgage, you really should make sure your survivors can wipe out the super-pricey credit card debtâhome-related or not.
Mortgage and life insurance, the perfect couple
If it wasnât clear before, by now it should be obvious. Once you get a mortgage, itâs time to get life insurance. And with all the complexities of home ownership, we wouldnât blame you if youâd want to make getting a policy as simple as possible. Donât worryâweâve got you covered. Get a Ladder term life policy quote in just a few minutes, and weâll help make at least one part of home ownershipâyour life insuranceâeasy.
