From one basket…
… to many baskets.
Your home’s value is also determined by other things in addition to local market conditions, such as any improvements you’ve made and how well you’ve maintained it. Those are specific to your home, and are not affected by our product.
Here's how it works. If you buy a Risk Reduction Plan from us, it will have a value that’s updated monthly based on how your local real estate market performs relative to the national average. Your value may fluctuate - up or down – by an amount that is the DIFFERENCE between your local home price index and a nationally diversified home price index. Here's how it works. If you buy a Risk Reduction Plan from us, it will have a value that’s updated monthly based on how your local real estate market performs relative to the national average. Your value may fluctuate - up or down – by an amount that is the DIFFERENCE between your local home price index and a nationally diversified home price index.
To illustrate, if your local market underperforms a national home price index, you will be paid the difference at the sale of your home (or mortgage payments can be made during periods of financial distress), just when you need it most. Conversely, If your local market outperforms a national average, you will pay the amount of the outperformance at the sale of your home, essentially offsetting your outperformance.To illustrate, if your local market underperforms a national home price index, you will be paid the difference at the sale of your home (or mortgage payments can be made during periods of financial distress), just when you need it most. Conversely, If your local market outperforms a national average, you will pay the amount of the outperformance at the sale of your home, essentially offsetting your outperformance.
You can think of this as an insurance policy. During the recent real estate crash, the national home price index declined 27% from August, 2006 to its lowest point in February, 2012, but the home price indices in many metro areas fell much further. For example Phoenix fell 54%, Las Vegas fell by a whopping 62%, Tampa by 48%, Miami by 50%, San Francisco by 43%, San Diego by 40%, and Los Angeles by 42%. This problem was not limited to Sunbelt and coastal cities – even traditionally stable markets in the Midwest experienced larger than average declines – Chicago declined by 37%, Detroit by 43%, and Minneapolis by 37%. If people in any of those metro areas owned a Risk Reduction Plan, their loss due to the market (not including any factors specific to their home) would have been limited to that of a nationally diversified index. Millions of foreclosures and much pain would have been avoided had Risk Reduction Mortgages been widely available before the last real estate crash -- and even during typical real estate markets like we are in now.
You can think of this as an insurance policy. During the recent real estate crash, the national home price index declined 27% from August, 2006 to its lowest point in February, 2012, but the home price indices in many metro areas fell much further. For example Phoenix fell 54%, Las Vegas fell by a whopping 62%, Tampa by 48%, Miami by 50%, San Francisco by 43%, San Diego by 40%, and Los Angeles by 42%. This problem was not limited to Sunbelt and coastal cities – even traditionally stable markets in the Midwest experienced larger than average declines – Chicago declined by 37%, Detroit by 43%, and Minneapolis by 37%. If people in any of those metro areas owned a Risk Reduction Plan, their loss due to the market (not including any factors specific to their home) would have been limited to that of a nationally diversified index. Millions of foreclosures and much pain would have been avoided had Risk Reduction Mortgages been widely available before the last real estate crash -- and even during typical real estate markets like we are in now.
We all insure our health, home and auto to protect these assets. Why not also protect your largest investment? The primary difference between insurance and our diversification plan is that insurance simply transfers risk whereas our plan significantly reduces overall risk. We all insure our health, home and auto to protect these assets. Why not also protect your largest investment? The primary difference between insurance and our diversification plan is that insurance simply transfers risk whereas our plan significantly reduces overall risk.
The risk reduction value proposition is stunning. The value added is estimated at more than 1% of your home value after nominal fees. That’s more than $3,000 per year in added value for a typical $300,000 home. The logic is that if you take less risk in your home value, you can take more risk in your investments and maintain the same level of risk to your overall net worth. If you take more risk in your investments, you would expect to earn higher returns. The value added from diversification is simply a calculation of the expected additional earnings in your investments if you transfer the reduction in risk. Whether you do or not is up to you, but the economic value added is simply a measurement of the value of diversification benefit commonly used in the financial services industry. It may sound too good to be true, but this is why diversification benefit has be termed “the only free lunch in Economics.” The risk reduction value proposition is stunning. The value added is estimated at more than 1% of your home value after nominal fees. That’s more than $3,000 per year in added value for a typical $300,000 home. The logic is that if you take less risk in your home value, you can take more risk in your investments and maintain the same level of risk to your overall net worth. If you take more risk in your investments, you would expect to earn higher returns. The value added from diversification is simply a calculation of the expected additional earnings in your investments if you transfer the reduction in risk. Whether you do or not is up to you, but the economic value added is simply a measurement of the value of diversification benefit commonly used in the financial services industry. It may sound too good to be true, but this is why diversification benefit has be termed “the only free lunch in Economics.”
You can diversify your home value, secured by a home lien, for just 0.06% of your home value annually ($15 per month on a $300,000 home).You can diversify your home value, secured by a home lien, for just 0.06% of your home value annually ($15 per month on a $300,000 home).