Long Beach Real Estate-Long Beach Condos

The wildfires in Southern California jarred most Long Beach homeowners' sense of calm this week.  The simple fact is that we live in an area that is prone to natural disasters:  earthquakes, wildfires, sinkholes, and mudslides affect properties in the Golden State.  Disasters can be financially devastating to Long Beach property owners during the aftermath.  Insurance companies negotiate claims and delay the settlements in an effort to reduce the exposure to liability.

The nefarious process of claims settlement sometimes induces the insured homeowner to agree to an "offer" that is far below what their policy covers.  A displaced homeowner, with a lot of property equity, may find that their strategy of debt elimination has strapped their financial reserves.  A wildfire, flood, or earthquake can render that property unhabitable.  The homeowner starts the claims settlement process with the insurance company with one hand tied behind their back- they have very little money because it's all tied up in the property.

We advise Long Beach homeowners to update their hazard insurance policy annually to reflect the higher costs of construction.  Lenders insist on adequate coverage so that their investment (the loan on a home) is protected.   What about the case of the homeowner with too much property equity?  They are usually the most underinsured.  The lenders don't worry about the property with a lot of equity.

The result?  The home burns down, the policy coverage is inadequate to rebuild a similar property, and the property equity, built through appreciation and prepayment of the home loan, quite literally, goes up in smoke.

Monday, I received a call from a frantic homeowner in the San Gabriel Valley.  She was concerned about her line of credit being "frozen".  We arranged a home equity line of credit for her last year as "disaster insurance".  I directed her to immediately access the line via wire transer to her bank account.  Thankfully, this wasn't needed.  The important thing is that she was able to set aside a six-figure reserve fund, in anticipation of disaster.  Hasty?  No, this is prudent equity management through proper mortgage planning.  Her family was able to rest easy on Wednesday when the six figure wire came through to their bank.  The few hundred bucks in interest she'll pay is minor in comparison to the anguish some California homeowners will experience during the insurance "claim settlement".

Long Beach home owners have been quite fortunate these past 6-7 years.  Most have seen their properties double or even triple in value.  The rise in property equity and its affect on the average Californian's net worth has been amazing.  Manage your property equity.  Leverage it and optimize it through a prudent investment account so that your financial future is intact....regardless of what disaster Mother Nature throws at you.

Related Posts