The recent downfall of the real estate market has caused many homeowners to be concerned as they watch their home's value plunge in a matter of months.

For some homeowners, obtaining a home equity protection plan may be just what they need to help with the anxiety gainst declines in the value of their home.  EquityLock Financial, based in Austin, Texas is a company that offers such protection.

Here's how it works: For a fee of 1% to 3% of their home's value, homeowners buy a contract that protects them against the loss of equity in their home if the market takes a turn for the worse. While this should not be confused with an insurance policy, this particular coverage will reimburse the homeowner when if they happen to sell their home in a market where average home prices have dropped since their purchase. The amount they receive is typically measured by one of two home price indexes (both of which are based on sales of single-family homes).

This coverage is not for everyone, one factor to consider is how long you plan to live in your home. Although home prices can fluctuate in the short term, they tend to hold steady and increase over longer periods. So for short-term homeowners-those who plan to be in the home for less than 10 years, it might make more sense.

Payment terms for this coverage vary with each company, but many require that the fee which ranges from 1 to 3% of the purchase price (or of the current value if you already own a home) be paid upfront. Be sure to ask about any lockout period which could prevent you from collecting payment before a set time. As with any protection policy, it is important to do your research and consider the costs versus the coverage.