The real estate market is on FIRE right now! Land value is increasing and making it more valuable so people are trying to invest. What does that mean for us trying to buy our dream house though? Well, it might be a little harder than it was five years ago. There are many factors to consider like property taxes, school district, curb appeal but also the forgotten financial implications like insurance. So we put together a guide to help you think through all the costs associated with buying a home and how to become a more attractive buyer, budget better and make a wise investment.
Before You Start Looking at Homes:
Set yourself up to be a financially desirable buyer
1. Check your credit rating A good credit history makes it easier to get a mortgage at a competitive interest rate, and may also qualify you for a good credit discount on your insurance. Obtain a copy of one or all of your credit reports. Make sure they are accurate and report any mistakes immediately. If your credit is not as good as it could be, take steps now to improve it. 2. Protect yourself with a renters insurance policy If you are currently renting a house or apartment, protect yourself financially with a renters insurance policy. In the event of a disaster, renters insurance can help protect the down payment you’re building to buy your new home, as well as provide a useful insurance history to your prospective homeowners insurer when you go to buy your first home.
While House Hunting: Consider the physical characteristics and features and the cost to maintain or fix them
While hunting for a house remember that the physical characteristics —its size, location, construction and overall condition—can affect the cost, choice and availability of home insurance. Sometimes the desirable features—like ornate plasterwork or proximity to the coastline—can make insuring a home costlier or more difficult. Some factors to consider when shopping for a home are: 3. Quality and location of the fire department Houses that are located near highly rated, permanently staffed fire departments usually cost less to insure. This also holds true for homes that have a hydrant nearby. 4. Proximity to the coastline Houses located on or near the coast will generally cost more to insure than those further inland. They will also likely require a separate hurricane or windstorm deductible. 5. Age of the home A stately, older home can be quite beautiful but ornate features like plaster walls, ceiling molding and wooden floors may be costly to replace and can raise the cost of insurance. And plumbing and electrical systems can become unsafe with age and lack of maintenance. If you are considering buying an older home find out how much it will cost to update these features and factor that into the cost of ownership. 6. Condition of the roof A new roof matters to insurers and keeps you and your family safer. Make sure to check the roof's condition. Depending on the type of roof and whether or not it's made with fire and/or hail resistant materials, you may even qualify for an insurance discount. 7. Quality of construction Find out whether the house has been updated to comply with current building codes. Homes well built by careful craftsmen and those constructed to meet modern engineering-based building codes are likely to better withstand natural disasters. 8. Risk of flooding Damage from flooding is NOT covered by standard home insurance policies. If you are buying a home in an area at risk from flooding, you will need to purchase flood insurance. 9. History of earthquakes While earthquakes are most frequently associated with California, they occur in the majority of states and are not covered under standard home insurance policies. Speak with one of our agents about adding an earthquake endorsement if it's a possibility where you live. 10. Swimming pool or other special feature If the house has a swimming pool, dunking pool, hot tub or other special feature, you will likely need more liability insurance. You may also want to consider purchasing an umbrella liability policy to provide added protection in the event someone gets injured on your property.
Before you place a bid on the home: Check the history, current condition and potential trouble spots and costs
11. Check the loss history report
Ask the current homeowner to obtain a copy of the loss history report on the home. Homeowners can obtain either a Comprehensive Loss Underwriting Exchange (C.L.U.E.) report, which is available from LexisNexis, or an A-PLUSTM property report from ISO®. These reports provide a record of the type of loss on the home and can provide extremely valuable information. For instance, if there was a claim for water damage on the home, it is important to find out the source of the damage (such as a burst pipe) and whether it has been properly repaired. On the other hand, a claim for wind or hail that resulted in a new roof makes the home stronger and is very attractive from an insurance perspective.
12. Get the house inspected
You’ll need to have the house inspected by a credentialed home inspector in order to get your mortgage approved. Accompany the inspector to make sure he or she is thorough and makes sure to:
Check the general condition of the home
Look for water damage, termites and other types of infestation
Review the electrical system, plumbing, septic tank and water heater
Show you where potential problems might develop
Double-check that past problems have been repaired
Suggest important upgrades or replacements
13. Estimate maintenance costs Routine maintenance is your responsibility as a homeowner so be sure to factor these costs into the overall price of owning the home. Losses caused by failing to properly care for your home are not covered by standard homeowners policies. 14. Call an agent at Time Insurance Agency Don’t wait until the last minute to think about homeowners insurance and don’t be shy about asking for estimates on more than one house. Quotes are free and we're more than happy to fill you in on additional coverages you might need and the best fit for you, your family and your property. The sooner you speak with one of our insurance professionals, the smoother the process will be. Our mission is to find you not only the most affordable price but also the most comprehensive coverage. Insurance is in an investment in the future, if that unfortunate and unforseen event happens we want you to know you're covered and it's going to be taken care of.