Many property owners find that the cost of homeowner’s insurance can make it difficult to lead the lifestyles that they want. While it is possible for them to afford monthly mortgage payments and bills, high insurance costs reduce the amount of money that they can invest and save for retirement. In following these steps, though, finding the cheapest homeowner’s insurance should be easy.
Shop Around When You Buy Your Homeowner’s Insurance
Comparison shopping is one of the most important things that you can do when buying homeowner’s insurance. You might think that all insurance providers are alike, but the truth is that rates can vary substantially. Conducting some research can help you determine which policies meet your budget requirements.
Bundle Your Policies With the Same Provider
Lots of companies offer discounted rates when you buy multiple policies from them. Bundling your homeowner’s, auto, health and other insurance policies can help you save a lot of money. If you buy flood, fire, earthquake and other policies for additional protection, be sure to ask your provider if you qualify for discounted rates.
Raise the Deductible on Your Homeowner’s Insurance Policy
Raising your deductible by a few thousand dollars can lower your monthly payments. Choosing your deductible is kind of like walking a tightrope. You want to be sure that your deductible is low enough to help with any home repairs, but you also want it high enough to lower your monthly payments.
Make Home Improvements
Many insurance companies give homeowners discounts when they install security systems, replace old windows and upgrade fire detectors and sprinkler systems. Contact your insurance company to discuss home improvements that will help you reduce your monthly payments. Doing so can lower your bill and increase the value of your house.
Review Your Homeowner’s Insurance Policy Annually
You will get the cheapest homeowner’s insurance if you review it annually and make any necessary changes. This is especially true if you have extra coverage for high-cost items in your home. The computer that was worth a couple of thousand dollars 10 years ago might be worth very little today. You can cut costs by eliminating items that you do not want to cover anymore or reevaluating items to make sure you do not overpay.
With all the news about the rising number of foreclosed homes and rising rent prices, if you are any the market for a new home, now seems like a great time to buy a home. Not only is there a wide variety of homes to choose from, prices have continued to fall to more affordable levels.
For current homeowners that need to sell their home, times are really hard right now. If you are currently in the market for a new home, right now, you hold all the cards. Hopefully, by the time I am ready to sell my home and move on, the market will have started on the road to recovery.
Buying a home is probably the largest purchase you'll make in your lifetime so it is important to do it right. There is more to home buying than whether or not you want to live in a certain school district or if the home is on a cul-de-sac. Of course those things are important in determining whether or not you purchase a home but they should come after the financial aspect is taken care of.
Before you make to leap towards homeownership, ask yourself these five questions:
1. Is your income stable? If you don't feel your job will be there tomorrow, now is probably not the time to buy a home.
2. Do you have a downpayment? With all the instability in the housing market, mortgage lenders are requiring more money down before you are approved for a loan. These days, it will be extremely hard to obtain 100% financing for your purchase, even with an excellent credit score. After this housing fiasco, lenders want to limit the amount of risk they expose themselves to. If you put 20% down on a home, you are less likely to walk away from it because you have more to lose.
3. How's your credit? You will have a hard time getting a decent interest rate or even getting approved for a loan if you don't have a pristine credit score. These days, you will need to have a minimum credit score of 720 to get the best rates. Hint: If you are planning to purchase a home, start monitoring your credit six months to a year prior to your purchase. This way you have time to correct any errors and allow your credit score to recover. Equifax offers a service that will monitor all three bureaus for you and alert you to any changes.
4. How's your debt? Is your debt load hovering in dangerous territory? After you make your debt payments, do you barely have enough money to live in? If you answered yes to either of those questions or had to think about the answer, you probably need to wait until you've eliminated more debt before you consider purchasing a home.
5. Are you stable? If you don't plan to stay in your home at least three to five years, it is probably better to wait before purchasing a home. Typically, it takes about three to five years to recoup the cost from buying and selling a home.
6. Savings. Not only will you need to have money saved for your down payment and closing costs, you will also need to have money saved for the additional items you will need after you purchase the home. For example, when I bought my home, there were no blinds in the home and no towel or tissue paper holders. There were no ceiling fans in any of the rooms. Just purchasing those needed items cost me almost $1,000. You will also need to have an Emergency Fund in the event of a job loss or medical issue.
7. Are you ready to be your own landlord? In an apartment or other rented property, if something breaks, all it takes is a call to the landlord. The landlord owns the property and is responsible for the cost of repairs. Your cost is usually only a minor inconvenience. Once you are a homeowner, there is no one to call. Any costs related to home repairs are your responsibility.
Here are a list of financial resources that can help with your decision:
How much home can you afford?
WT Direct - High Yield Savings
Equifax Credit Watch Gold
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You've found the home of your dreams. You have a pre-approved, fixed, low-rate home loan. You have your 20% down payment ready. You've calculated your monthly payment and it will fit nicely in your monthly budget and still allow you the freedom to enjoy life.
Sounds like you have it all planned out right?
Don't forget about the homeownership costs that you may not have planned for. Here are a couple of additional costs that need to be considered when taking the leap from being a renter to being a homeowner.
Utilities: You probably budgeted for utilities based on your last home. Most people usually move up and get more space when they purchase a home. Don't forget, with all that extra space, comes higher utility bills. You need to use more power to heat and cool that additional space.
Appliances: If you purchase a new home, you will also probably need to purchase a washer and dryer, stove, refrigerator and possibly a microwave. When I purchased my home, I purchased directly from the builder and part of the incentive to purchase the home, they included an appliance package. This saved me thousands of dollars that I had not considered as part of the purchase. If you purchase an older home, all these items may need to be replaced as they may have completed their intended lifespan.
Window Treatments. This is one of the costs I certainly did not account for. Each window in my home needed some kind of window treatment. I did not want curtains on all the windows so I had to purchase blinds for each window. This cost was not considered and quickly added up.
Repair and Maintenance. This cost can vary based on the age of your home. If you were previously renting, you were probably used to calling the landlord and having problems fixed without any money out of your pocket. As a homeowner, you are the landlord and will need to pay for any problems that may arise. Even if you have a new home, repair and maintenance issues will still come up. Did you have a pipe burst? Get ready to come out of pocket to pay for it. One good way to lessen the pain of repairs and maintenance of your home is to set aside a set amount of money each month in a repair fund account. Now when a repair comes up, you are not relying on credit or trying to figure out where to get the money to pay for the problem.
Yard Care. Depending what type of home you have, you will probably be responsible for your yard maintenance. If you live in a condo or townhome or have a homeowners association, this is something you may not be concerned about. Responsible for your own lawn? Get ready to buy a lawnmower, trimmer, chainsaw, blower and possibly a pressure washer to keep things nice and clean. One tip to save money on these items is to visit a pawn shop. I saved a bunch of money buy going to a pawn shop for all these things when I bought my first house.
Homeownership is a wonderful thing; you just need to make sure you are financially ready to take on the responsibility.
This was a group project organized by Rocket Finance. Visit Rocket Finance to view all the home related posts.
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