Tag Archive for Buying a House

5 Hacks for Saving on Homeowners Insurance

homeowners insurance

5 Hacks for Saving on Home Owners InsuranceYou did it! You found your dream home, you applied for and got a mortgage, you saved and had a decent down payment, and you bought your house.

But don’t think your work as a homeowner is over. There are a lot of things you have to consider as a home owner that you’d never have to worry about as a renter.

For instance, you now have the worry of what happens if you house burns down, or if the roof gets hail damage, or what to do if?someone breaks into your home. This is where homeowners insurance comes into play.

Although it’s not actually required in most states, many mortgage lenders require a borrower to have it in order to get a?loan.

Home owners insurance is pricey, but there are ways you can save money and still have peace of mind. Here are 5?hacks for saving on homeowners insurance.

Shop Around

You are doing yourself?and your wallet a disservice by not collecting multiple quotes for home insurance. Ask your neighbors, family, friends and co-workers to see who they prefer. But remember it is not always about price. If you find a?company with?good rates but poor customer service, or a company with very strict rules about damage and things they cover, it may not be a good fit for you. In these instances, it could be better to pay more for the right plan.

Bundle Your Insurance

If you have a good relationship with your current insurance company for car insurance or other types of insurance, you may be able to bundle your homeowners insurance under the same policy. This usually leads to a lower cost for you. Plus your customer loyalty could result in better customer service as well.

Raise the Deductible

A deductible is the minimum you have to pay out of pocket before the insurance policy kicks in. The higher the deductible the lower your premium costs and vice versa. If you can afford to raise the deductible, do so and save some of that premium cost for other expenses. This is also a good idea if you have fully-funded emergency fund that can help you cover the deductible if you ever have to file a claim with your insurance company.

Buy the Right Amount of Insurance

If you bought an expensive house or a large property, you might need to insure your home for a larger amount of money. But if you bought a small condo, you don?t necessarily need the same amount of coverage. It just depends on the price of the property you purchased. When you are buying homeowners?insurance, you are looking at the rebuilding or replacement cost for your home and possessions. Be smart about the actual insurance value of your home. It is not the same as the value you paid for it as you need to make sure your valuable possessions are included on your policy too.

Reappraise Your Possessions and Home

You should be doing an annual appraisal of the value of your home and household possessions. While you might have some new things to add to your insurance, depreciation can work in your favor to help lower the amount of insurance you need if many of your possessions have depreciated over time. The TV you bought for $5,000 three years ago is probably not?still worth $5,000 today.?If you overvalue your items you could be paying for too much insurance.

When you are buying a house, don?t forget to factor in the monthly insurance cost if it’s not included as part of your mortgage payment and kept in an escrow account. That can dramatically affect how much home you can afford.

To save money on home owners insurance, do your research on what policies are available and find what works best for your needs and your budget. It might be something as simple as re-evaluating what coverage you really need, including the value of your home and possessions.

 

Have you used any of these hacks to help you save on home owners insurance? How else might you be able to save on home owners insurance?

 

Photo courtesy of: Meditations

5 Simple Ways to Save Money When Buying a New Home

buying a new home

buying a new homeHere?s a bit of breaking news ? buying a new home is?expensive. What?s that? You already knew houses were expensive? Okay ? so maybe it isn?t breaking news after all.

As any recent homebuyer can tell you, it is incredibly difficult to get into a new home without totally breaking your budget for the year (and maybe many years to come). If?you are getting ready to go through the home buying process, it is important that you find as many ways to save money as possible.

With that in mind, we are happy to offer you the following five money saving tips. These tips might not make your home buying experience ?cheap?, but they should help to lessen the burden at least a little bit.

Keep Your ‘Old’ Furniture

The temptation when buying a new home is to also buy all new furniture to fill it with. While that might be a fun idea, it is also extremely expensive. Instead, be patient and simply move your old furniture into the new place. Once you have settled in and your bank account has recovered from the house purchase, you can go about starting to buy new furniture one piece at a time as your budget allows.

Don?t Get Desperate

If you find yourself in a ?desperate? home buying situation (meaning you have to buy one ASAP), you are likely to wind up overpaying for your house. Try to give yourself as much time as possible so you can make reasonable offers and only agree to a purchase when you are totally happy with the final sale price.

Pick a Reasonable Square Footage

It is easy to get caught up in trying to find the biggest possible house when you hit the market for your next home. However, square footage isn?t everything when buying a house. Be reasonable with your size needs based on the number of people that will be living in the home, and focus your search on homes that are big enough while still being affordable so you don’t end up feeling house poor.

Be Flexible on Location

You probably have a general area in which you need to shop in order to have a reasonable commute to and from work each day ? but you should be flexible within that range in order to find the best deal. If you are only willing to look in one geographic area, you are more than likely going to pay too much. Keep your mind and eyes open and be ready to act when you find a great deal in a location that will work.

Pay for an Inspection

That?s right ? for this last tip, we are actually going to tell you to spend some money in order to save some money. By paying for a home inspection as part of the home buying process, you can potentially avoid expensive home repair bills later on. A good inspector will be able to catch potential problems upfront, which is far better than finding out about them after you have moved in to the house.

 

How have you saved money when buying a new home? Can you think of any other tips to help save money when buying a new home?

 

Photo courtesy of: midascode

7 Benefits of Downsizing Your Home

downsizing

downsizing your homeTake a minute and think about?your home.

When you first bought your home, what features drew you to it? Was it the four bedrooms, three baths and a large master suite? Or was it the gourmet kitchen that could feed 20 of your closest friends?

For the average home-buyer the amount of space is key when purchasing a home. But, a big property comes with a big price.

If you cannot afford to continue living in your large home, a way to remedy that is to downsize your property.

That said, downsizing isn?t just for retirees and empty nesters. It?s a great way to lessen debt and gain financial freedom no matter how young or old you are. There are a lot of financial benefits to doing more with less.

If you are thinking about downsizing, here some of the financial benefits of?downsizing your home.

Instant Savings

By buying a smaller house or property, you instantly save money by having a lower house payment every month. Not to mention lower total debt. The difference you save in a house payment can be directly applied to current debt or invested in the stock market. Either way you are making gains toward achieving?financial freedom.

Less is More

Downsizing your home?means downsizing your stuff. You can?t fit the same amount of stuff into a smaller space comfortably. (If you do try to cram it all in, that?s called hoarding and is a topic for another blog. Just kidding, but seriously.) This means you should take the time to declutter and?get rid of unused or unwanted belongings. The best part about decluttering?is that you can sometimes make money back from selling your clutter.

Lower Utility?Bills

A smaller space does not take as much energy to warm it up in the winter or cool it down in the summer, thus you’ll enjoy lower utility bills by downsizing your home. By not running the heat or air conditioner as much, you save on your electric bill as well. A smaller space also requires fewer lights, so you won?t need to turn as many on at one time, which also saves energy. Lower utility bills is a definitely a financial positive for downsizing.

Lower Property Taxes

A smaller property is not taxed as much as a larger property, so you’ll pay less for property taxes if your downsize your home. Enough said.

The Potential for a Debt Free Property

When you downsize, you might make enough off of the sale of your larger home to completely pay for the smaller home in cash, which means you’ll have no mortgage debt hanging over your head each month. Even if you don?t make enough cover the entire purchase of your new, smaller home, you can at least make enough to not have to pay for a cash down payment on the smaller property.

Lower Maintenance Costs

Maintenance costs are of the things I hate most about being a homeowner, and they are also one thing many people forget to account for when buying a house. A smaller home means less work to keep it up, especially if you end up purchasing a condo or apartment. Instead of replacing ten windows in a larger home you might only have to do three if you have a smaller place. Savings in landscaping, lawn maintenance and on your summer water bill also provide an instant bonus to your savings.

The Ability to Choose a Lower Cost of Living Area

Last, but not least, when you downsize and move into a smaller home, it?s possible for you to move to a place with a lower cost of living. If it costs less to live in a certain neighborhood, you’ll see instant savings over your old neighborhood or city. It may not be a possibility to move to a different area due to factors such as your job and your family’s needs, but it?s definitely worth considering when downsizing your home.

As with anything, there are always other factors to think about?when you are considering?downsizing your home. In the end it comes down to what fulfills your needs and fits your budget best.

 

Have you ever thought about downsizing your home? What else did you consider before you downsized?

 

Photo courtesy of: Tammy Strobel

5 Reasons Why You Shouldn?t Buy a House

Buy a house

house-435618_1280When you seek out financial advice, one of the first things you are likely to hear is that you should buy a house. While that is certainly good advice for many people, and there are a number of benefits to home ownership, there are some drawbacks as well. Buying a house is not the right choice for everyone, so carefully consider all of your options before picking the right path.

Following are five reasons why it might not be a good idea for you to buy a home at this time.

You May Be Moving

This should be obvious, but it doesn?t make sense to buy a house if you are going to be moving sometime in the near future (within a couple of years). In fact, even if you might move sometime soon, you would be better off to wait on buying a house until you can set down roots. The financial advantages that are available by buying a home don?t start to show up for several years, so purchasing a house only to turn around and quickly sell it is something that won?t be worth your while.

Out Priced by the Market

Simply put, you might not be able to afford a suitable house in the region where you want to live. While you may be able to find several rental options that suit both your needs and your budget, you may not be as lucky when it comes to buying a home. Take some time to review the market conditions near where you wish to live to determine if buying a house is even feasible at this time.

Prefer the Renter?s Lifestyle

Owning a home is fundamentally different than renting. As a renter, you usually just call the landlord when something breaks down. As a home owner, that responsibility falls on you. It will be up to you to either fix the problem yourself, or hire a professional who can do the work for you.

There is more responsibility that goes along with owning a home ? some people enjoy that challenge, while others do not.

Limited Funds for Down Payment

In recent years, the need for a sizable down payment has increased in the mortgage world. Gone are the days of zero-down loans, so you will need to have plenty of cash saved up in order to write that big check when closing comes around.

If you don?t feel comfortable laying out a large portion of your savings in order to make a down payment, you may be better off renting until you are in a position to make the down payment without draining your entire bank account.

You Love Where You Live

If you are currently renting, and you are happy with your accommodations, why make a move? Buying a house is a good financial choice for many people, but that doesn?t mean that it is the only way to be smart with your money. If you are happy with your life as a renter, look for other investment options?to grow your money over the long run.

 

What are your thoughts on the idea that “everyone” should buy a house? What other instances will buying a house not be a good choice? When did you by your first house?

 

Additional resource: If you?re looking for an easy way to stay on top of all your finances so as to know whether or not you?re ready to buy a house, check out my favorite tool ? Personal Capital. Completely free, it allows you to track your spending, monitor your bank and investment accounts and watch your net worth grow plus many other tools.?

 

Open a free Personal Capital account today!

 

Photo courtesy of: tkoch

2 Simple Ways You Can Avoid Being House Poor

House Poor

1714284933_6bbda465dc_zOne of the biggest financial mistakes I?ve ever made was buying my house at age the age of 21.

I had just graduated from college and started working a full-time job back in my hometown. After viewing several rental houses I grew frustrated by their terrible condition and thus I started looking at houses that were for sale instead.

As I?ve said before, I love being a homeowner most of the time. But when I bought my house, I made the mistake of making myself house poor.

According to Investopedia, house poor is ?a situation that describes a person who spends a large proportion of his or her total income on home ownership, including mortgage payments, property taxes, maintenance and utilities. House poor individuals are short of cash for discretionary items and tend to have trouble meeting other financial obligations like vehicle payments.?

With that in mind, here are two ways you can avoid being house poor.

Don?t Buy Too Much House

Buying too big and too expensive of a house is how m0st people, myself included, become house poor.

In my case, I was pre-approved for up to $120,000 to spend on a house. After viewing houses in my community at the $80-90,000 range, I knew I would need to spend more to get a house that was move-in ready and up-to-date. Unfortunately in my community there aren?t really any houses between that and the $120,000 mark, which is how much my house cost. I also didn?t have money saved up for a down payment or closing costs, which made my house loan more expensive.

Just because I was pre-approved for $120,000 and I faithfully make my payment each month doesn?t mean it hasn?t been hard to watch almost 45 percent of the income from my full-time job being used just for the mortgage and utilities each month – it is! I wish I had shopped around longer for a cheaper house or a rental in decent condition. A worst case scenario would’ve simply resulted in living with my parents for a few months while I kept looking for a place.

Don?t Be Above Downgrading if Your Income Drops

With all the job losses from layoffs and company closures in today?s economy, it shouldn?t be embarrassing to have to move to a smaller, older, or cheaper home in order to avoid being house poor.

Sometimes when people experience a job or other income loss, like a parent transitioning to a stay-at-home parent after the birth of a child, they continue to live in their expensive house even if they can?t afford it.

If the income drop is short term and you have an adequate emergency fund in place, this might work out just fine. But if not, you might want to ?consider moving so you don?t become house poor.

Being house poor is not very conducive to helping you achieve other financial goals, like getting out of consumer debt, building an emergency fund, or saving for retirement. Plus when you are house poor the amount of money you can spend on fun things, like family vacations and more is also drastically limited.

 

 

Are you house poor? What other ways can you think of to avoid being house poor? How old were you when you bought your first house?

 

 

Photo courtesy of: Smart Destinations