Homeowners Insurance: What You Need and Why You Need It

Even if you’re the type of person who likes to live dangerously, your mortgage lender is not. They will require you to purchase homeowners insurance to protect their interest in your home. And thank goodness they do. Because even if you don’t have a mortgage, you should have homeowner’s insurance. Your home is a huge investment that contains all your worldly possessions. The premiums for coverage are a small price to pay for the protections they provide.

When you say “small price…”

The cost of homeowner’s insurance varies depending upon your location, type of coverage, any discounts you might qualify for and your provider. But as an extremely rough estimate, you can expect to pay in the neighborhood of $35 per month for each $100,000 of coverage.
When do I have to pay?

Assuming you will have a mortgage, you will be required to bring proof of at least 12 month’s worth of insurance premiums to your closing. You will need to bring along your policy’s declarations page which shows the effective date and the cost for a year’s coverage to closing, along with a receipt or a letter showing you’ve paid the bill.

After that, your lender will set up an escrow account and pay your monthly premiums out of that. Your homeowner’s insurance will just be rolled into your house payment, along with taxes. Since you’ve already paid for a year upfront, some home buyers assume their first year’s payments will be reduced. But from the first payment forward, your lender will be collecting insurance premiums to pay next year’s bill.

Picking an insurance company

You can probably rattle off at least three big insurance companies with no prompting, so finding one isn’t a problem. But finding the right one for you is important. Ask trusted friends and relatives if they have recommendations based on their experience. Then get quotes and compare prices. Check in with your state insurance office to see if there are any issues with the insurers you are looking into. If you already have auto insurance, you may be able to get a discount by using the same company. (Or you may find you want to move your auto insurance to a new company.) Ask if there are discounts for alarm systems or a sprinkler system.

How much?

To satisfy your mortgage lender, you need to cover the home for current market value. All they care about is that they get their loan repayment even if the house and its contents burn to the ground. Except in some very rare circumstances, that’s not enough.

Most experts advise you to buy “replacement cost” coverage rather than market value. Here’s the difference. Say you buy a $200,000 home with market value coverage. If a fire destroys your home, it could cost $225,000 to rebuild. You’re left to foot the bill for the extra $25,000. Would it really cost more to rebuild than the market value of the home? First you’ve got to pay to remove the debris from the destroyed home.

Even without those demolition costs, rebuilding is just more expensive. You won’t get the economy of scale that that a professional home builder enjoys. You may also want to consider adding “extended value” coverage. This will pay you up to 20-30 percent over your policy coverage limit. Why would you need that? Let’s say a storm damages homes throughout your area. A lot of people are going to need repairs and quick. The laws of supply and demand dictate that prices to make those repairs will spike. Extended value coverage protects you against that.

How do you determine replacement value?

Your insurance agent should be able to help you come up with a ballpark. There are also online calculators you can use to compare. You can also hire a contractor to give you an estimate or see if the appraisal that was done on the home included a replacement cost estimate.

Your policy may include an automatic inflation adjustment, but even if it does, it’s a good idea to take a look at your coverage limits once a year or so to make sure nothing has changed that would make you want to adjust your policy.

What’s protected besides the house?

You: As a homeowner, you also need to protect yourself against lawsuits if someone is injured on your property. Let’s say you have the neighbors over for a barbeque and one of them trips on a tree root and breaks a wrist. Or maybe a door-to-door salesperson trips on an uneven concrete walkway and falls. You could be liable for their medical treatment and even loss of work. This is also why your insurance company may ask what seem like strange questions. Do you have a dog? Do you own a trampoline? They could raise your premiums to account for past claims experiences with that sort of thing.

The amount of liability coverage you need depends on your personal worth. The more you’re worth, the more you have to lose and the more coverage you need, possibly including an enhanced personal liability plan.

Your stuff: Ask about the personal property protection included – how much of your stuff is covered. Is it covered at replacement value or depreciated cash value? What isn’t covered? If you have an antique doll collection or high-end computers, you’ll probably need a “rider” to add coverage. Ask your insurance agent what specific exclusions are in your policy.

You should take an inventory of what you own to help in case you ever need to make a claim. Where to start? The Insurance Information Institute’s website can be an enormous help.

What isn’t covered

Standard homeowner’s policies do not insure against floods, earthquakes, hurricanes or wildfires, among other things. If you live in a flood zone, your lender will probably require you to purchase additional flood insurance. Even if you aren’t required to purchase specific hazard coverage, you may as well ask what it would cost for those events most likely to occur in your area. Only you can decide what the peace of mind is worth to you.

Source: zillow.com

Taking Care of Your New Home, Season by Season

Your home is typically your biggest asset, so taking care of it is essential. Not only will keeping up with home maintenance protect your investment, it will make living in your home more enjoyable.

Some inside chores are year-round, best done weekly or monthly, depending on your lifestyle and tolerance. So while some might reach for the scrubber at the first sign of mold in the bathroom grout, others might tackle it quarterly.

That said, here’s a suggested checklist of seasonal maintenance.

Spring

Spring is the time for rebirth, renewal and cleaning anything that doesn’t move.

Inside
• Wash windows inside and out on a cloudy day to avoid streaking
• Power wash deck and vinyl exterior siding
• Steam clean carpets and floors
• Dry clean or machine wash drapes
• Dust baseboards and cabinet toe kicks
• Do a deep clean on bathroom surfaces and renew tile grout
• Give your oven and stove top a good scrub
• Change batteries in smoke and carbon monoxide detectors

The yard
• Prune trees and shrubs to shape and let in sun
• Gather fallen branches and other yard debris, and compost if possible
• Prune shrubs and plants to 2 feet away from air conditioning compressors
• Plant summer-flowering bulbs like dahlias after last date of frost
• After the lawn wakes up, fertilize and over-seed if necessary
• Scrub and fix patio furniture
• Power wash sidewalks, patios and paths

Home exterior
• Clean and repair gutters and downspouts
• Repair or replace window screens to keep out bugs
• Scrape and touch up peeled paint
• Remove, replace and paint rotting wood trim
• Remove and replace crumbling bricks and stone
• Inspect foundation and seal cracks
• Check and replace cracked roof shingles and vent collars

Summer

When the weather turns hot, summer maintenance revolves around outdoor space and saving money on cooling costs.

The yard
• Water plants deeply two or three times a week, then give grass a little water daily
• Mow grass as needed (length varies by variety) and leave clippings on the lawn to decompose and nourish the turf
• Keep on top of weeding flowerbeds and around shrubs; a spritz of horticultural vinegar will kill young weeds
• Deadhead spent flower to encourage continuous blooms

Inside
• Dust ceiling fans and change rotation direction to counterclockwise to create a cooling downward air flow
• Clean refrigerator coils to keep the appliance cooling efficiently
• Clean refrigerator door gaskets; replace if necessary
• Dehumidify the basement to prevent mildew and mold
• Clean or replace air filters that can reduce your AC’s energy consumption by as much as 15 percent

Fall

Winter is coming, and you’ve got a few months to prepare.

Inside
• Hire a professional to check and clean your heating system
• Clean and replace system filters, and clean return vents
• Change batteries in smoke and carbon monoxide detectors
• Inspect and repair weather stripping around doors and windows
• Check the insulation around your home, and consider adding more in the attic to save money
• Call a chimney sweep to maintain chimneys

The yard
• Pull spent plants, remove weeds, store summer bulbs like dahlias, and dig in shredded leaves to nourish soil
• Plant bulbs like tulips for spring color
• Aerate your lawn to help water and nutrients to penetrate grass roots
• Overseed lawn bald spots
• Clean and cover porch furniture; bring cushions inside
• Empty and clean flower planters and pots
• Clean and store garden tools
• Disconnect, drain and store garden hoses before the first hard freeze

Home exterior
• Check and repair caulk around window frames and venting — any place heat can escape
• Replace frayed door sweeps to prevent drafts
• Clean gutters of fallen leaves

Winter

Staying inside and saving energy are the name of the winter chore game.

• Clean or replace furnace filters
• Reverse ceiling fans so blades spin clockwise to move warm air down into rooms
• Turn off interior water valves that lead to outdoor spigots; open bibs a bit to let remaining water in pipes drip out
• Wrap vulnerable pipes in unheated rooms or on exterior walls to help prevent a cold-weather burst
• Clean heating registers to maximize air flow
• Wait for spring to return

Source: zillow.com

Tips for Packing and Making Your Move

The excitement of a new home comes with the hassles of packing your stuff and moving in. And that means one more decision: Hire movers or do it yourself. As you weigh your options, you’ll want to consider both budget and logistics such as distance and time.

A little prep now will help prevent hassles later on.

Estimate your costs

Professional moving prices vary greatly, so make sure you get two or three estimates from moving companies recommended by friends or trustworthy consumer sites. You’ll want to make sure the company is licensed and insured.

To get a rough idea how much a professional move will cost, it’s helpful to use an online calculator.

If you’re thinking of DIY, factor in these costs:
• Rental truck (with fees typically based on hours used and miles traveled)
• Boxes and tape
• Packing paper and bubble wrap
• Moving blankets
• Dolly, hand truck, moving straps

And then there’s the implied cost of “free help,” which you’ll have to repay with either beer, dinner, and/or agreeing to help with their DIY move. If five friends help you move once, you’ll feel obligated to help each of them when they move.

Clear the decks – and closets

Do you really want to move those decade-old cooking magazines or that T-shirt from a better-forgotten weekend in Vegas? Purging what you don’t need will lighten your load and cost you less when you move. You can donate stuff and maybe get a tax deduction, or give things away and make someone else’s day. Either way, it’s one less thing to pack. Speaking of packing…

Packing pointers

Pack one room at a time, making it easier to unpack in your new home. Some tips:
• Wrap all items carefully and keep each box cushioned inside.
• Mark all boxes according to the room they’ll be moving to.
• Limit box weight to about 50 pounds.
• Keep all of your important items in boxes labeled “essentials.”

Thinking ahead about what you’ll want to unpack first may help you strategize about what to put in those “essentials” boxes.

Packing supplies

Start stockpiling boxes way before the professional or DIY move so you don’t have to pay for them at the last minute. Neighborhood online chat rooms are great sources of free packing material. Here’s what you’ll need:

• Boxes (variety of sizes and styles)
• Packing paper
• Bubble wrap and/or cushioning foam
• Packing tape
• Moving blankets
• Plastic wrap
• Paper towels
• Scissors
• Screwdriver set
• Markers for marking boxes

Check out other pro packing pointers here.

Share your info

It’s easy to get caught up in the move itself, but you’ll want to share your new address with important people in your life: friends, employers, creditors!

A good place to start is the United States Postal Service. Fill out a change of address request at your local post office or at the USPS official website to have your mail forwarded to your new place. Even with mail forwarding, you should still update your address with individual organizations and companies.

To prevent service lapses and past-due bills, you need to inform your utilities and service providers about your relocation plans. Contact telephone, cable, internet, electricity, gas, water and other municipal services. Arrange for the utilities at your old home to be disconnected on moving day and have them reconnected at your new residence by the time you move in.

Other must-updates include your bank, credit card companies, stockbrokers and other relevant financial institutions. For a full list of institutions to contact, read more here.

Source: zillow.com

Settling into Your New Home, Neighborhood and Life

So the movers have left you awash in a sea of boxes. What’s next?

Unpacking requires just as much thought as packing. Get started with these expert unpacking tips.

Then, when you’re feeling settled inside, make your move outside by putting down new roots in the community. Here are tips for quickly becoming part of the neighborhood. Hint: Most tips include actually leaving your home and talking to new people.

Make the first move

In some places, neighbors will deliver a casserole before the moving vans leave. Oh, wait: That was in 1954. These days, everyone’s working, shuttling kids, maybe taking care of elderly parents. We just don’t have the bandwidth to think about new people in the neighborhood. So don’t wait for neighbors to make the first move. Knock on doors and introduce yourself. Have a house warming and invite the block.

Be friendly

The more open you appear and act, the more likely you are to meet new people. Sip lemonade on your porch in the evening instead of binge watching Netflix inside your home. Say hi to folks who are walking their dogs or taking an after-dinner stroll. Have a ready question that will start them talking, like, “I’m new to the area. Where’s the best dry cleaners?” Or “is there a dog park nearby?” Any subject that lets neighbors know you’re a new kid on the block and looking to engage with them.

Shop local

The best way to feel part of a neighborhood is to go where other locals go. Scout out the popular markets, pharmacies, coffee bars, burger joints and bakeries. Stop at neighborhood bars after work and sit at the bar where you’re more likely to strike up a conversation. Introduce yourself and get to know proprietors and cashiers. It’s much nicer to enter a store and hear, “Hello, Sarah!” rather than, “Can I help you, ma’am?”

Join in

As soon as you unpack the last box, become a member of community and neighborhood groups, either in person or online. It’s a great way to meet people and become involved in issues that matter to the entire area. If your neighborhood has a listserv or social network, sign up. These online chat areas are great resources for everything from pediatricians to plumbers.

Join a house of worship

No matter what your spiritual path is, houses of worship aren’t only about God. They help build communities that care and support each other. You can establish a friendship network by attending services, suppers, lectures and charitable activities the group sponsors.

Volunteer anywhere

Volunteering warms your heart, helps others, and creates friendships. If you have school-age children, volunteering to help at school is a quick way to connect with other parents. Or pick a cause that you care about: work for a candidate, stock a food bank, read stories to school kids, even hold babies in hospitals. Each activity will give you purpose, provide a valuable service, and help meet people with similar interests and hearts.

And don’t forget to…

• Contact your college alumni groups and connect with former classmates in your new area.
• Visit local parks and rec centers to help you and your family meet new friends.
• Frequent your local library, where you’ll be surrounded by other readers.

Source: zillow.com

Smart Ways to Build Equity in Your New Home

Now that you’ve invested in a home, how do you increase its value?

That’s called “building equity.” Equity is the market value of your home or property, minus your outstanding mortgage debt. So, for example, if you can sell your home for $450,000 and you still owe $100,000, you have $350,000 in equity. Building equity is one the biggest financial benefits of ownership.

If you live in a market where home values are rising, yours may float up with the rising tide and your equity will increase without doing a thing.

Or you can work on growing your home’s value by decreasing the amount you owe and/or increasing the value of your property. Here are some ways to do both.

Mortgage payments

Part of every mortgage payment goes towards paying off your loan’s principal and interest, with most of the payment going to interest in the loan’s early years. You can use Zillow’s amortization calculator to estimate how much money will be paid over the life of your loan for principal and interest. If you pay down the principal faster, your equity should increase faster. This can be done a few different ways.

Paying more: If you have a 30-year mortgage, adding more to your payment either monthly or when you have extra cash can help you gain equity. If you pay more, make sure your lender applies it to your principal. This is a great way to use your tax refund, a bonus from work or an inheritance.

Paying faster: You could divide your monthly mortgage payment into two bi-weekly payments, for a total of 26. So instead of 12 payments a year, you make the equivalent of 13, paying down your mortgage faster and gaining more equity. But make sure to check with your lender first to make sure they accept bi-weekly payments. And make sure all the extra money goes immediately to the principal instead of waiting for the second half-payment. Reputable lenders will not charge a fee for bi-weekly payments.

Refinancing: If you have a 30-year mortgage, you might want to consider refinancing to a 15-year loan, which has a lower rate. Most consider this worthwhile only if you can drop your interest rate by at least 1.5%. Factor in any closing costs before making this move. Also make sure your mortgage doesn’t have a penalty for pre-payment. It’s not common, but it’s better to check.

Before you decide on any of these options, consider if it’s really the best use of your money. If you’re not maxed out on employer-matched saving accounts, perhaps you should be putting extra money into your 401(k) rather than paying off a low-interest mortgage. It’s smart to talk with a financial advisor to determine the best investment strategy for you.

Also make sure you have an emergency fund, typically 6 months of savings in case you fall ill or lose a job.

Renovate wisely

Making smart improvements and adding the right amenities to your home can also increase its market value, which means more equity for you.

How do you know which projects will bring the best return on your investment? Even though you’ve just moved into your new place, there are home improvements buyers typically love: bathrooms, attics, entrances, kitchen updates, garage doors and siding. Popular features can vary by area and home type, so consider what’s in demand in your market.

Also, be mindful of your market as you’re thinking about how much to invest in improving your home. The realities of a buyers or sellers market will have an impact on how much return you’ll get when you sell.

You can find more inspiration, ideas and guidance in Zillow Porchlight home improvement articles.

For new homeowners, Zillow’s design and home improvement videos show you how to tackle your first project.

Source: zillow.com