Your Wealth Puzzle » Flood Insurance

The Real Cost of Home Ownership:Everything You Must Know

yourwealthpuzzle — Tue, 11 May 2010 18:57:21 +0000

Are you ready for home ownership? Owning a home is a big responsibility. If you don’t consider all of the costs involved and are not prepared for all of the expenses – some day you risk losing your home. Before you buy a new home, be sure to analyze and calculate and analyze again all of the expenses that you will incur. Let’s do a quick review of the real cost of home ownership.

What home ownership really costs:

The Cost of A Low Credit Score.

A low credit score could cost you double due to higher interest rates over 30 years.

When you start shopping for a home, one area they you may forget about is your credit. Before you pick out the curtains and paint colors, you absolutely must check your credit score. To just qualify for a loan and then to obtain a good interest rate on that loan, you need to have a good credit score; which is above 750.
But even if you do qualify for a loan based on poor to average credit, the interest rates you will pay on that mortgage loan will cripple you financially for the next 30 years, you don’t want that. Starting out with a lower interest rate on your mortgage loan will help to make home ownership a lot less costly over the long run.

The Cost Of Monthly Mortgage Payments.

You could lose your home if you miss your mortgage payment.

If you miss making your mortgage payments too many times, the bank will just take your home away from you. Keep your life simple, if you cannot afford the cost of the monthly mortgage payment, do not buy the home.
Work out your figures before you make any commitments. Be absolutely sure that your take-home pay is more than adequate enough to meet ALL of your expenses.
Do not buy the home expecting to make your monthly mortgage obligation based on a bonus you get every year – or sales commissions on projected sales – because the year that you don’t get that bonus or if the projected sales don’t materialize – you won’t have the funds to be able to make your payments.

And remember, it’s not your realtors job to make sure you have enough money to meet your monthly expenses, it’s the realtors job to sell you a house. Buy a home within your personal price range, do not over extend, you just risk losing that home someday.

The Cost of Homeowners Insurance

Miss your payments and the insurance company will drop you.

You never want to be without homeowners insurance. If you want to find out what your home really costs, have it burn down without having homeowners insurance. For pennies on the dollar you are buying peace of mind.

With a standard homeowners insurance policy your home is covered for the major perils…fire, wind, hail, theft, lightening and then you can buy additional coverage for other hazards.
If the replacement cost of your home is $250,000 your annual home insurance cost could range from $600 – $1000. That is cheap peace of mind coverage. Call your personal homeowners insurance agent for quotes and a review of coverages.

Flood Insurance is an insurance that some homeowners will have to buy while others will not. If you live in a flood plain, by law you will have to buy flood insurance. Check with your realtor and insurance agent.

Don’t Forget the Cost of Association Fees

If you are a part of a homeowner’s association there will be an association fee.

Homeowners’ associations take the business of association fees very seriously, and so should you. If you do not pay your association fee every month, the homeowners association can put a lien on your home; and collect when you sell it in the future.

Homeowners’ associations need your fees to keep the maintenance of the properties up, if there is a pool, the fees cover that maintenance, if there is a sign at the front entrance of the property, the fees pay for that.
Just remember that it is your obligation to pay your association fee; you agreed to that obligation when you moved in. If you don’t pay it when it’s due every month, the association will eventually get their payments….when you sell.

Real Estate Taxes

Miss paying your real estate taxes and you could lose your home.

You cannot control how much your real estate taxes will be; but you better make sure you make that payment every year, if you don’t, you will lose your home.

Be sure to include the real estate tax amount into your calculations of total expenses before you buy the house….real estate taxes are like your mortgage payment, you cannot miss the payments because you could lose your home. Your mortgage and your real estate taxes are the two largest costs of home ownership….if you have to struggle to make either of those payments, do not buy the house, you will regret it.

Maintenance & Renovation

The cost of maintaining your home.

Things will break, that is the cost of home ownership; you cannot get around that. Expenses to maintain your property are unavoidable and sometimes unpredictable. Be ready for the unknown.

Do yourself a huge favor, make sure you have an “emergency fund account” with money set aside for the what-if’s. Now you own it, now you can change it. Your home is your castle and you want it to express you…guess what…you got it, that costs money. Are you sure you’re ready for home ownership?

There will be other unexpected, unavoidable expenses along the way. When you own a home it pays to be ready for the unknown. Home ownership can be expensive but with proper planning you can make it less challenging on yourself. Just be prepared.

Set up a special savings account for yourself with about 6 – 9 months of income in it; you can earmark this money for your unknown expenses and your renovation projects, then if there’s any money leftover, you can invite the neighbors over for a cookout.

My Flood Insurance

yourwealthpuzzle — Mon, 06 Jul 2009 18:09:20 +0000

If you own or rent a home, do you need flood insurance? Floods can happen anywhere and at anytime; so theoretically – everyone needs flood insurnace.

Even low to moderate flood risk areas have natural occurring floods. Just because you live in a low to moderate risk area do not feel as if you do not need flood insurance. Statistics show that twenty-five percent of all flood insurance claims are filed in low to moderate risk areas.

Many people believe that their homeowners insurance will cover a flood – no it does not cover for damages caused by a flood. If you have the proper coverage, your homeowners insurance policy will cover “water-backup” from your sump pump – but “water-backup” is entirely different from a flood.

Flood insurance is purchased through insurance agents across the country – but flood insurance is underwritten by the federal government – not the insurance agent. To learn more about the National Flood Insurance Program through the federal government visit the NFIP website.

Flood Insurance

yourwealthpuzzle — Mon, 06 Jul 2009 18:07:31 +0000

Where can you learn more about flood insurance? Start by looking at the National Flood Insurance Program (NFIP) website.

Most homeowners and renters can be eligible. Some people think that they may be ineligible due to where they live, this is untrue. You can get flood insurance even if you do not live in a flood plain. And you can get flood insurance if your property has been flooded before. Now if you live in a flood plain or flood hazard area and you have a mortgage through a lender that is federally regulated flood insurance is required.

The flood insurance premiums depend upon where you live. The premiums will be lower if you live in a low to moderate flood risk area vs a high risk area.

There is a waiting period before the flood insurance policy becomes effective. This waiting period is usually 30 days after the purchase of the policy.

Flood insurance is not a federal disaster assistance loan program. If you use the flood insurance after a flood disaster – you do not have to pay back the federal government like you would with other federal disaster programs. Talk to your insurance agent today about flood insurance

Everything You Need To Know About Credit Insurance

yourwealthpuzzle — Fri, 03 Jul 2009 21:56:32 +0000

There seems to be insurance available for everything.

You can get insurance for your autos, home, jewelry, silverware, art deco, skidoo, boat and your life. You can get insurance for flooding disability, traveling and your pet bird. You can even get credit insurance. Credit insurance is different from credit scores and credit ratings.

If you’re not exactly sure what credit insurance is, don’t be alarmed, not too many other people know what credit insurance is either. Let’s talk about that.

The Basics About Credit Insurance:

Understanding Credit insurance:

When you take out a car loan or mortgage and you think you will have a hard time making payments on that loan at any time during the life of the loan, you would look into credit insurance.
Credit insurance pays for loans when the person who took the loan out is unable to.
There are different types of credit insurance.
You can get credit insurance to cover your loan payments if you become ill or are injured from an accident.
You can get credit insurance to pay off the loan if you die before it is paid off; so that your heirs are not saddled with those payments.
Another type of credit insurance will make your loan payments if you lose your job and are able to make the payments yourself.
With credit insurance you avoid the risk of losing your property if you cannot make your loan payments.
Your home and your automobile are two of your most valuable assets – if you have a loan on them and do not have credit insurance you run the risk of losing them.
Credit insurance is optional when you apply for a loan.
The lender must ask you if you want it included in your loan.
The lender cannot make you purchase credit insurance without your permission.
The lender cannot slip it into your loan without your approval.
It is against the law to make credit insurance mandatory on a loan.
It is also against the law to include credit insurance in a loan without your knowledge and consent.
When applying for a loan, ask the lender to run a quote on your loan payment amount with and without credit insurance included.
These quotes will give you a choice.
Ask the lender at the time of the loan application whether the credit insurance will cover your full loan or just a portion of the loan.
Some lenders just offer partial loans, so be sure to ask.
Ask the lender if you can cancel the insurance at any time; and if you do cancel, what are their refund policies.

Credit insurance can be of great value to you. It’s the type of insurance you may not think you need, but when you cannot make your loan payments, you’re glad you have it. Work with your lenders to learn as much as you can before you buy it.