Before You Buy – Homeowners Insurance Tips and News Fri, 28 Jun 2013 15:01:02 +0000 en-US hourly 1 Before You Buy Wed, 21 Jul 2010 17:49:57 +0000 For most Americans, owning your own home is part of the American Dream. Underneath all of the arguments about whether or not buying a house is a good investment, and all of the bickering about Fannie May, Freddie Mac and all of the other housing lenders and programs, most Americans really do want a corner of this globe to call their own. And most of us are willing to pay the homeowners insurance, utilities, property taxes, and other related expenses that go with having a house of our own and a mortgage.

But before you buy that first home, take a moment to consider the fact that you could be putting yourself in a really bad situation if you go into the process with poor credit. We know that you can get a mortgage. But should you? The sector of the mortgage industry that caters to those with credit problems is quickly gaining a bad reputation for putting people into bad situations with little regard to what’s actually good for them.

Consider this: if your credit is poor, you’re going to pay a higher interest rate. While that may not seem like a big deal, a few points on your interest rate adds up to a whole lot of dollars over the course of a thirty year mortgage. In most cases, whether you want to hear it or not, you’d be better off spending a year or two really focusing on paying off your other debts and building some positive credit history than jumping into a mortgage knowing that your credit is poor.

Also, start saving before you buy a house. Ideally, you should have at least 20% of the total price of the house as a down payment. We know, this has gone the way of the dinosaur. We know most people, even with bad credit, can get a house with nothing down. And we also know that most realtors will encourage you to buy more home if you have that much to put as a down payment.

When it comes to buying a house, though, you need to realize that the only person who’s going to really look out for your best interests is you. The realtor is looking out for a commission, and 3% of more is more. The same holds true of lenders. Show some discipline when it comes to this, and save up for the down payment, then buy a home that you can afford to put 20% down on.

Waiting until your credit is good and you actually can afford to buy a home will not only save you a lot of money, but will also make it much less likely that you will lose your home to foreclosure. So, slow down. Buy a house, but wait for the right time and opportunity.

Photo via juhansonin

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Before You Buy that Fix-It-Up House Mon, 21 Jun 2010 19:34:05 +0000 In recent years, there has been a great deal of buzz around the idea of buying a home that is in, shall we say, less than perfect condition and fixing it up, either to live in or to sell.

Some people have even managed to make a very good living out of “flipping” houses. They buy houses in poor repair cheap, fix them up, and sell them for a fast turnaround and a good profit. There are some things to consider before doing this, however, including homeowner’s insurance, the time and cost of repairs, and whether or not you will be able to live in the house while you are restoring it.

While the slowdown (crisis, anyone?) in the housing market has made this practice a bit less attractive, at least as a business option, many people do still buy homes that need a considerable amount of work. Of course, the idea is that, once the work is done, they will have a dream house that not only was less expensive than buying a home in pristine condition, but also bears the labor of love that goes into making the house in the image that they want.

But there are some things to consider before going out and diving head first into a house that needs some work. A little asking around will dredge up all kinds of horror stories of people who bought fix it up homes, only to find that there was more work to be done than they had thought. A lot more work, more often than not.

Will your family be living in the home while you’re working on it? If so, is the home really going to be livable? Keep in mind that even relatively minor repairs like patching drywall can make things very uncomfortable for those who have to live in the house, and major repairs just shouldn’t be done while people are in the house.

That’s not to say no one should buy a project house. If your family has a high degree of tolerance for such things, that’s great. But, most families don’t. If you can afford to, live elsewhere while you are fixing the house up.

You should also consider the costs of homeowners insurance. Often, some of the safety flaws inherent in homes that are in need of repair can cause your premiums to be much higher. If you do buy a project house, check with your agent to see which repairs would affect your premiums and make sure you let him know as soon as you complete those repairs.

Photo via Bert K

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