You’ve found your dream home and everything is falling into place beautifully. Congratulations! There is so much to process when buying a new home, it’s enough to make your head swim. When looking for a home loan, for example, you may be uncertain about homeowners insurance and you’re not alone. Use this quick guide to familiarize yourself with it before making a decision.
Homeowners Insurance 101
Insurance is purchased to allow you to rest assured knowing your investment and future is safe and secure. There are a lot of things you may consider important in your life and your family, pets, and your home likely top the list. Consider the following tips when looking for a homeowners insurance policy for your new home.
Go Into The Details and Supplemental Policies
Generally speaking, details are important regardless the venture, but with your home and future at stake, taking the time to go over the details and fine print of your plan is vital. You want to think comprehensively, making sure to consider every possible angle and outcome. Detailed supplemental policies include, but are not limited to:
- Additional personal property “valuable articles” endorsement.
- Protection from flood damages.
- Sewer backup.
- Protection from damages caused by earthquakes
Don’t Forget About It
Explore all possibilities of what could go wrong so you don’t unintentionally leave anything out in the initial setup of your homeowners’ policy. Remember, a general rule of thumb is that it’s never safe to assume. No question is a dumb question and there’s nothing that could happen that isn’t worth discussing. As the years go by, it’s good to review your policy periodically to make sure you didn’t leave anything out.
Find Ways to Lower The Cost
You may notice that your homeowners insurance premiums will rise every year. Don’t be alarmed, however, as the cost of insurance rises along with inflation. However, there a few things you can do to get your cost down as low as possible.
- Before you sit down to speak with an insurance representative do research on their competitors’ pricing. They may state that it is a fixed price, but don’t be deterred. Now is the time for negotiation. Sometimes you may even find better luck with a different agent. The point is, don’t be afraid to stand your ground in negotiations.
- Don’t include your land value in the equation of overall value, you’ll be paying more when your land isn’t at any risk.
- Look to add multiple policies with the same insurer which may give you leverage for lower pricing.
- If you’re a loyal customer, seek out a discount. Often times, customers who hold policies for 5 years or more can save up to 10% with the same insurer.
Shop Around and Negotiate
It may take some time, but the savings can be well worth it. Check out this price comparison tool and ask around. The National Association of Insurance Commissioners (www.naic.org) has information that can help you choose, including complaints filed which can tell you a lot about what to expect. Keep in mind that price alone should not be your only consideration. Ensure that who you decide to go with is of quality service that will deliver what you expect during a claim year after year.
Find the Homeowners Insurance Plan to Fit Your Needs
There are so many decisions to make when buying a house and it can be overwhelming. Taking one thing at a time and working with an experienced real estate agent eases the load. It’s important to protect your investment with comprehensive homeowners insurance. Use this guide to get started today.
The Lippincott Team is your Cypress and Northwest Houston area source for real estate investments and information. Contact Us to learn more about buying a home or for assistance with any real estate need.
Buying a house is a dance of negotiations, offers, and counteroffers. As a buyer, you want your offer to stand out among all other potential offers. There are several tactics buyers often employ to make their offer more attractive. One such tactic is waiving certain contingencies.
The Most Crucial Contingencies for Your Real Estate Contract
Contingencies allow you to back out of an offer on certain conditions. They’re there to protect you in case things aren’t as they seem or when certain events occur. While waiving some contingencies can be a strategic move to ensure your offer will be taken, there are other contingencies you really don’t want to remove. The following 4 are the most important contingencies to keep when buying a home.
The appraisal contingency is the most important one, if for no other reason, because it could potentially save you a lot of money. Once a seller accepts your offer, your lender will order an appraisal. A problem arises, however, when the appraisal comes back lower than your offer price. With an appraisal contingency, you can place certain conditions on the offer in terms of the appraisal. You can stipulate that the appraisal must come within a certain percentage of the sale price. This will allow you to back out of the offer if you feel you’re overpaying.
The inspection contingency protects you against unseen structural and other issues in the home. It allows you to have a licensed inspector to check the property once you sign the purchase agreement. After the inspection, you can negotiate with the seller concerning repairs you want them to make. If no agreement is reached, you can back out of the offer without losing any money.
This contingency is important if you’re needing to sell your current home in order to buy the new one. If you’re current home doesn’t sell in the specified time, you can back out of the offer on the new one. While this is crucial when you need the equity in your current home to purchase a new one, it may drive some sellers away.
What happens when you make an offer on a house, but the financing falls through? A financing contingency ensures you will get your earnest money back in the case that you can’t get the home loan. You typically will have a certain amount of time to obtain a mortgage, often as many as 14 days. If the financing falls through, you are no longer obligated to buy the house.
Protect Yourself When Buying a House
You want to make sure you’ll get the best price possible for your new home. While waiving some contingencies may give you the edge you need in some cases, those contingencies are there for a reason. They’re for your protection. Make sure these 4 must-have contingencies for your real estate contract are non-negotiable.
Contact Us to learn more about buying a house with The Lippincott Team or for assistance buying a new home.
Buying a new home is an exciting, and sometimes overwhelming, process. There are so many factors to consider, research to complete, and decisions to make. Sometimes you don’t know where to begin. It’s ok. It will be over soon! Take a deep breath and get started with this buyer’s guide to new home features.
Top 7 New Home Features
It’s important to know what you’re looking for before you begin your search. Take some time to prioritize the features you value most. Then find an real estate agent you can trust. Turning to a good agent for help buying a home will reduce your stress and ensure you find the absolute best home for you and your family. Afterall, Houston area realtors know the market AND have invaluable resources to help you evaluate all your options.
1) Location is everything.
Location is a huge factor in determining your overall enjoyment in a house. And it’s a feature you cannot change after you buy the house. How close is the house to your work? Don’t forget your morning commute is every day. Note the ease of travel to all the places you typically frequent. Grocery store, post office, shopping centers, and entertainment venues are some popular examples. The ease of access, local parks, and noise factor are other location-influenced features to consider.
2) Gotta love the layout.
How many bedrooms and bathrooms do you need? Don’t look at anything less. You’ll be doing most of your living inside your house, so don’t scrimp on size. Cramped quarters make no one happy. Do you want a single-story, 2 story, or 1 ½ story home? Think about upcoming changes in your number of occupants. And at the end of the day, do you like the general layout of the house?
3) A beautiful day in the neighborhood.
You’re not just buying a new house, you’re buying into a new neighborhood. Drive around the block. There are many northwest Houston neighborhoods to choose from, so take a good look around. Notice the other houses nearby and pay attention to yard and maintenance upkeep and general care. Is there a park, pool, and clubhouse nearby? Try to meet as many neighbors as you can. This will give you two things: insight into the neighborhood from people who know, and an idea of who your neighbors could be.
4) Storage options.
One of the biggest regrets homebuyers express after buying a new home is lack of adequate storage space. Take a look at all the closets in and out of the bedrooms. Take a good look at the space in your garage. Make sure there’s plenty of space for everything you have now and plenty of room for growth.
5) All about the curb appeal.
Having pride in your home begins with what people see as they drive by. What will be the first impression of your friends and family members? How will others talk about your house? Take a look at the exterior features and condition. Does the landscaping catch the eye? Walk up to the front porch and take note of how visitors will feel as they approach. Is it warm and welcoming?
6) Light and lighting.
Adequate light inside and out is another key feature that can seriously affect your living experience in the house. Walk through every room during the day with the lights off. Do you get plenty of natural light with the curtains open? Next, take a look at the rooms with the lights on and curtains closed. Do you see any potential problem areas with low lighting? Take a look at the exterior lighting as well. You don’t want to be stumbling around in the dark at night. Finally, take a look at the style and condition of all the fixtures.
7) Energy efficiency.
Energy efficiency in your home is a huge concern right now. Do all of the appliances including the a/c meet Energy Star qualifications? Take a walk in the attic. Is it properly insulated? Are the windows energy-efficient? All of these factors can make a serious impact on your monthly utilities bill.
Your new home will likely be one of the biggest investments you ever make. Take your time and choose carefully. Consider the features that are most important to you and don’t overlook anything you may regret later on. A little extra time and effort before you buy will reap benefits for years down the line. Use this buyer’s guide to new home features to get started.
Contact Us for help buying or selling a house or for more great tips on buying a new home.
Buying your first house is exciting and scary and wonderful, all at once. There are so many things to consider, review, and decide on. It can be overwhelming. It is, after all, one of the biggest investments you’ll ever make. You want to make sure you’ll make a good decision.
Your First-time Home Buying Process
You may already be ready for this process to be over with. You’ve likely already looked at some homes, or at least taken a look at some online listings. You were ready to find the perfect home, make an offer, and move in yesterday. Before you go any further, consider the following 7 home buying tips:
1) Get pre-approved before anything else.
A pre-approval letter shows sellers you’re ready to put in a serious offer. Many won’t want to move forward if you don’t already have one. Before even looking at houses, get a pre-approval. Ask for referrals and recommendations for reputable mortgage brokers and interview several. You want to work with one that doesn’t hesitate to give you transparent information about their fees and processes. You want to know they have your best interest at heart and will research terms and rates from several lenders.
2) Hire an agent with experience.
We live in the DIY era, but some things are still better with professional help. Experienced Houston area realtors bring a wealth of information and resources to the table. They have relationships you can leverage for your benefit. They will help you navigate through the confusion of buying a home and make it an easier, smoother process for you. They’ll help research other comparable listings, give you advice on making offers, and handle the negotiations for you.
3) Be prepared to negotiate.
While we’re on the topic, be ready for negotiations. Lean on your agent. He or she will know what kind of market you’re currently in and how best to handle the negotiations. Try not to look at other listings. Sellers can list a home at any price they want. It doesn’t really have any bearing on the final sale price. Instead, let your agent take a look at comparable sales and pending sales. They’ll look at homes in similar condition and location that have sold in the last 3 months. A good agent will manage your expectations and give you an idea of what to expect.
4) Hire an experienced home inspector.
There can be many issues hidden from the untrained eye even in the newest of houses. An experienced inspector will protect you from walking into something you’ll soon regret. He or she will bring to light problems that could cause you unnecessary stress and money later on. At worst, they’ll uncover reasons to pass on the house. At best, they’ll confirm your decision to buy. The inspection discoveries could also give you leverage in negotiating the best price.
5) Know when to hold and when to fold.
Some issues you may find in the house may not be bad enough to warrant backing out. Minor aesthetic problems, needed upgrades, and small renovations may still be worth buying the house. They may also give you leveraging power when negotiating with the seller. It’s also a good idea to talk through your hopeful price and the highest price you’re willing to pay.
6) Consider HOA contract, fees, and property taxes.
Request to see the HOA contract and make sure you’re comfortable with the deed restrictions and fees. You don’t want unexpected surprises once you’re all settled in. While you’re at it, research property taxes in the area. Again, you don’t want any surprises.
7) Research the neighborhood.
You’re not just buying a new house, but becoming part of a neighborhood. Try to talk to some of your would-be neighbors to get a feel for the culture and events. Make note of local grocery stores, restaurants, and other places you’ll visit frequently. Research utility companies, cable and internet providers, and local services you use. Try to envision day to day life in this neighborhood with these neighbors.
A Place to Call Home
Remember, you’re looking for the place you’ll likely call home for a long while. It’s important to take the time to ensure you’re making the absolute best decision. You don’t want to find out you actually regret your decision after it’s too late to change anything. Use this guide to the first-time home buying process to get started.
Contact Us for more information on buying a new home or for other Cypress and North Houston real estate resources.
Considering buying your first home? Congratulations! It’s an exciting time of expectation and preparation. It can also be overwhelming. Especially going over all the financing options. It will be one of your biggest investments and you want to make sure you’re making the right decisions. But where do you begin?
Things to Consider When Financing Your First Home
When buying a home, mortgage lenders will analyze your creditworthiness. In a nutshell, they’re trying to get an idea of how much risk they’re taking on by lending you money. You want to take steps to make sure you’ll get the best rate possible. You also want to consider what’s best for you, both in the short term and for your long term goals.
Make Sure Your Credit is in Top Shape
Lenders will look at your credit history and score to determine their level of risk in offering you a loan. Check your credit report. If there are errors, file disputes to clean it up. If you’re carrying high balances on any cards, pay them down. Lenders like to see you carrying balances that are no more than 30% of your total credit limit. Lenders also look at your recent activity. Don’t open a lot of new accounts or make any big purchases like financing a new car or a boat just before applying for a home loan. Instead, make choices to lower your risk to lenders for best results.
Check Your LTV and DSCR
In addition to checking your credit, lenders will also look at two other factors in determining the pricing of your loan. One is your loan to value ratio (LTV). The LTV is the amount you’re borrowing divided by the purchase price of the home. This gives the lender an idea of the implied equity available in the collateral (your home) being borrowed against. The higher the LTV, the more risk a lender will see. More risk = a more expensive loan. You can lower your LTV by making as big of a down payment as you can.
Your debt-service coverage ratio (DSCR) is an assessment of your ability to make your mortgage payments. It is your monthly net income divided by your monthly mortgage costs. The greater your DSCR, the greater the probability you will be able to cover the monthly mortgage payments. This means less risk to the lender. For this reason, it’s important to include all qualifying income sources you may have when negotiating your mortgage with a lender.
Another reason to make a bigger down payment and get your LTV down below 80% is to avoid having to purchase private mortgage insurance (PMI). PMI lowers the risk a lender sees in a borrower by transferring a portion of it to a mortgage insurer. In most cases, a lender will require PMI anytime a borrower is making a down payment less than 20%. Making a down payment gives you instant equity in your home. More equity says less risk to a lender.
Fixed vs. Adjustable Rates
You will also want to consider whether a fixed-rate or an adjustable-rate or floating-rate mortgage is best for you. The rate on a fixed-rate mortgage will not change for the duration of the loan as long as payments are made on time. The rate may start off higher, but will remain constant. For new home buyers, sometimes an adjustable-rate or floating-rate mortgage is a good idea. Your payments typically start off lower, and increase in intervals over time. This is good for someone who expects their income to increase substantially over time. It’s also good for someone who plans on selling or refinancing before the rates change.
There are a few different loan types you can apply for. One choice you will make is whether you want a 15 year or 30 year mortgage. A 15 year mortgage typically has a lower rate, but higher payment amounts. Stretching the payments over 30 years will lower your payments, but increase the rate. A shorter term loan will help you pay it off faster and pay less interest. However, you may be able to accomplish the same thing with a 30 year mortgage by making extra payments. Just watch out for prepayment penalties.
You will also need to choose between a conventional loan, FHA loan, or a VA loan. Conventional loans are typically more difficult to get. They are fixed-rate mortgages not insured by the federal government. The qualifying requirements may be more stringent, but some things like PMI may be lower. A Federal Housing Administration (FHA) loan is easier to qualify for than a conventional loan. Down payment requirements can be as low as 3.5%. VA loans are given by the U.S. Department of Veterans Affairs to veterans and service people. They offer more favorable rates, typically without a down payment, and are generally easier to qualify for than conventional loans. VA loans often have a max limit. You must request eligibility from the VA prior to applying for the loan. Also, look for state and local government loan programs designed to encourage growth in certain areas.
Improve Your Odds
There’s so much to do in preparation for buying a home. Research, home viewings, decorations, and more. Don’t let financing your first home overwhelm you. Talk to a local real estate agent. He or she is connected to many lenders and can help guide you in the process. The Lippincott Team is your North Houston/Cypress area real estate resource. Contact Us for more information on buying your first home or to set an appointment.