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How Does Home Insurance Work? How To File an Insurance Claim, and More

October 30, 2020

how home insurance works

Milaspage / Getty Images

Nobody expects the worst to happen—a hailstorm, a break-in, someone gets burned at your backyard barbecue—but unfortunately, these types of accidents can and do happen. And that’s when home insurance really comes in handy.

Home insurance helps homeowners pay for an array of disasters that can take place on their property. But how does homeowners insurance work, exactly—and how do you go about using it when you need it?

In this installment of our Home Buyer’s Guide to Home Insurance, we’ll walk you through the ins and outs of how home insurance works, how (and whether) to file a claim, and what could happen as a result (e.g., a higher insurance rate).

How does home insurance work?

Home insurance works just like other types of insurance—your car or health insurance, for example. You pay a fee, called a premium, typically once a year in a lump sum. In exchange, your insurance company promises to help you out financially if something bad (and expensive) happens to your home—e.g., a tornado rips through the neighborhood, a burglar smashes your bedroom window, or your dog bites a UPS driver.

While the benefit to homeowners is clear, home insurance companies aren’t just covering these calamities out of charity. These enterprises make a profit by playing the odds that most homeowners won’t have a disaster wreck their home, so much of their members’ premiums will remain in their coffers to pay for the few who do file claims.

“Like other forms of coverage, insurance is based on pooling risk,” says Amy Danise, chief insurance analyst at Forbes Advisor. “Put simply, a lot of people pay into the pool through premiums, and when someone has a problem or claim, the pool is able to pay out to help them.”

This is how home insurance companies manage to stay in business—while providing a safety net and peace of mind to homeowners.

How to file a home insurance claim

So what happens when something bad does happen to your home—say, you’re awakened in the middle of the night by a burglar shattering a window or a tree falling on your roof?

Before you do anything, be sure to alert the authorities (like the police) if necessary. Make sure you evacuate any building that is not safe; go to a hotel if necessary and keep the receipts to submit to your insurance company later.

Once everyone is safe, you can move onto the insurance itself. Don’t delay, since many claims must be filed fairly soon after the incident occurs.

Most insurance companies allow policyholders to file claims online or over the phone. One benefit with calling is that you can ask some quick questions of a representative, who can help give you an overview that will help you decide whether to file a claim or not.

The first questions to ask an insurance representative:

  • Is the problem you experienced typically covered?
  • Will it surpass your deductible (the amount you must pay before your insurance kicks in)?

For example, if a tree branch fell on your home and barely scratched your gutters, you likely wouldn’t want to go through the claims process, since the damage is probably less than your deductible. Yet if the incident is likely more costly to repair than your deductible, then it may be worth filing a claim.

If you decide to file a claim, your insurance company will typically assign an adjuster to visit your home, assess the damage, and  estimate how much it will cost to repair (or replace). After this, your insurance company may tell you to go ahead and get the damage fixed, then submit your receipts for reimbursement up to a certain amount. It might also write you a check upfront.

What happens if my home insurance claim is denied?

Of course, there’s also a possibility your insurer will deny your claim. There are a few common reasons this can happen:

  • The incident is not covered by your policy.
  • You filed your claim too late.
  • The damage is determined to have resulted from normal wear and tear or lack of maintenance on your part.
  • The damage doesn’t surpass your deductible.
  • You misrepresented the incident (also known as insurance fraud).
  • You haven’t paid your insurance bill or you let your coverage lapse.

Similar to how your car insurance works, your insurance company might also try to get someone else’s insurance company to pay for the damage—say, if a contractor accidentally started a fire while working on your house, or a neighbor’s obviously rotted, dead tree fell through your roof.

If you feel your insurer has wrongfully denied your claim, you can typically appeal its decision, try to negotiate with the insurer on a compromise, or, if necessary, hire an attorney to pursue legal action.

Should I file a home insurance claim? Will my rates go up?

Now, you might be wondering: If I file a home insurance claim, will my rates go up? That will depend on your policy and the type of incident, as well as your own track record (whether you’ve filed claims before or not).

For instance, certain claims like theft and dog bites are more likely to cause your rates to go up because these incidents could happen again. Other types of claims, like a once-in-a-lifetime windstorm that knocked down every single tree on your property, are one-off events that are less likely to affect your rates.

Bottom line: Yes, your rates may go up a bit if you file a claim. But if the damage to your home is extensive—and expensive to fix—then a small increase is probably still worth it since it will save thousands of dollars in repairs.

Think of it this way: The average insurance payout is about $8,800 per claim—do you have that kind of money sitting around to fix the giant hole in your roof or to replace a sopping wet drywall after a pipe bursts? If not, then filing a home insurance claim is probably worth every penny.

The post How Does Home Insurance Work? How To File an Insurance Claim, and More appeared first on Real Estate News & Insights | realtor.com®.

Need Cash? 3 Ways To Tap Your Home Equity—and Which One’s Right for You

October 30, 2020

home equity

aluxum / Getty Images

You need to come up with some cash, fast. Maybe you have a leaky roof that desperately needs fixing or you need help paying for your kid’s first semester of college. But where do you turn?

If you’re a homeowner, you have options that involve tapping into your home equity—the difference between what your home is worth and how much you owe on your mortgage.

There are three main ways to tap into home equity, but sorting through those options can be confusing. To help, we’ve boiled down what you need to know about some of the most common home financing options—cash-out refinance, home equity loan, and home equity line of credit—and how to determine which one is right for you.

1. Cash-out refinance

How it works: A cash-out refinance replaces your existing mortgage with a new loan that’s larger than what you currently owe—and puts the difference in your pocket. With a cash-out refinance, you’re able to receive some of your home’s equity as a lump sum of cash during the process.

“This only works if you have equity in your home, either through appreciation or paying down your mortgage,” says David Chapman, a real estate agent and professor in Oklahoma.

Pros: If you need cold, hard cash in your hands, a cash-out refinance can help you get it. You can use this money for whatever you want—upgrades to your house, even a vacation. Another positive? If interest rates are lower than when you first got your loan, you’ll get to lock in lower interest rates than you’re paying now.

“Now is the time to look at a cash-out refinance due to the low interest rate environment,” says Michael Foguth, founder of Foguth Financial Group.

Cons: You’ll have to pay closing costs when you refinance, though some lenders will let you roll them into your mortgage. The costs can range from 2% to 5% of your loan amount. And, depending on the circumstances, if interest rates have gone up, you could end up with a higher interest rate than your existing mortgage.

Also, you’ll be starting over with a new loan and, unless you refinance into a different type of mortgage altogether, you’ll ultimately be extending the time it takes to pay off your home loan. Even if you get a better interest rate with your new loan, your monthly payment might be higher.

When to get a cash-out refi: A cash-out refinance makes the most sense if you’re able to get a lower interest rate on your new loan. (Experts typically say that at least a 1% drop makes refinancing worth it.)

This option also works well for home renovations, since (ideally) you’ll be increasing your home’s value even more with the updates. In essence, you’re using your home’s existing equity to help pay for even more equity growth.

While you could use your cash-out refinance to pay for anything, financial experts typically advise that you spend the money wisely, on something that you see as a good investment, rather than on something frivolous.

2. Home equity loan

How it works: Unlike a cash-out refi, which replaces your original loan, a home equity loan is a second additional mortgage that lets you tap into your home’s equity. You’ll get a lump sum to spend as you see fit, then you’ll repay the loan in monthly installments, just as you do with your first mortgage. The home equity loan is secured by your house, which means that if you stop making payments, your lender could foreclose on the home.

Pros: With a home equity loan, you get a huge chunk of cash all at once. A home equity loan lets you keep your existing mortgage, so you don’t have to start over from year one. Your interest rate is typically fixed, not adjustable, so you know exactly what your monthly payment will be over the life of the loan. And, another plus is your interest may be tax-deductible.

Cons: Compared with a cash-out refinance, a home equity loan will likely have a higher interest rate. Home equity loans also come with fees and closing costs (though your lender may opt to waive them). Another downside? You’re now on the hook for two mortgages.

When to get a home equity loan: A home equity loan makes more sense than a cash-out refi if you’re happy with your current home loan, but you still want to tap into your home equity, says Andrina Valdes, chief operating officer of Cornerstone Home Lending. It can also be handy for home renovations that add value, though of course you’re free to use it however you want.

“A home equity loan could be used in cases where you may already have a low mortgage interest rate and wouldn’t necessarily benefit from a refinance,” says Valdes.

3. Home equity line of credit

How it works: A home equity line of credit, aka HELOC, is similar to a home equity loan—it’s a second mortgage that lets you pull out your home equity as cash. With a HELOC, however, instead of a lump sum amount, it works more like a credit card. You can borrow as much as you need whenever you need it (up to a limit), and you make payments only on what you actually use, not the total credit available.

Since it’s a second mortgage, your HELOC will be treated totally separately from your existing mortgage, just like a home equity loan.

“With a HELOC, the homeowner will need to make two payments each month—their mortgage payment and the HELOC payment,” says Glenn Brunker, mortgage executive at Ally Home.

Pros: You borrow only what you need, so you may be less tempted to spend this money than a lump-sum home equity loan. You pay interest only once you start borrowing, but you can keep the line of credit open for many years, which means your HELOC can act as a safeguard for emergencies.

HELOCs typically have lower interest rates than home equity loans, and they typically have little or no closing costs. (Again, your lender might offer to waive these fees.) HELOCs are often easier to get because they’re subject to fewer lending rules and regulations than home equity loans.

Cons: HELOCs usually have adjustable interest rates, which means you can’t necessarily predict how much your monthly payment will be. Most HELOCs typically require the borrower to pay interest only during what’s known as the draw period, with principal payments kicking in later during the repayment period. If you don’t plan properly or you lose your job, you might be caught off guard by these higher payments down the road. As is the case with other second mortgages, your bank can foreclose on your house if you stop making payments.

“Once a HELOC transitions into the repayment period, the borrower is required to make both principal and interest payments,” says David Dye, CEO of GoldView Realty in Torrance, CA. “Many borrowers forget about this transition and are often startled by the sudden increase in minimum payments.”

When to get a HELOC: A HELOC makes the most sense if you want the flexibility and peace of mind of knowing you can easily access money in the future, says Mindy Jensen, a real estate agent in Colorado.

“A HELOC is great to have just in case,” says Jensen. “You have access to it, but are not committed to taking it or paying for money you don’t have an immediate need for.”

And compared with an actual credit card, a HELOC has a much lower interest rate, so it’s likely a cheaper financing option for you.

The post Need Cash? 3 Ways To Tap Your Home Equity—and Which One’s Right for You appeared first on Real Estate News & Insights | realtor.com®.

9 Surprising Things Home Insurance Doesn’t Cover: Do You Know Them All?

October 28, 2020

home insurance

tiero / Getty Images

Whether your home is hit by lightning, hail, or some other calamity, you’ll be awfully glad you have a home insurance policy in place to help foot the cost of repairs.

Yet while homeowner insurance typically covers a variety of common hazards that can befall your home, don’t get too confident, because it may not cover every mishap that may come your way.

The exact instances that are and aren’t covered by a typical home insurance plan depend entirely on the details of your policy—and, contrary to what you may think, each policy is different.

“Insurance policies are like snowflakes; no two are exactly the same,” says Ashleigh Cloud Trent, an insurance adviser with Swingle Collins and Associates in Dallas.

Generally speaking, most home insurance policies cover natural disasters, certain crimes, and accidents. Think: Wind and hail, dog bites, theft and vandalism, snowstorms, burst pipes. Beyond that general framework, however, there’s no blanket guarantee you’ll be covered.

In our latest installment of our Home Buyer’s Guide to Home Insurance, we’ll flag certain things that most standard policies exclude. Don’t bank on your insurance company footing the bill for the following unfortunate situations.

1. Does home insurance cover floods?

If the “flood” you speak of is a puddle of water from a burst pipe, yes, insurance should cover it.

But if the flood is due to excessive rain, a hurricane, or an overflowing river, most standard home insurance won’t cover it. (The National Flood Insurance Program defines flooding as “an excess of water on land that is normally dry, affecting two or more acres of land or two or more properties.”)

“Many homeowners don’t realize that flood damage is not covered under typical home insurance policies,” says Amy Danise, chief insurance analyst at Forbes Advisor.

“With many parts of the U.S experiencing floods, this is one of the biggest mistakes a homeowner can make.”

With both floods and earthquakes (more on that below), the damage caused by these natural disasters can be so extensive that private insurance companies can’t afford to provide coverage for all (or will only provide costly policies to select homeowners).

Luckily, though, the federal government has stepped in, and is now the primary seller of flood insurance.

If you live in an area that’s prone to floods, you’ll want to purchase this additional flood insurance. This is especially true since flooding tends to cause expensive damage—even 1 inch of floodwater can result in $25,000 in repairs, on average. So don’t buy a home in a flood-prone zone without it!

2. Does home insurance cover earthquakes?

If you live in an area with earthquakes, you’ll need to purchase additional insurance here, too.

Most insurance companies offer special earthquake policies or, if you live in California, you can purchase it from the California Earthquake Authority (most Californians live within 30 miles of an active fault line, so it makes sense to do so).

Your insurance company may offer you a discount or even a rebate when you pay for certain improvements that help your home better withstand earthquakes.

3. Does home insurance cover water leaks?

It depends. Damage caused by slow leaks—technically “seepage and leakage”—can be denied coverage. Water damage has to be “sudden and accidental,” explains Trent.

“A prime example is a client whose contractor nicked a pipe behind a wall. The pipe was connected to a seldom used guest bathroom, so nobody noticed the leak,” he recalls.

“When they rented out the home years later, the tenants called a few months later, to report that the floorboards were warping.”

The slow leak caused $25,000 in damage—and the homeowner insurance didn’t pay out a nickel.

4. Does home insurance cover mold?

This depends on what caused the mold to appear. A policy might cover mold if it’s the result of a “covered peril,” such as water damage from a burst water heater or firefighters dousing flames on your home.

However, mold won’t be covered if it was caused by perils outside your policy, such as flooding (see above), or preventable ongoing problems, like a slow water leak or high humidity.

5. Does home insurance cover sewer and drain backups?

If the sewer backs up and fills your house with water, you might have to clean up the mess yourself—and on your own dime.

“In a lot of places, when there’s serious rain, the sewers and drains can back up into people’s homes,” says Trent. “Not all policies will cover that.”

6. Does home insurance cover wear and tear?

Sorry, your home insurance policy also won’t pay for damage caused by normal wear and tear.

They’re there for actual emergencies that can’t be avoided, not damage that could easily have been prevented. So make sure not to neglect little problems at home that could balloon into bigger problems later on!

7. Does home insurance cover damage from renovations?

A lot of homeowners don’t realize they need to take out a specific renovation policy if they’re doing major work, even if the contractor has a builder’s risk policy.

According to Trent, the builder’s risk policy covers only new construction, not the existing structure.

“It’s OK if you’re just doing cosmetic updates; but if you’re taking the roof off, that’s more than a standard homeowners’ policy is designed to protect,” she says.

Even if the house is a tear-down, a renovation policy will cover any liability issues for people who wander onto the property and get hurt.

“If someone gets hurt on the property, you’re liable,” she explains. “If neighborhood kids are playing around in the empty house, that’s your liability.”

8. Does home insurance cover historically accurate repairs?

If you live in a landmark area and you need permission from the historical society to make changes to your home, there might be a cap on how much your insurance will pay to fix a problem. And the historical society might dictate the kinds of material you must use on your home, no matter how expensive it is.

“A hailstorm decimated all of these historic homes in Dallas recently,” says Trent. “What should have been a $9,000 vinyl siding repair ended up costing homeowners $90,000, because the historical society insisted they use” a specific type of shingle. A typical policy would not have made up that difference.

9. Does home insurance cover acts of war?

“If the U.S. government determines we are at war, and your home is destroyed as a result of the war, you will not be covered,” says John Espenschied, agency principal at InsuranceBrokersGroup.com. Destruction from acts of terrorism, however, is generally covered.

The post 9 Surprising Things Home Insurance Doesn’t Cover: Do You Know Them All? appeared first on Real Estate News & Insights | realtor.com®.

What Does Home Insurance Cover? The Facts on Fire, Flooding, and More

October 26, 2020

what does home insurance cover

ChristinLola / Getty Images

Few things give new home buyers peace of mind about their real estate purchase as much as a solid home insurance policy. This ensures that if disaster strikes—in the form of a tornado, house fire, or otherwise—homeowners won’t be on the hook to foot the bill for expensive repairs on their own.

Exactly what does home insurance cover, though? Are there any key things homeowners might assume are covered that actually aren’t?

In this latest installment of our handy Home Buyer’s Guide to Home Insurance, we’ll explain what’s covered under most insurance plans—plus some key exceptions—so you know just how soundly you can sleep at night in your new home.

What does homeowner insurance cover?

A standard home insurance policy generally covers most (but not all!) natural disasters, theft, and accidents.

For instance, when a hailstorm does a number on your roof, you’ll file a claim and your home insurance company will help you pay to get it repaired. If the damage to your home has made it uninhabitable, your insurer may even pay for a hotel room until you can move back in.

“Generally, home insurance pays to repair or rebuild your property if it is damaged by fire, wind, lightning or other natural disasters,” says Josh Herz, president of Associated Insurance and Risk Management Advisors.

“It also covers your personal belongings, additional living expenses, and liability for you and others—if, say, when someone is injured on your property and litigates for damages.”

That said, all policies are different, so you’ll want to read through your home insurance documents carefully. Plus you might be surprised by what’s not typically covered in the fine print. Here’s what you need to know.

Does home insurance cover fire?

Whether you’re grappling with damage caused by a wildfire, lightning, electrical problems, a grease fire on your stove, or even a candle you left lit by accident, take heart that most house fires will be covered by home insurance.

And good thing too, since house fires are surprisingly common, with roughly one in every 350 insurance homeowners filing a claim due to fire or lightning each year. On average, insurance companies pay out $11,971 per claim to help repair fire damage.

Does home insurance cover water damage?

Water damage is typically covered by a standard homeowner insurance policy, as long as it was sudden and accidental—i.e., a pipe freezes, bursts, and floods your basement, or your hot water heater explodes.

Roughly one in every 50 insurance homeowners files a claim for water or ice damage every year. On average, insurance companies pay out $10,849 per claim. However, not all water issues are covered (more on that next).

Does home insurance cover water leaks?

While sudden water damage is typically covered, insurance companies generally won’t cover water leaks that appear gradually due to wear and tear, or are the result of poor maintenance.

In other words, if your roof is old and springs a slow leak, or if a pipe freezes and bursts because you didn’t shut off your water supply when you were away over winter break, good luck—you could be on your own.

It’s also important to know that your insurer will help cover the damage caused by water, but it probably won’t help pay to repair or replace the source of the damage. In other words, it won’t be buying you a new dishwasher if your own appliance flooded your kitchen.

Does home insurance cover plumbing?

Since plumbing problems can result in water damage, a standard home insurance policy should cover the problem if it appears out of the blue (i.e., a burst pipe). But if your pipes are just generally leaky, old, or poorly maintained, you might be on your own.

Does home insurance cover the roof?

This depends on what caused the damage. If your roof (as well as other parts of your house) gets pummeled by wind, hail, or a healthy tree falling, this is typically covered by home insurance.

It’s a good thing, too, since approximately one in every 40 insured homeowners suffers wind and hail damage each year, with claims paying out $11,200 to fix the problem.

Yet once again, your policy won’t help you out with normal roof aging and wear and tear. You’re responsible for maintaining your roof, which will need to be replaced around every 30 years (give or take, depending on what it’s made of).

If a tree falls on your roof because it was dead or rotted out, this could constitute neglect, and you could be on your own.

Does home insurance cover hurricanes?

This also depends, since hurricanes inflict damage in one of two ways—wind and water.

Damage from wind is typically covered, although your insurer may put in place a separate, higher deductible for wind damage caused by hurricanes.

Meanwhile, flooding caused by hurricanes is typically not covered by a standard homeowner insurance policy.

Does home insurance cover theft?

If someone breaks into your home and steals some of your belongings, your insurer will typically help you pay to replace those stolen items. Similarly, if a thief damages your home during the break-in, your home insurance company will help you pay for repairs, too.

Theft is surprisingly common, with approximately one in every 400 insured homeowners suffering property damage or loss caused by theft. On average, these claims pay out $4,391 annually.

Does home insurance cover pet bites and other injuries?

If your dog (or cat!) bites someone in your home, or if a visitor trips and falls down the stairs, your guests may want you to pay for their ensuing medical bills. You might also need to pay for lost wages if the injury prevents them from working.

Most standard insurance policies include what’s known as liability coverage, which means that your insurer will help pay for these expenses if someone gets hurt on your property.

This is good for you, since the average claim for bodily injury is roughly $45,000. Approximately one in 900 insured homeowners file claims of this type every year.

While home insurance covers many calamities that might hit your home, most policies don’t cover everything. Curious to know what these notable exceptions are? More on that in a future installment of this guide. Stay tuned!

The post What Does Home Insurance Cover? The Facts on Fire, Flooding, and More appeared first on Real Estate News & Insights | realtor.com®.

My Husband Bought a Retirement Property, but Only Put His Name on the Deed. Will His Adult Children Inherit This Home?

October 24, 2020

Marketwatch's The Moneyist

MarketWatch

Dear Moneyist,

My husband and I have been married for 25 years. We do not have children together, but he has children from a previous marriage.

We are retired now, and he bought property in Florida for us to live in. My name is not on the deed of the property, and he has not made a will yet. I keep complaining to him about it.

If he should die without a will, will his adult children and grandchildren be entitled to the property and house? Hopefully, you will be able to answer this question and set my mind at ease.

Carla

Dear Carla,

Your husband appears to have control issues at worst or, at best, problems with being direct and transparent. This is not the way to deal with a family property, especially after 25 years of marriage. If your husband wants his children to inherit his estate when he is gone, he should discuss it with you like a man (or woman), face to face, and you should outline a plan for your future together. But this game of cat and mouse, where he makes unilateral decisions about your future, is not a respectful or helpful way to conduct a 25-year marriage.

Not knowing if you’re going to have a place to live after your husband dies, assuming he predeceases you, creates a constant feeling of unease. The whole point of saving for retirement and being fortunate enough to retire comfortably is that you can see out your final years together with the knowledge that you will both be financially secure. Only one person in this relationship knows what that feels like — and, given that you have raised this issue with him, he is aware that you do not enjoy that same peace of mind.

Florida is an equitable distribution state and, for the most part, divides property 50/50. Here’s the legal interpretation from Schnauss Naugle Law in Jacksonville, Fla.: “If the decedent’s homestead property was titled in the decedent’s name alone, and if the decedent was survived by a spouse and descendants, the surviving spouse will have the use of the homestead property for his or her lifetime only (or a life estate), with the decedent’s descendants to receive the decedents’ homestead property only after the surviving spouse dies.”

You will have the right to live in this property for the remainder of your life. If you divorce, however, anything purchased during your marriage is considered marital property, and even though this home was purchased in your husband’s name only, it would be divided 50/50. In Florida, “equitable distribution” is mostly treated as “equal distribution.” According to this interpretation of family law in Florida by Arwani Law: “Even if he purchases the car with his own money and puts the car title in his wife’s name, it is still considered marital property.”

And as most lawyers will tell you, a lack of communication is one way of buying a ticket to divorce.

The post My Husband Bought a Retirement Property, but Only Put His Name on the Deed. Will His Adult Children Inherit This Home? appeared first on Real Estate News & Insights | realtor.com®.

How Much Home Insurance Do I Need? A Guide for Buyers

October 22, 2020

CatLane/iStock

If you’re buying a home, choosing the right amount of home insurance for your property is key. Buy too much, and you’re wasting cash on coverage you’ll never use.

Buy too little, and if a hurricane, hailstorm, or other disaster strikes your home, your insurance might not cover the costs to fix the damage—which means you’ll be paying out of your own pocket.

So how much home insurance is enough? In this latest installment of our Home Buyer’s Guide to Home Insurance, we’ll outline all you need to know to get the right amount and type of insurance to suit your circumstances perfectly.

How much home insurance do I need?

The goal of your homeowner insurance policy is to ensure you’re covered not only for minor damage that you’d like financial help fixing, but more importantly, in case your home is completely destroyed (in a tornado, fire, or otherwise) and needs to be rebuilt from scratch. This is known as “actual total loss” or “total loss.”

Total loss coverage varies from area to area as well as from home to home, but basically boils down to an estimate of how much it would cost to rebuild your home. That could cost more than you paid for your house, or less—it all depends on construction costs in your area.

“Size, materials, quality of finish, and a number of other factors will influence that rebuilding cost,” says Stefan Tirschler, product and underwriting manager at Square One Insurance Services.

To determine the total loss coverage for your property, you’ll want to talk to a home insurance company or agent (who probably represents various insurance companies), who can determine the best amount of coverage based on your home’s square footage, the local construction market, and, of course, the current market value of the house.

“When you shop for home insurance, your insurance provider will likely have access to electronic reconstruction cost-estimating tools to help provide a sense of how much coverage you need,” Tirschler explains.

If you have a mortgage on your home, your lender will probably require your coverage to equal 100% of the replacement cost of the home. And even if your home is paid off—or no requirement is in place—it’s still a good idea to buy enough coverage to cover the complete replacement cost.

Even if the odds are slim that you’ll ever need to use it, the peace of mind it can provide in the event of a disaster is priceless.

Does home insurance cover what’s inside the house?

Another factor to consider is not only the replacement cost of your house, but what’s inside as well—in other words, your belongings. After all, if your home is destroyed by fire or damaged by a hurricane, it’s not just the roof and walls that take the hit.

Most home insurance policies will cover interior items, but that doesn’t mean everything inside your home is safe. For instance, a “named perils policy” typically covers only a specific, narrow list of causes of loss, and depending on why you place the claim, you may find your insurance company won’t pay up!

If you want to ensure your valuables are fully protected, Tirschler suggests looking for an insurance provider that offers an “open perils” (or “all-risk”) policy.

“Open perils policies provide the strongest protection, because they cover all possible causes of loss except for those that are specifically excluded,” he notes.

Is basic home insurance enough?

As you shop for home insurance and compare quotes, you should know that most insurance providers won’t give you just one quote—rather, they may offer several. This is because companies often offer different levels of insurance—like “basic” and “enhanced”—each with their own price, pros, and cons. Here are some factors to consider:

  • Deductible. A deductible is the amount you’ll need to pay out of pocket before your insurance kicks in. Generally speaking, the higher the deductible, the cheaper the monthly insurance premiums. Why? Because with a high deductible, you’ll have to pay more before your insurance company has to pitch in. Deductibles often range from $1,000 up to $5,000.
  • Coverage limits. A coverage limit is the maximum amount your insurer will pay when something goes wrong and you file a claim—everything above this amount, you’ll have to pay out of pocket. For instance, a more affordable, basic plan might pay the medical bills if a guest is injured at your house at up to $1,000 per person, whereas a more expensive, enhanced plan might cover up to $5,000 per person.

You can choose between these various insurance levels based on your personal comfort level, tolerance for risk, and how much money you have in the bank in case of emergencies.

If your circumstances or outlook change, most companies will allow you to increase or decrease your coverage. For instance, if you could only afford a basic, bare-bones plan originally but want pricier/better coverage after getting a promotion at work, most insurance companies will happily adjust your plan to suit your new circumstances.

Do you need additional home insurance riders?

Your insurer will also likely offer you some additional, optional coverage. Got expensive jewelry or artwork in your home? You may want to purchase additional coverage. You’ll pay more now, but if your valuables are damaged or destroyed, your insurance company will help you pay to replace them, which could save you money in the long run.

“If you have any high-value items, such as jewelry or expensive art, these will require a different policy to truly cover their actual worth,” says Ralph DiBugnara, president of Home Qualified.

Remember, too, that you may need to purchase a separate insurance policy for things that are not covered in your plan. For instance, floods and earthquakes are typically not covered in basic insurance plans, so if you want it, you’ll have to buy this insurance separately.

In our next installment of this series, we’ll dive in more depth into what home insurance covers—and what it doesn’t.

The post How Much Home Insurance Do I Need? A Guide for Buyers appeared first on Real Estate News & Insights | realtor.com®.

What’s an Affordable Ski Town Where We Can Retire?

October 22, 2020

Skiing Schweitzer Mountain outside Sandpoint, Idaho.

Schweitzer Mountain Resort

Dear MarketWatch,

My wife and I are both federal employees and will retire in a few years with total (combined) pensions of around $10,000 a month. Our nest egg for retirement (TSP plus savings) will be another $2 million or so. Social Security will kick in on top of that. 

We both love skiing and ski towns, but also lakes with forest running and mountain biking trails. It seems hard to find affordable ski towns that aren’t too touristy with good lakes and water sports nearby. We’d prefer not to be too far from a “real” city to get our urban fix, when needed.  

We have $200,000 available for a down payment. That would put a house budget at around $1 million. We’ve looked at Park City — it’s pricey these days. Aspen Valley is way out of reach, as is Breckenridge. East Coast skiing is icy and unpredictable. Places like Whitefish (in Montana) or Crested Butte (in Colorado) are nice but remote and hard to get to. Same with Durango. New Mexico lacks the lake options (ie, Santa Fe, Taos). Lake Tahoe is congested and full of casinos and second homes.  

I feel like we must be missing something. Any ideas?

Thanks!

Dillon

Dear Dillon,

An underdiscovered ski town? That’s a tough one.

I hear you on pricey, but that’s down to supply and demand. And right now, demand is hotter than normal as people figure they can work from somewhere else. Sadly for you, Breckenridge is particularly hot.

And ski towns are often in no rush to build more housing. See these objections about a proposed development in Breckenridge as an example.

But a $1 million housing budget is nothing to sneeze at. Many are priced out of their dream ski town with far less.

I admit I’m nervous about an $800,000 mortgage. You know your expenses and lifestyle better than I do, but please, double-check your budget and don’t forget to take income taxes on tax-deferred savings into account. Yes, you have an impressive nest egg and pensions. Equally, a 30-year mortgage at 3% is $3,373 in monthly payments — and then there are property taxes and possibly HOA fees.

Here’s how financial planners come down on the mortgage-in-retirement debate. If you have a financial adviser, this is worth a chat.

As you know, having a great time in a ski town for one week is not the same as daily living for 52 weeks. As you look around, ask if it’s mostly filled with second-home owners and vacationers, or are there plenty of year-round residents?

Perhaps consider renting for a year in one town. If it doesn’t feel right, try another one or reassess what you’re looking for. (Cities like Ogden, Utah, and Bozeman, Mont., with ski slopes a short drive away?) And if you love a pricey town, consider a smaller place or something a bit further from the slopes. That could make Summit County — Silverthorne or Dillon instead of Breckenridge? — work for you.

Here are three suggestions to get you started. You should be able to find something well below $1 million.

Sunset at Lake Granby, near Rocky Mountain National Park
Sunset at Lake Granby, near Rocky Mountain National Park

Laurens/Colorado Tourism Office

Winter Park, Colorado

Pick this lower-profile resort as your ski area, and you avoid much of the traffic jams around Georgetown and further up the mountain to Summit County and beyond. While you can live at the resort, you may want to consider Fraser, 15 minutes north of Winter Park, or Granby, another 20 minutes away.

Nearly 16,000 people live in Grand County, or about half as many as in Summit County, and homes are more affordable. The towns are admittedly small — Fraser has about 1,300 year-round residents, and Granby has around 2,100 people. (By comparison, Breckenridge has about 5,000.)

Not only would you be in the mountains, but you’d have plenty of water options. Granby in particular is close to Lake Granby as well as Shadow Mountain Lake (actually a reservoir) and Grand Lake.

Get your mountain-biking fix at Winter Park’s Trestle Bike Park; Ski magazine calls it “Colorado’s best downhill mountain biking park” — or explore some of the smaller options in the county.

Finally, Winter Park is less than 90 minutes from Denver.

Temperatures stay cool here, with average summer highs only reaching the mid-70s. You’ll still have snow in May.

Here’s what’s for sale now in Winter Park (some are fractional ownership), Fraser and Granby using listings from Realtor.com (which, like MarketWatch, is owned by News Corp.).

———

Fat-tire biking near McCall, Idaho.
Fat-tire biking near McCall, Idaho.

Chad Case Photographic/McCall Area Chamber of Commerce

McCall, Idaho

Ski magazine recently sung the praises of Brundage Mountain and its “killer glades,” backcountry skiing and powder possibilities.

McCall, with 3,500 residents and the 5,330-acre Payette Lake, is just 10 miles away. Nearby you’ll find plenty of mountain biking — but also hot springs.

When that’s not enough outdoor activity, try whitewater rafting on the Payette River, and start your search for hiking trails in the Payette National Forest and in Poderosa State Park.

Average summer highs are in the low 80s. Snow starts in October, when there is an average of 2 inches and continues through April.

Here’s something that might surprise you: there are almost no chain stores and restaurants in town because of a long-standing local ordinance that restricts their numbers in favor of mom-and-pop stores. You’ll have to go to a local coffee shop instead of Starbucks (no worries, there’s a local roaster too). Be sure to peruse the bulletin boards in the coffee shops to find activities.

Valley County has 11,000 residents, and more than a quarter of them are 65 and older. The town will soon have a new hospital; St. Luke’s McCall Medical Center, part of a major health system in the state, is being rebuilt as well as expanding. Today’s version is rated highly for patient experience.

When you want a big city, drive to Boise in just over 2 hours (suggested here as a place to retire).

Here’s what the local housing market looks like now.

———

Trail running on Schweitzer Mountain
Trail running on Schweitzer Mountain

Schweitzer Mountain Resort

Sandpoint, Idaho

Would you prefer somewhere a little bigger? Sandpoint, in northern Idaho, has around 8,900 residents (Bonner County has 46,000, and a quarter of people there are 65 and older). It’s perched on Lake Pend Oreille and surrounded by mountains and forest. Schweitzer Mountain Resort is just 11 miles away with 2,900 skiable acres, and, Powder magazine says, rarely is crowded.

You can mountain-bike at the resort during the summer or try local options like the Gold Hill Trail. Given all the mountains and forests, you won’t be short of playgrounds.

Average summer highs here are a touch higher than in McCall. Snow starts falling in November.

Your city fix is Spokane, less than two hours away.

Don’t kid yourself — the COVID boom in ski towns has reached this corner of Idaho 75 miles from the Canadian border. Stephanie Rief of the Selkirk Association of Realtors says home sales in Sandpoint from April 20 through Sept. 30 have jumped 40% from the same period in 2019. The median home price is up 17%.

“We’re being overrun,” she says. Many buyers are from California, Washington and Oregon, “but you name it — I’d say all 50 states, minus 10. At the most.”

The median home price in the two-county area is now $371,500, she says, and the average home price is higher. On the outskirts of Sandpoint, that price translates into a three-bedroom, two-bathroom house. And nothing stays on the market for long these days.

Here’s a look at homes on the market now.

The post What’s an Affordable Ski Town Where We Can Retire? appeared first on Real Estate News & Insights | realtor.com®.

First-Time Home Buyer Confessions: ‘How We Beat 32 Offers and Got the House’

October 21, 2020

first time home buyer

Julie Migliacci

First-time home buyers have it harder today than ever. Caught between high real estate prices, low housing inventory, and a pandemic that has many of us nervous about leaving our house, home shoppers might be wondering: Is it even possible to buy right now—and how?

If you’re curious about what it takes to purchase property in today’s marketplace, look no further than this new series, “First-Time Home Buyer Confessions.” We’ll profile home buyers who’ve successfully navigated a variety of obstacles to close a real estate deal during these challenging times. We’ll also hear what they’ve learned in the process that might inspire other hopeful first-time buyers to get out there and follow in their footsteps.

Our first tale from the trenches comes from Julie Migliacci, a virtual events planner near Boston, and her husband, Mark, a banker who specializes in affordable housing. In June, they beat out 32 other offers (yes, 32!) and purchased a 1,627-square-foot, three-bedroom house in Wakefield, a Boston suburb. Here’s how they pulled it off, along with the many mistakes and lessons learned along the way.

first time home buyer
The Migliaccis paid $50,000 over asking price for their first home.

realtor.com

Location: Wakefield, MA

House details: 1,627 square feet, 3 bedrooms, 2.5 baths

List price: $599,000

Price paid: $650,000

What made you decide to buy a house in the middle of a pandemic?

Three years ago, Mark and I moved from New York City to Boston and rented a 900-square-foot apartment in Belmont with our two daughters, Chloe and Rose.

We’d always known we wanted to buy a home. But once COVID-19 hit and we were all working and schooling from home, our tiny apartment felt like nothing anymore.

At one point I looked at my husband and said, “I love you, but I really don’t like being with you right now.” So we agreed to put our house hunt in hyperdrive.

first time home buyer
The Migliaccis’ rental, a second-floor apartment in Belmont, MA, was affordable enough that they were able to save to buy a house.

Julie Migliacci

How much did you put down on the house—and how’d you save for it?

We put down 20%. We’d been saving for three years. We’d made sure our rent was low enough that we could really sock a lot away. We could have paid higher rent for a bigger place, but wanted every extra cent we had going to our house fund.

The Migliacci daughters, Chloe and Rose

Julie Migliacci

What were you looking for in a house?

COVID-19 definitely shifted what we were looking for in a home. We always had a goal of finding a place with about 1,700 square feet. But now I found myself wanting a yard more than ever. I’m a city kid, so originally I never thought that was something I needed. I also wanted to find a house that was close to the city, in case we ever needed to commute back in.

The back of the home with a large yard.

realtor.com

How many homes did you see in person?

Starting in April, over the course of five weeks, we visited about 10 homes—alone, in masks, with plenty of hand sanitizer of course. With COVID-19, there were no open houses.

How many offers did you make before you had one accepted?

We put in offers on five different houses.

Why do you think your first four offers didn’t pan out?

At the beginning, we had this HGTV idea of what a home-buying experience would be like. We thought we’d go $10,000 above asking and be fine. But what we realized is we weren’t even in the running. It was a waste of time and paper. I was surprised at how competitive the market is right now because of COVID-19. We kept making offers on houses after seeing them for just a few minutes, and we still kept getting outbid. I guess you could say our learning curve was steep.

Every time we got denied, we asked who won the house instead. The offers that kept winning were those that waived all contingencies. So we did what everyone tells you not to do: We waived the financing contingency and the home inspection in order to even have a shot. We crossed our fingers, read all of the disclosures very carefully, and hoped it would all work out.

How did you know this house was the one?

We thought this house was nuts! It has a two-story rock formation out front that, at first glance, looked like a death trap for my two kids.

The rock formation at the Migliacci home

Julie Migliacci

At the time we put in an offer, we’d actually had an offer in on another house as well. That house checked all the boxes, but needed a bit more work. This house, despite the rock, was move-in ready.

As we waited to hear back on these offers, we actually tried to talk ourselves out of the house. We kept saying, “It’s an empty-nester home, not a home for a family.” And then, of course, that’s the house we ultimately got. We’re really happy, though. It’s definitely our dream home now.

first time home buyer
The Migliacci family all smiled when they first entered this home.

Julie Migliacci

How’d you manage to beat out 32 other offers on this house?

I don’t know honestly! In addition to waiving contingencies, we were very aggressive with our price point, offering $50,000 over the asking price. And that wasn’t even the highest offer!

It may have also helped that I wrote a very heartfelt letter to the sellers. I wrote letters to every house we put an offer on, where I described a tiny detail that I thought would resonate with the owners. For the house we ultimately bought, I wrote a letter where I joked that our whole family smiled when we first walked into the home, except for our fish. My husband was against using that line, but I think it worked!

first time home buyer
Their heartfelt offer letter may have helped them get the house.

Julie Migliacci

What surprised you about the home-buying process?

I think it’s crazy that we’d see a house for five or 10 minutes before deciding to put in an offer. With houses staying on the market for a matter of days or even hours, we knew we had to act as fast as possible.

Yet after our offer was accepted, the process slowed down, a lot. We closed in 30 days. I was surprised that it was considered lightning-fast. I wanted to move right away! It takes a few hours to buy a car.

first time home buyer
Although they now have a lot more space, they still sometimes work at the same table—old habits are hard to break!

Julie Migliacci

What’s your advice for aspiring home buyers?

If you decide to buy during COVID-19, I’d recommend doing as much research as possible. Get to know the neighborhood. Because once you find a house you like, you’ll likely have to jump on it as soon as possible.

Some markets right now are aggressive, and if you aren’t ready for that, then it’s going to take you a long time to find the right home. So be ready for a lot of heartache. If you’re crazy enough to be a buyer right now, then that must mean you’re motivated—which is good!

The newest member of the Migliacci household seems to like his new digs, too.

Julie Migliacci

The post First-Time Home Buyer Confessions: ‘How We Beat 32 Offers and Got the House’ appeared first on Real Estate News & Insights | realtor.com®.

6 Modest Front-Yard Updates Home Sellers Should Never Forget

October 21, 2020

bruev/Getty Images

Home sellers know that a tidy, tasteful home will catch any buyer’s eye. That’s why many people put effort into fixing up—and even staging—the interior of their home before putting it on the market and hosting open houses.

But did you know that an unkempt exterior could deter potential buyers from even setting foot in the door? That’s right. A shoddy-looking front yard could undermine all that hard work you put into beautifying the inside of your home, and that could jeopardize your chances of selling.

“You only get one chance to make a first impression, and it happens when a potential buyer sees the exterior of your home,” says Kate Rumson, interior designer and Trane Residential partner. “We all tend to form opinions in the first few seconds of seeing a home for the first time—make those seconds count!”

Don’t let your home’s exterior fall to the wayside. Whether your front yard is in need of a few tweaks or a full face-lift, the following tips will help boost your home’s curb appeal and make sure everything matches.

1. Replace your garage door

Garage doors tend to be large, so they’re a major architectural element of your home. Replacing one can be costly, but this one upgrade could help sell your house faster.

According to Remodeling magazine’s annual Cost vs. Value report, garage door replacement has consistently topped the list of remodeling projects that give you the biggest return on investment. In fact, this year’s report found that by replacing your garage door, you could recoup 94.5% of the cost when you sell your home.

“Old or damaged garage doors will make a house feel dated and not cared for. If your garage doors are in poor condition, replace them,” says Rumson. “Don’t let potential buyers think that the damaged garage doors represent the rest of your home’s condition.”

As for the cost, garage door replacement can range from $600 to $2,750, according to HomeAdvisor.

2. Do a front door audit

The first thing potential buyers see as they walk up to your home is your front door. The door can give house hunters a hint of your design sense and what decor delights await them on the other side.

Ted Roberts, chief style and design expert at Schlage, says to consider the color and materials of both the inside and outside of your door. He says the hardware on a door is also important to the overall aesthetic and that door hardware should be updated to create a unified statement throughout your property.

“Updating your front door can do wonders for your security and style. If your door hardware is showing signs of age, this fall could be the perfect time to upgrade to a new handle set and an electronic lock that adds smart, keyless convenience,” says Roberts.

3. Complement your colors

Choosing the right colors for the inside of your home takes careful thought and consideration. But no matter what paint you choose, make sure the palette transitions smoothly from exterior to interior.

“Interior and exterior colors don’t have to match, but they need to complement one another,” says Rumson. For example, a traditional forest-green exterior trim looks great when paired with navy blue, tan, or blush interiors.

“Make sure that the colors of your exterior accurately represent what buyers should expect to see on the inside,” Rumson adds.

4. Consider new window frames

Photo by Spivey Architects, Inc.

Installing new window frames will create the appearance of brand-new windows, and is a quick and inexpensive way to make your home look newer and more attractive to buyers, says Rumson.

Consider updating your outdated window frames with new, stylish black window frames.

“Black window frames will boost your home’s curb appeal, make your home more unique, and create a great contrast with the rest of your interiors,” says Roberts. “Because black windows make such a statement, they don’t always need shades, blinds, or curtains, offering an opportunity for you to sidestep what can be an occasionally costly investment.”

5. Refresh your landscape

The American Society of Landscape Architects recommends that homeowners invest 10% of a home’s value in landscaping. A well-manicured front yard can be eye candy to potential buyers.

Professional landscaping can be pricey, but we’re not suggesting a full foliage overhaul. Simply take a few hours on a weekend to freshen up your existing landscaping with plants and fresh mulch.

Over 75% of top real estate agents nationwide say that well-landscaped homes are worth anywhere from 1% to 10% more than homes without landscaping, according to research at HomeLight.

6. Install outdoor lighting

Photo by Solid Renovations

“Outdoor lighting is important for safety, but it can also significantly improve the curb appeal of a home,” says Rumson.

There are a variety of outdoor lighting options, from decorative lighting (like sconces by your front door) to landscape lighting (to illuminate the pathway to your porch).

“It’s an easy update,” says Rumson. “You will find many beautiful options and styles at your local home improvement store.”

Light up your home’s exterior walkway with a set of 10 solar-powered, black LED outdoor lights ($79.97, Home Depot) or a lantern sconce ($59.97, Home Depot).

The post 6 Modest Front-Yard Updates Home Sellers Should Never Forget appeared first on Real Estate News & Insights | realtor.com®.

How Much Does Home Insurance Cost? Advice To Find the Best Price

October 20, 2020

wutwhanfoto / Getty Images

If you’re buying a home, you probably know that paying for the property isn’t the only expense you’ll incur. Among other things, you’ll also want to buy home insurance to protect this valuable asset in the event of unforeseen problems, from damaging hailstorms to theft and beyond.

So how much does home insurance cost? In this second installment of our Home Buyer’s Guide to Home Insurance, we’ll walk you through what you should know about home insurance rates, and how to find the best plan and price.

How much does home insurance cost?

The average annual homeowners insurance premium runs about $1,445. However, it can be much higher or lower based on numerous factors. Here’s a full rundown of what can affect homeowners insurance costs.

  • Condition of your home: This plays a big role in your homeowners insurance rate, and can include everything from the roof to the pipes, heating system, electrical wiring, and age. Your insurer may ask you to provide detailed information about your home; it may also gather information from public records and documents filed with your city and county.
  • Price to rebuild: Another big factor is the price per square foot to rebuild in your area, based on current construction rates. For reference, the national average is between $100 to $200 per square foot. Why does this matter? Because if your house is damaged or completely destroyed and you need to rebuild, your insurer will be footing the bill.
  • Natural disasters in your area: The cost of your homeowners insurance also depends heavily on the likelihood of destructive natural disasters or other incidents. In other words, the more known risk there is to your home, the stiffer the homeowners insurance premium. Homeowners in Oklahoma, where tornadoes wreak havoc every summer, pay an average of $2,559 for home insurance each year, the highest in the nation. Texas is not far behind, at $2,451 per year, thanks to its destructive hurricanes and thunderstorms.
  • Personal information: Your credit score, age, and other personal factors also play a role in your home insurance costs. A higher credit score and few or no insurance claims usually result in a lower rate for home insurance. Generally speaking, the older you are, the lower your premiums. Why? Because older people are less risky for insurers to cover—they tend to spend more time at home, particularly if they’re retired, which means they’ll catch a house fire before it gets out of control.
  • High-risk features: Your homeowners insurance company will also factor in high-risk home features, including swimming pools, trampolines, and even your dog. (Certain breeds have a reputation for being more aggressive, which could lead to expensive insurance claims if your dog bites someone.) Similarly, adding safety features such as a home security system or fire sprinklers can help lower your home insurance rates.

How to find the best price on home insurance

To determine how much you’ll pay for home insurance, contact a few insurance companies by calling to chat with an agent or by filling out a form on their website. After you share some information about you and your home, they’ll run this information through their own algorithms to come up with a quote on how much your insurance will cost.

But here’s the thing: Since each insurance company uses its own formulas to determine a property’s risk levels, each may offer different rates. To get the best price and policy, it pays to shop around.

“You won’t know your homeowners insurance cost until you get quotes,” says Amy Danise, chief insurance analyst at Forbes Advisor. “Quotes are free. And it’s best to get quotes from multiple companies so that you can get a sense of what a good rate will be.”

Many homeowners go with the first homeowners insurance policy quote they get in order to cross one more thing off their list during a move or the home-purchasing process. And that could be a big, costly mistake because you may pay more. But the cheapest home insurance option isn’t always the best, either.

“An informed insurance agent that can shop your home with multiple insurance carriers is your best bet at finding a great rate for your home,” says Erin Wenzel, account manager at Michigan’s Provision Insurance Group.

Ask the agent to explain why the homeowners insurance premiums are different and what the trade-offs are in liability coverage and deductibles. And this isn’t just something you should do when you first buy a home. Every year, you should review your homeowners insurance, including your liability coverage, premium, and deductible.

“Make an effort to get a new quote each year, and shop around if you’re not happy with your current rate,” says Wes Taft, co-founder of moveCHECK.

Homeowners insurance companies hungry for new business offer competitive rates on premiums.

Is homeowners insurance included in the mortgage?

In many cases, homeowners insurance will be part of your monthly mortgage payment. Why? Because your mortgage lender wants to make sure your important house-related bills get paid on time and in full.

As such, you’ll have to pay your lender your monthly home insurance premium along with your mortgage. From there, your lender will keep that insurance money in a special account, called an escrow account, and will pay your insurance bills for you when they come due.

Lenders will often show you a breakdown on their statements of how much of your payment is going to your mortgage (principal and interest) as well as what’s going toward homeowners insurance and any other fees (such as property taxes or homeowners association dues).

In certain situations, you can pay your home insurance company directly, without having to send this money to your lender first, but this isn’t common. Some lenders may offer some flexibility, such as if you made a 20% (or higher) down payment—it just depends on the lender. Also, if you paid for your house in cash or you’ve paid off your mortgage in full, then you’ll need to pay your insurance company directly.

Is homeowners insurance tax-deductible?

No, the money you spend on home insurance is not tax-deductible. The one exception is if it’s for a rental property, in which case home insurance can get deducted from your taxable income.

In addition to shopping around for the best price on insurance, you should make sure you get the right amount and type. That’s what we’ll explore in our next installment: How much insurance do you need?

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