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5 Crucial Questions to Ask Before You Co-Sign a Mortgage

November 7, 2019
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If you’re considering co-signing a mortgage—say, to help your grown kids buy their first house—it’s wise to take a step back and consider whether this move makes sense. Sure, you’re helping a loved one purchase property, but this type of arrangement could also pose a risk to your own finances (not to mention your relationship with the co-signee).

So before you put your John Hancock on the line which is dotted, ask yourself these four key questions first.

1. What is co-signing, exactly?

When a home buyer uses a co-signer, the buyer becomes what’s known as the “occupying borrower”—the person who is going to be living in the home.

Meanwhile, the co-signer—usually a relative or friend of the occupying borrower—is someone who typically doesn’t live at the property.

Co-signers physically sign the mortgage or deed of trust in order to add the security of their income and credit history against the loan. In turn, both parties take on the financial risk of the mortgage together—meaning that if the occupying borrower defaults on the loan, the co-signer is expected to cough up the cash.

To qualify as a co-signer, you must have a strong credit history and good income, says Ray Rodriguez, regional sales manager at TD Bank. Co-signers get vetted just as ordinary borrowers do—they have their income, credit history, credit score, assets, and debts scrutinized by a lender.

2. What are my responsibilities when co-signing a loan?

If anything affects the occupying borrower’s financial health—for example, loss of a job or severe medical problems—”the co-signer is responsible for the [mortgage] payments,” says Rodriguez.

Moreover, if the occupying borrower misses a mortgage payment, that blemish can go on your credit report, as the co-signer, as well—potentially damaging your credit score significantly.

According to data from the credit analysis firm FICO, someone with an excellent credit score—780 or above—could see it drop 90 to 110 points if mortgage payments are missed.

Another thing to consider: When you co-sign a mortgage, you’re adding that person’s debt to your own, reducing your own borrowing power. As a result, “Your chance of getting a loan yourself in the future could be in jeopardy,” says Janine Acquafredda, a real estate broker at Brooklyn-based House-n-Key Realty.

3. What are the risks of co-signing?

Real talk: When you co-sign a financial product—whether it be a mortgage, a car loan, or a credit card—you could get burned.

In fact, in a 2016 CreditCards.com survey of 2,003 U.S. adults, 38% of co-signers said they had to pay a part of or the entire loan or credit card bill because the primary borrower failed to do so. Furthermore, 28% reported they suffered a drop in their credit score because the person they co-signed for paid late or not at all.

Most often, people co-sign mortgages for their friends or family—but co-signing inherently puts the relationship in jeopardy. Proof: Of respondents in the CreditCards.com survey, 26% said the co-signing experience damaged the relationship with the person they had co-signed for.

4. How do I mitigate my risks?

The good news? There are several safeguards you can put in place to protect yourself as a co-signer.

First, make sure your name is put on the title of the home. That way, if your borrower can’t pay the mortgage, you have the power to sell the property.

Second, take steps to monitor your co-borrower’s mortgage payments. You can do this by setting up email and text alerts to let you know when mortgage payments are posted, or asking the mortgage lender to notify you if the borrower misses a mortgage payment.

This offers a nice protection, since every home loan agreement offers borrowers a grace period for late payments.

Typically, there’s a 15-day grace period, in which case you would have 14 days after the payment is due to help your co-signee pay the bill without incurring a late fee or taking a hit on your credit report, says Guy Cecala, chief executive and publisher of Inside Mortgage Finance.

You’ll also want to establish clear lines of communication between you and your co-signee—and make sure the person knows how to contact you if he or she has a problem with the mortgage.

5. Do I trust the borrower?

Before offering to become someone’s co-signer, ask yourself whether you truly trust the other person to be financially responsible for making the mortgage payments.

Pro tip: Past behavior is a good predictor of future behavior. If the person has had trouble making credit card payments or has a pattern of not meeting other financial obligations, he or she may not be responsible enough to be taking on a mortgage, especially one that has your name attached to it.

The bottom line

Co-signing a mortgage is serious business. You’re not just putting your name on a piece of paper—you’re putting your own finances, including your debt obligation and your credit score, at risk.

From: Realtor.comDaniel Bortz has written for the New York Times, Washington Post, Money magazine, Consumer Reports, Entrepreneur magazine, and more. He is also a Realtor in Virginia.

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117. I can help.

10 True Tales of Real Estate Terror

October 31, 2019
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Practitioners recall the scariest moments they’ve faced in the field.

NOTE: One of the stories was too ghoulish to share but enjoy the rest. HAPPY HALLOWEEN! – Lisa

Real estate professionals are a brave bunch. You walk into unfamiliar homes every day, prepared to deal with whatever lurks inside. Hopefully, the scariest thing you find is a seller’s outdated sense of style. But some properties have more insidious issues that staging can’t fix.

No strangers to haunted houses, many practitioners have real-life horror stories of dealing with creepy, ghostly circumstances in the course of their daily work. With Halloween around the corner, REALTOR® Magazine asked its readers to share their most frightening experiences in the field. From paranormal occurrences during showings to apparitions in listing photos, read on … if you dare.

‘It Wanted Me to Leave’

There was an old two-story house in my area that was on the market for a long time—a real fixer-upper in a hot neighborhood. It was eerie: Floors weren’t level, squeaky steps, the works. When I was inside, I felt like someone was watching me, and it wanted me to leave. It was when I noticed a light in the basement that I calmly walked right out … because the house had no electricity. —Monette Chain, Metro First Realty, Oklahoma City

Did You Just Perform an Exorcism?

While showing my client homes one day, we walked into a vacant foreclosure that I thought no one else was showing at the time. There was no car in the driveway and no sign of anyone present. As we opened the front door, two men were coming down the staircase from upstairs—one wearing a long black robe like a priest would and a necklace with a huge cross. He had dark hair and a long, dark beard. The other man, whom I’m guessing was his agent, walked behind him. We all cordially greeted one another, and they walked out the back door. We never saw them get into a car or walk down the street. They just seemingly disappeared. My buyer never lets me forget that house and tells everyone that story. —Barbara Mattingly, SFR, Mattingly Real Estate, Upper Marlboro, Md.

A Ghostly Purchase Agreement

I have a client whose sister-in-law is a medium. After my client made an offer on a home, I joked that the sister-in-law should come through the house during inspection and make sure there were no spirits lingering. So she did! As she left, she said: “I got rid of two, but there is a spirit in the front room that doesn’t want to leave. If you buy the house, I’ll come back and get rid of him.”My client still took the house. —Allyson Valcheff, Keller Williams Realty Centres, Newmarket, Ontario

Nothing Left Behind

As soon as I pulled up the driveway, the hair on the back of my neck stood up. My buyers, a married couple whom I was showing the property to, were standing outside, and there was a feeling—and—odor of death. I had chills and began to shake. When I opened the front door, the wife—who was five months pregnant—felt like she was going into labor. We turned around immediately and left. As soon as we pulled out of the driveway and got about 100 feet away from the house, the wife said she felt better. Later, the listing agent, who was related to the seller, told me no one who visited the property wanted to stay long. Finally, after getting no offers, the seller decided to demolish the property. Three workers were injured one way or another during demolition, so the seller gave the remnants of the home to the volunteer fire department to use for controlled fire training. Three firemen were hurt, though not severely. The house smoldered for three days. Now there’s nothing but dead space where the house once stood, and nothing—not even grass—grows there. —Theresa Akin, SFR, Corpus Christi Realty Group, Corpus Christi, Texas

Moving Into Someone Else’s History

Several years ago, while searching the MLS for the perfect home for my client, I came across an intriguing photo of a midcentury dining room buffet in a new listing. I previewed the home and called my client to come see it right away. She didn’t like the buffet, which was bolted to the wall, but she loved the house. During the inspection, we happened to be at the home when an elderly woman knocked on the door. The woman, who lived next door, insisted that her deceased husband still lived in the listing, and, therefore, my client could not purchase it. The buyer, unfazed, completed the purchase. Later, she learned from neighbors on the block that her home’s original owner was an architect who built it and the house next door, which was an exact replica, for his wife. They lived in the separate homes rather than share one together. The elderly woman made several appearances at my client’s front door over the subsequent years, always insisting that her deceased husband was still occupying the home. She told my client that her husband had designed and built the dining room buffet, which was the only piece in the home that was not duplicated in the house next door. Eventually, the elderly woman was moved to a nursing home, and her house was sold. I recently sold my client’s home, and though she disliked the dining room buffet, she kept it through several renovations. The next owner also had lukewarm feelings about the buffet—but it remains in the house. I still can’t explain why that midcentury buffet intrigues me or why the people who have owned the home kept it when they didn’t like it very much. But I have a feeling that buffet will stay in that house for a very long time. —Monika Lenz, Monika Lenz Realty, Ridgecrest, Calif.

Not the Cat’s Meow

I was previewing a home for out-of-town clients one day. No one was home, so I used the lockbox key to let myself in. After looking at the upstairs bedrooms, I turned to find a giant black cat guarding the stairs. She tried to scratch and bite me every time I tried to go down the stairs. After five or six frightening attempts, I grabbed a sweater from one of the bedrooms and threw it over the cat as I sprinted down the stairs and out the door to safety! —Keith Willingham, Faith Wilson Group, Vancouver, British Columbia, Canada

Open and Shut

A few years ago, I went with a customer to view a foreclosure in which the previous owner had passed away, we were told. When we went inside, we both felt a strong presence, but the house was vacant. As we toured the home, we felt as if someone was watching us. Halfway through, all the exterior doors, which were closed for our safety, started to slightly open and close. There was no power, and, therefore, no AC to make that happen. We looked at each other and said, “Nope, this is not the right house for you,” and got out of there. I never showed that house to anyone else again. I believe it’s still vacant to this day. —Sabrina Robles Ocasio, Weichert, REALTORS®, Land & Home, Brooksville, Fla.

A Picture’s Worth a Thousand Screams

I’m a professional real estate photographer, and I have taken photos of many old homes. When I edit the pictures, I am sometimes shocked by what I see. One time, the reflection of a tree in the window looked like a person wearing a creepy mask. But worse was when a woman was standing behind me while I took a photo in one of the rooms of a listing. In the picture, the reflection in a mirror showed an old man in an overcoat behind me instead. —Raylene Hansen, Raylene Inder Hansen Photography, Providence, R.I.

‘Rattle, Rattle, Rattle’

Back in 2010, I was showing a home to a client while I was five months pregnant, and as I walked up to the front door and put the key in the lock, I heard “rattle, rattle, rattle.” I looked down and saw a young rattlesnake at my toes. Apparently, he had been curled up under the door jamb, and I didn’t see him. Now he was fully awake and quite annoyed at the disruption. I yelled to my client to stay back, and then I pushed off the door, jumping back as fast as I could. I felt the snake hit my leg, but miraculously, he didn’t break the skin. I still don’t know how I wasn’t bitten, but I thanked the “man above” for saving me and my baby. —Lisa Bartlett, RE/MAX Desert Showcase, Peoria, Ariz.

From: REALTOR® Magazine Staff

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Earnest Money Deposit vs. Down Payment: What’s the Difference?

October 24, 2019
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When you buy or sell a home, you get used to hearing words you’ve never heard before. The mortgage lenders and insurance agents who help you through the process will throw around so much real estate jargon, somewhere along the way you might wish you had brought a dictionary—or maybe a translator.

Two rather vague but very important terms for buyer and seller alike are “earnest money deposit” and “down payment.” Both have to do with cold, hard cash, but what’s the difference? Here’s your cheat sheet on earnest money deposit vs. down payment.

What is earnest money?

Earnest money—also known as an escrow deposit—is a dollar amount buyers put into an escrow account after a seller accepts their offer. Buyers do this to show the seller that they’re entering a real estate transaction in good faith, says Tania Matthews, an agent with Keller Williams Classic III Realty in Central Florida.

Another way to think of earnest money is as a good-faith deposit that will compensate the seller for liquidated damages if the buyer breaches the contract and fails to close.

How much is a typical earnest money check?

Earnest money deposits usually range from 1% to 2% of the purchase price of a home—depending on your state and the current real estate market—but can go as high as 10%. If a home sales price is $300,000, a 1% earnest money deposit would be $3,000.

The buyer’s financing can also dictate the amount of an earnest money check. For example, if a buyer makes a cash offer, the seller may request more earnest money to show a true “buy-in” from the purchaser, says Matthews. In that instance, the seller of a $300,000 home might want a 3% deposit (or $9,000) versus the 1% deposit for an offer financed through a mortgage.

In any case, the seller can either accept, reject, or negotiate the buyer’s suggested earnest money amount, says Bruce Ailion, a Realtor® with Re/Max brokerage in Atlanta.

The earnest money deposit process

Earnest money deposits are delivered when the sales contract or purchase agreement is first signed. They are often in the form of the buyer’s personal check.

The check is held by the buyer’s agent, title company, or other third party (but never given directly to the seller) and is sometimes never even cashed, says Brian Davis, co-founder of SparkRental.com.

If the check is cashed, the funds are held in an escrow deposit account. The money will be shown as a credit to the buyer at closing and will offset part of the down payment amount or closing costs.

So here’s the real crux of the matter: If a prospective buyer backs out of the deal, the seller might be able to keep the earnest money deposit.

Matthews advises sellers to comb through the contract to see if they can take legal action. But keep in mind that if the buyers back out for any reason allowed by the contract or purchase agreement, they are legally entitled to get their earnest money back.

What is a down payment?

down payment is an amount of money a home buyer pays directly to a seller. Despite a common misconception, it is not paid to a lender. The rest of the home’s purchase price comes from the mortgage.

The money you put down can come from the buyer’s personal savings, the profit from the sale of a previous home, or a gift from a family member or benefactor.

Down payments are usually made in the form of a cashier’s check and are brought to the closing of a home sale or wired directly from the buyer’s bank.

Typical down payment amount

The exact amount of a down payment is often determined by the lender in relation to the overall loan amount. The minimum down payment required by mortgage lenders is 3% of the house’s price, and a 20% down payment is recommended by real estate agents.

Your purchase contract offer generally states how much you intend to put down, and a seller may be more likely to accept your offer if you are putting more money down.

But that’s not to say you have to put down 20%. After all, that’s a large chunk of change to have on hand, especially for first-time home buyers.

Be aware that the down payment is not all you need to buy a house. You also need to budget for closing costs, appraisals, and other expenses when you purchase real estate.

Is a 20% down payment mandatory?

For decades, a 20% down payment was considered the magic number you needed to be able to buy. It’s an ideal amount, but for many people it’s not realistic. In fact, many financing solutions exist, so you can consider that myth busted.

“Putting [down] less than 20% is OK with most banks,” Christopher Pepe, president of Pepe Real Estate, in Brooklyn, NY, told U.S. News & World Report.

Of you’re putting down less than 20%, however, there’s a catch. You will probably have to also pay for mortgage insurance, an extra monthly fee to mitigate the risk that you might default on your loan. And mortgage insurance can be pricey—about 1% of your whole loan, or $1,000 per year per $100,000.

Still, nothing compares to the feeling of owning your own home, so if you have your heart set on buying, there are options out there to help you achieve your dream of homeownership.

By: Margaret Heidenry, Realtor.com

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Inspecting the Inspection

October 17, 2019

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Before You Choose a Mortgage Lender, Read These Tips

October 10, 2019

Everyone in the market for a house has different wants — pre-war charm, a lush backyard, a welcoming front door in Pantone Ultra Violet, perhaps — but at the end of the day, they all share a need in common: money. Lots of it.

That’s where your mortgage lender comes in. The right lender can save you time, anxiety, and loads of cash. And the right loan officer — the professional who represents the lender — can be a powerful ally when you close on a mortgage. As with any potentially life-altering partnership, it’s important to choose wisely. 

Only You Know Which Lender Is Your Type

There are three types of mortgage lenders — retail banks, credit unions, and mortgage banks — as well as mortgage brokers, who compare loan products via a coterie of potential lenders to help you, the client, find the right one. Before you start narrowing down the candidates, you have to know what you’re looking for, and where to find it. Let’s talk about your options. 

Retail Banks

What they are: These are your Chases and Banks of America, plus your local banks. They do their own underwriting (in a nutshell, investigating your finances), so retail banks, especially the smaller ones, can sometimes offer lower fees and less-stringent credit requirements. If you like to have your accounts all in one place, you may want to use your own bank or credit union. 

Who you’ll work with: You’ll be assigned a loan officer, who will receive a commission or bonus for writing your loan. 

Credit Unions

What they are: They’re not-for-profit and customer-owned, so they’re not beholden to shareholders like a bank. Because of that and their not-for-profit tax status, they typically offer more personal service and lower fees. The flip side is less convenience: They have fewer branches and ATMs. 

And to apply for a loan, you must be a member of the credit union’s community, which could be faith-, employment-, interest-, or union-based, among other things. That said, it’s typically not difficult to become a member; the National Credit Union Administration’s Credit Union Locator is a tool for finding credit unions near you. 

Who you’ll work with: As with a bank, you’ll be assigned a loan officer, who will receive a commission or bonus for writing your loan. 

Mortgage Banks

What they are: These banks only offer home loans. Many online lenders operate as mortgage banks. 

Who you’ll work with: A mortgage bank will assign you a loan officer, who will receive a commission or bonus from the lender’s gross fees for writing your loan. An online lender is going to offer less hand-holding. 

Mortgage Brokers 

What they are: Mortgage brokers are essentially personal home loan shoppers — they act as liaisons between home buyers and mortgage lenders to help people find the lowest rates and the best mortgage terms. They’re able to get home buyers the best mortgage rates because they leverage their existing relationships with lenders — something individual home buyers can’t do. By doing the heavy lifting for the borrower, the idea is that they make loan shopping more convenient — and perhaps a bit faster. 

Who you’ll work with: A mortgage broker can be an individual agent or a group of agents, who act as independent contractors. In exchange for their services, mortgage brokers typically charge a 1% to 2% fee of the loan amount, which is either paid by the borrower or the lender at closing. 

Now that you’re armed with the basics, you’ll want to give yourself time to weigh the options about which lender, exactly, to work with. 

It Pays to Shop Around Before You Commit

Over the life of the loan, seemingly subtle differences could add up to tens of thousands of dollars. That money belongs to future you and all your dream vacations, renovations, and remodeling #goals. 

So before you choose your specific lender …

Thoroughly research any retail bank, credit union, mortgage bank, mortgage broker, or online option you’re considering. Make sure you’re clear on what they can offer you. About one in five (21%) home buyers said they regret their choice of mortgage lender, according to a recent J.D. Power survey. You’re doing your homework so that won’t be you. 

Interview lenders. You’re aiming for a shortlist of three. (You’ll see why it’s three in a minute.) If you’re thinking about selecting an online lender, make sure you take into account these tips and tricks. 

Don’t be shy about seeking advice. Survey your family, friends, and coworkers — especially the ones who are nerdy about money. 

Ask your real estate agent for a second opinion. They have experience with reputable lenders, particularly in your city or town. 

Now, let’s say you’ve narrowed your list of potential lenders to at least three candidates. The next step? Finding out whether they will give you a loan. You Should Seek Out a Lender’s (Pre-)Approval, Too

There’s a world of difference between being pre-qualified for a loan and being pre-approved. Pre-approval means you’ve got skin in the game. It means you’re a boss. And it’s proof that you can buy. 

Besides being the grown-up thing to do, pre-approval puts you in a better position when you make an offer. Everyone takes you more seriously. Pre-approval provides evidence to your real estate agent and the seller (or seller’s agent) that a trusted financial institution is willing to finance the purchase. 

In most housing markets, sellers are going to expect your to be pre-approved when you make your offer. And when you’re pre-approved, you’re more likely to have your offer accepted — or at least, you won’t lose out on a bid because you have to go back to the bank to get approved for a loan. 

As for pre-qualification, it’s an approximation and not necessary unless you have no clue about your creditworthiness and just want a snapshot. 

By contrast, with a pre-approval, a lender typically goes deeper and tells you more specifically how big a loan you can get. Caution here: Just because the lender says you can take out a loan for an amount, doesn’t mean you should. Consider your lifestyle and monthly budget to decide on the responsible loan amount for you. 

To get pre-approved, you must also authorize a lender to pull your credit. 

Borrowers with credit scores of 760 or higher can typically qualify for the lowest interest rates. 

Borrowers with credit scores below 650 may need to apply for a non-conventional mortgage, such as a Federal Housing Administration (FHA) loan — a government-backed loan that requires a minimum credit score of 580 but lets borrowers make as low as a 3.5% down payment. 

Borrowers with credit scores below 580 can still qualify for FHA loans, but they’ll have to make at least a 10% down payment. The lower the score, the tighter the requirements become. 

When you’re pre-approved, you’ll receive a Loan Estimate. This three-page document is about to be your new best friend. 

It Makes Good Sense to Get Pre-Approved by at Least Three Lenders

A Loan Estimate spells out a future loan’s terms, including:

  • The interest rate
  • The length of the loan
  • Estimated costs of taxes and insurance
  • How interest rates and payments might change over time

Other important financials

By comparing loan estimates, you can effectively size up your loan options and decide which lender is best for you — and your future. (If you need help navigating the details, the Consumer Financial Protection Bureau offers a sample Loan Estimate with helpful tips and definitions.) 

Getting pre-approval early in the process also gives you an edge over other buyers. Here’s why: 

  • The amount you’re approved for can help you determine your price range, and thus save time and frustration when shopping.
  • It sends a signal to your agent and sellers that you’re serious about buying a home.
  • It’ll help you move quickly to make an offer when you see a home you like.

And it’s an excuse to celebrate! You now have everything you need to move ahead with that one special lender — and, at the same time, connect with an officer or broker who can help you select the home loan product that’s best for you. 

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117. I can help.

What Does Homeowners Insurance Cover?

October 3, 2019

You’d be surprised at what your home insurance policy doesn’t cover. Here’s what is and isn’t covered by your insurance.

What does your homeowners insurance cover? The short answer is: “A basic homeowners insurance policy (called HO-1 in insurance lingo) covers your home and possessions if they’re damaged or destroyed by these things:

    Fire
    Lightning
    Windstorm (unless you live in a hurricane zone)
    Hail (not available everywhere)
    Explosion
    Riots
    Civil commotion
    Aircraft  (and things falling from aircraft)
    Vehicles (and things thrown from vehicles)
    Smoke
    Vandalism (although some policies exclude this)
    Malicious mischief
    Theft
    Volcanic eruption

But many states don’t allow this basic policy to be sold. Instead, you have to buy an upgraded policy that Upgraded Homeowners Insurance

That upgraded policy (called HO-2) adds protection to your home and possessions from even more perils. You get protection from everything on the HO-1 list (above) plus: covers more perils.

    Falling objects
    The weight of ice, snow, or sleet
    Flooding from your appliances, plumbing, HVAC, or fire-protection sprinkler system
    Damage to electrical parts caused by artificially generated electrical currents (such as a power surge not caused by lightning). But damaged electronics such as computers aren’t covered.
    Glass breakage
    Abrupt collapse (say from termite damage)

That same list applies to the homeowners insurance you buy for a condominium or co-op (except then it’s called HO-6 instead of HO-2).

With HO-1, HO-2, and HO-6, what you see is what you get. So if zombies attacked your home, your HO-1 or HO-2 wouldn’t cover the damage because zombies aren’t on the list of specific things those policies cover.

The Most Complete Homeowners Insurance

The most complete and protective form of homeowners insurance (called HO-3) covers you for all perils except some specific ones like:

    Floods
    Earthquakes
    Wars
    Nuclear accidents
    Landslides
    Mudslides
    Sinkholes

With this policy, if zombies attacked, you’d be covered because zombies weren’t specifically excluded by your HO-3 policy.

What Homeowners Insurance Doesn’t Cover

No matter which basic policy you get, it’s not going to cover everything than can damage or destroy your home. Typical homeowners policies don’t cover:

    Bad things that happen because you failed to maintain your home (like mold)
    Hurricanes
    Floods
    Earthquakes
    Mudslides
    Landslides
    Sinkholes
    War
    Nuclear accidents
    Sewer backups
    Sump pump failure
    Ground movement and holes caused by mining (known as mine subsidence insurance)
    Pollution

You can buy additional policies to cover some but not all of those perils (a quick Google search didn’t turn up any nuclear accident coverage).

And even if insurance is available for the most common natural disaster in your area, you may not be able to buy it if your home has features that make it vulnerable. For example, a home with unrated wood shake roof shingles may be tough to insure in an area where wildfires are common.

Other Things Homeowners Insurance Covers

In addition to covering your home, homeowners insurance also covers four more things:

1. Your outbuildings, landscaping, and hardscaping. If you have outbuildings (like a barn), landscaping, or hardscaping (like fences), your homeowners policy most likely covers those for up to 10% of your policy amount (5% for plants).

For example, if you have $100,000 in homeowners insurance and someone drives into your fence, the policy would cover 10%, or $10,000 in repairs.

Sometimes policies exclude damage to outbuildings, landscaping, or hardscaping caused by a particular peril (like wind).

2. Damage or loss of your personal belongings. Your homeowners policy covers your family’s belongings, even when you take them out of the house. If your child heads to college with a laptop and it’s stolen, that’s probably covered by your homeowners insurance policy.

A home insurance policy covers a lot of your personal belongings, but not necessarily everything.

You’ll need additional insurance if you have many expensive items like jewelry, furs, or antiques.

Policies will either state that your personal belongings are insured for replacement cost or cash value.

Replacement cost means that the insurance company will pay the full cost of replacing an item (such as the laptop mentioned above, or a sofa damaged in a fire) once you show a receipt. Cash value means the insurance company will issue you a check for the amount that the laptop or sofa would have been worth when it was stolen or destroyed.

3. Temporary living expenses if your home is so damaged you can’t live in it. When you can’t live in your home, your homeowners insurance covers your living expenses, including hotel bills and meals. But, you can’t live in the hotel forever and eat lobster every night on the insurance company’s tab. Your policy will have limits on how long you stay and how much you can spend.

4. Injuries or accidents at your house. Homeowners insurance coverage includes liability – meaning it covers you when you or your family members cause injuries or damage. This coverage also pays when your dog bites someone (medical payments) or someone falls and injures themselves.

Add an umbrella policy to boost your liability coverage into the millions.

Homeowners Insurance for Older Homes

There’s another kind of homeowners insurance (HO-8) used when your home is so old it would be impossible to replace. It couldn’t be built like the original — that is, new electrical code wouldn’t permit the same electrical, etc.

An HO-8 policy covers the same perils as the basic HO-1, but will only pay you the repair cost or market value instead of the replacement value.

If your home is old, but not so old that it’s historic, you might want another homeowners insurance coverage. A “law and ordinance” policy covers the cost of rebuilding using today’s building codes. It’s good to have if the building codes have changed a lot (for example, in Florida) since your home was built.

From: ClientDirect

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A Fall Checklist of 10 Things You Gotta Do Before Winter Sets In

September 26, 2019

When the last of summer’s heat is a faint memory, and you’re pulling out your hoodies more than your shorts, it’s time to tackle a few simple chores that’ll make winter more pleasant and prevent some nasty surprises next spring.

This fall checklist helps:

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117. I can help.

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