5 Things to consider before becoming a landlord: What they don’t tell you

Nobody really knows the total number of people who consider themselves landlords in the U.S.

The IRS puts the estimate at 7.1% of tax filers. They also claim that 17.1 million properties generated income for their owners,” according to David Bitton at Doorloop.com.

The most interesting statistics are of a financial nature. Bitton explains that, according to the US Census, “. . . landlords’ income is typically solid, earning up to $97,000 annually. It’s $35,000 more than the actual median household income.”

If you’re toying with buying a rental property, read on as we discuss five often-overlooked factors you should consider before becoming a landlord.

1. Legal and financial responsibilities

Being a landlord involves more than just collecting rent. You need to familiarize yourself with local landlord-tenant laws, which can vary significantly from one jurisdiction to another.

Understanding your legal obligations as a landlord is essential to protect your rights and avoid potential legal troubles down the road. We urge all new landlords to consult a legal professional to ensure compliance.

Moreover, being a landlord requires a solid grasp of your financial responsibilities. You’ll need to factor in costs such as property maintenance, repairs, insurance, property taxes, and possibly mortgage payments.

Be prepared for unexpected expenses, such as a leaky roof or a broken furnace, which can quickly eat into your profits. A comprehensive financial plan will help you weather these challenges.

2. Time and commitment

Owning rental properties may appear to be a passive income source, but it requires a significant investment of time and energy if you don’t hire a property manager.

From finding and vetting tenants to addressing maintenance requests and handling administrative tasks, being a landlord is a commitment that demands your attention.

Consider whether you have the time and willingness to take on these responsibilities. Are you prepared to be available 24/7 for emergencies? Can you handle tenant inquiries promptly?

If you’re already juggling a busy schedule, you might want to think twice before becoming a landlord. Alternatively, you can hire a property management company to handle these tasks, which will cut your profits.

3. Dealing with Difficult Tenants

As a landlord, you’re likely to encounter various types of tenants, and not all of them will be easy to deal with. While most tenants are responsible and respectful, there may be instances where you have to handle difficult situations.

Late rent payments, property damage, noise complaints, and even eviction procedures can be financially, emotionally, and mentally challenging.

Developing strong communication and conflict-resolution skills is crucial to handle these situations effectively. Being fair, firm, and proactive can help maintain a positive landlord-tenant relationship.

However, if confrontation and problem-solving aren’t your strong suits, being a landlord may not be the right choice for you.

4. Market volatility and vacancies

The real estate market is prone to fluctuations, and vacancies are an inevitable part of the job.

Assessing the local rental market and gauging the demand for rental properties in your area is important. Understanding the vacancy rates and rental prices will help you make informed decisions and set appropriate rent levels.

Additionally, periods of vacancy can result in financial strain, as you’ll still be responsible for mortgage payments and other property-related expenses. To avoid undue stress, have a financial buffer to sustain yourself during these lean periods.

5. Emotional attachment

While it’s natural to feel a sense of attachment towards your property, especially if it’s your former home or an investment you’ve poured your heart into, emotional attachment can cloud your judgment as a landlord.

Remember that this is a business venture, and making decisions based solely on sentimentality may not be in your best interest.

Treat your rental property as a business asset and make decisions based on sound financial considerations. Keep emotions at bay when dealing with tenant issues or making decisions about repairs and upgrades. It’s important to detach yourself emotionally and approach situations pragmatically.

Remember, being a landlord is not for everyone, and that’s perfectly okay. Weigh the pros and cons, evaluate your personal circumstances, consult with your legal and financial advisors, and make an informed decision.

Easy ways to increase your property value before selling

Have you ever noticed how the longer you live in a home, the less you notice or the more you can tolerate stuff that’s wrong with it? It starts feeling less like an investment and more like your territory.

When you decide to sell the home, common sense hits. The faucet drips, the oven doesn’t heat properly and the paint is 20 years old. Your home’s value becomes top-of-mind.

While there may be a lengthy list of tasks you’d like to perform before putting the home on the market, and it may seem overwhelming, relax.

Some tasks take priority. Others are more cosmetic in nature. Let’s take a look at some projects that won’t break the bank and may increase the home’s value.

If you have repairs that need to be made, do those first

It’s a wise use of your money to make repairs before doing any cosmetic work. The problems will most likely appear in the home inspection report, and you may pay for some of them anyway.

At least take care of any major repairs, such as repairing or replacing an HVAC systems, fixing roof problems or plumbing or electrical issues.

No major problems? Great!

Get to work on providing potential buyers with what they crave.

Flooring

When you turn your attention to upgrades, it pays to know what homebuyers are seeking in their new home. Flooring is near the top of the list. Although hardwood flooring is a draw for luxury homebuyers, starter and family homeowners would do well to consider luxury vinyl plank flooring.

Why?

A large real estate conglomerate studied online listing descriptions to determine which features yielded a good return on investment. They found that homes described as boasting luxury vinyl plank flooring sold for nearly 2% more than those without it.

Not only that, but they sold four days faster than the other homes. Learn the pros and cons of vinyl plank flooring at TheSpruce.com.

Update the kitchen

Since it’s the most important room in the home, according to numerous surveys of homebuyers, updating the kitchen should be first on your list. Not only will the work be popular with buyers but it will also help boost your home’s value.

Here are a few tasks to consider:

  • Repaint the kitchen. Nearly 45% of real estate agents surveyed by Homelight.com claim that homebuyers crave “… light or calming color palettes in the kitchen,” according to Daniel Feininger at housedigest.com.
  • If it’s within budget, replace your countertops with granite or quartz.
  • Replace or paint the cabinetry and add new hardware.
  • Add new, task-oriented lighting.
  • Hit the appliance sales because 75% of homebuyers say they want new appliances in their next home. Energy-efficient appliances will bring in even more money at closing.
  • Install an undermount sink and a new faucet.

Do the same for the second most important room, the bathroom 

The most important task in the bathroom is to ensure that it’s impeccably clean, then turn your attention to the following:

  • Replace the countertop toiletries with decorative items.
  • Replace the builder-grade towel racks.
  • Add new plumbing hardware.
  • Freshen up the towels and throw the rug.
  • Replace the mirror.
  • Update the lighting.

All that remains now is to clean the home, top to bottom. Make it look move-in ready, and you’ll have buyers clamoring after it.

Finding Your Property Line: A Guide for Homeowners

Here’s a scenario. You receive a notice of violation from your HOA regarding weeds in your front yard. Since your property lines aren’t clearly delineated with fencing or anything else, how are you to know that the property on which these weeds are growing is yours and not your next-door neighbor’s?

The answer can most likely (but not always) be found in that big packet of documents from the closing process. You still have that, right?

For many homeowners, trying to decipher closing documents is akin to attempting to get a sip of water from an open fire hydrant. That’s ok. We’ll walk you through practical methods and resources to help you identify your property lines.

Start with your deed and survey

Your property’s legal description can be found in the deed or survey documents. The deed provides a written description of the property’s boundaries, while a survey is a precise land map. Start by reviewing these documents, as they often include measurements, landmarks, and other relevant information to guide you in identifying your property lines.

Andie Huber, with This Old House, suggests, “Most mortgage lenders require prospective homeowners to have a current survey, and your title insurance also depends on it. If you bought your home recently but don’t have the survey, contact either company to see if they have a copy on file.”

What happens if you still can’t get your hands on the survey and can’t make heads or tails of the deed’s description?

Look for boundary markers

Boundary markers, such as metal stakes or concrete monuments, surveyors use to demarcate property lines. Begin by exploring your property’s perimeter and watch for any visible markers.

These markers may be buried underground, so gently probing the soil around the suspected area can help you locate them.

Be careful when digging. Utility lines are often buried as well. If you fear hitting a gas line or something else, dial 811 on your phone. This is a national number created by the Federal Communications Commission (FCC). There is no charge to call; they will help you from hitting these hidden, underground hazards while digging.

Talk to your neighbors

A friendly conversation with your neighbors can be surprisingly helpful. They might know about the property boundaries or have conducted a past survey.

Sharing information and experiences can provide additional insights and help you understand your property lines.

Check local records and government offices

Local government offices, such as the county clerk’s or assessor’s office, often maintain property records. These records may include maps, plats, or previous surveys that can assist in identifying property lines.

Visit these offices or check their websites to access relevant information. Some counties even have online databases that allow you to search for property records using your address.

Use online mapping tools

Advancements in technology have made locating property lines easier than ever. Several online mapping tools, such as Google Earth, can roughly estimate your property’s boundaries.

While these tools may not be as accurate as professional surveys, they can give you a general idea to start with. Additionally, some counties have online mapping systems offering more precise boundary information.

Hire a professional surveyor

Hiring a professional surveyor is the way to go if you need precise and legally binding information. Surveyors use specialized equipment to accurately measure and map property boundaries.

The national average cost to hire a surveyor is Homeowners report that the average land survey costs around $516. The low end of the price range is $200, and the high end is $1045, according to HomeAdvisor.com.

The surveyor will conduct a thorough survey of your property, locate existing markers, and may even install new markers if necessary. While this option incurs a cost, it provides the highest certainty regarding your property lines.

Ensure that the surveyor you hire is licensed and insured.

Locating your property lines is crucial for understanding your land clearly and avoiding potential conflicts with neighbors or your HOA.

While some methods can give you a rough estimate, consulting professional surveyors and relevant local authorities will provide the most accurate and legally binding information.

 

 

 

 

 

 

From Tenant to Homeowner: A Guide for Young Renters

Slightly more than 35% of Americans are tenants, paying $1,937 (median) in rent each month, according to Rent.com. The total monthly housing cost for these folks is $1,301, while the housing cost for homeowners is $1,510, only $209.00 more, according to the US Census Bureau.

Of course, we are looking at median costs here so your situation may be different. In the main, however, owning a home is not prohibitively more expensive than renting.

It’s the actual purchase that has many tenants, especially those in the younger generations, feeling as if they are locked out of homeownership.

From the perpetuation of the myth that a 20% down payment is the law of the land to the notion that a house payment would be significantly higher than a rent payment, many Americans remain in the cycle of paying someone else’s mortgage payment.

Today, we’ll dive into the various ways you can get on the path to homeownership: to make a move from “No, you can’t paint the living room” to the complete freedom to decorate how you want, to plant what you desire and to have a dog, finally.

Step one in the journey to homeownership

Before embarking on the path to homeownership, it’s crucial to be mentally prepared and financially ready. Consider the following questions:

  • Do you have a solid support system in place to help you through the process?
  • Have you thought about what type of real estate agent you need? Many new homebuyers require a bit of hand-holding and a substantial amount of tutoring on the ins and outs of the process. Some agents are adept at “real estate therapy,” so if you feel you might need that type of support, you’ll want to make a note to choose your real estate agent carefully.
  • Are you ready to begin letting go of emotions and thinking like an investor during the purchase process? For example, your dream might be a suburban home with the quintessential white picket fence. Your financial reality, on the other hand, may dictate that you purchase a condo to keep home maintenance costs low enough to be affordable. Are you ready for that? For doing whatever is necessary to start building equity?

Get clear on your credit and finances

Becoming a homeowner requires financial stability and planning. Start by assessing your current financial situation. Take a close look at your income, expenses, and savings. To make this easier, use a worksheet like these from the folks at MortgageCenter.com and this one from the Consumer Financial Protection Bureau.

Then, check your credit report and score. Every American is entitled to a free credit report each year from AnnualCreditReport.com, the only company authorized to provide these reports by Federal law.

Here is a list of which aspects of your credit report lenders will scrutinize the most:

  • Have you recently applied for credit?
  • Do you pay your bills on time?
  • Are your credit limits maxed out? Lenders want to see balances no higher than 30% of the limit.
  • Have you declared bankruptcy?
  • Are you an authorized user of someone else’s credit card?

Work on getting your credit balances where they should be, paying bills on time, and avoiding opening new credit accounts.

Consult a mortgage broker

Implement some changes once you have a clear idea about your budget and credit. If you don’t make enough money to buy a home, consider taking on a side gig.

Fix your credit, if necessary. Then, visit with a mortgage broker to determine how much you can borrow and how much you’ll need to put down.

Ask the broker about state, local, and federal down payment assistance programs and whether or not you qualify.

Finally, ask for a ballpark figure on what you can expect to pay in closing costs.

Save up some money for the down payment and closing costs

Now that you know how much money you’ll need for the down payment and closing costs, have you figured out how to come up with it? Here are a few tips from mortgage professionals:

  • Create a dedicated homebuying savings account and direct your employer to auto-deposit a portion of each paycheck.
  • Take on another job. This can be a part-time job or a side gig, such as driving for Uber or one of the other similar companies. Or, check out freelance, work-from-home opportunities at Upwork.com.
  • Look into the down payment assistance programs recommended by the mortgage broker.
  • Find ways to cut expenses. Many young people are moving back in with Mom and Dad to speed up the savings process. As of February 2023, the median rent nationwide was $1,937. By moving back home, you can save $23,244 in just one year.

Transitioning from being a tenant to a homeowner is an exciting and fulfilling journey, but it requires careful preparation and planning. You can confidently navigate the homebuying process by getting clear on your goals, assessing your financial situation, saving diligently, and seeking professional advice.

Let us know how we can help. Advice is always free.

We are not mortgage professionals. This blog post’s legal and financial information is provided for general informational and educational purposes only and is not a substitute for professional advice.

Smart Strategies to Save for a Down Payment on Your Dream Home

Dreaming of buying a home? One of the biggest challenges of the process is coming up with a down payment, a percentage of the home’s purchase price that you must pay at closing.

But don’t worry; with the right strategies, accumulating a cash down payment can become more achievable than you might think.

Let’s explore several simple and practical strategies to help you reach your goal of homeownership.

Set a savings goal

Start by determining how much you need for a down payment. Despite what many Americans assume, 20% down payments are not mandatory. In fact, the average down payment is 6%, according to the experts at Reliance State Bank. Several government-backed mortgage products require much less, depending on your circumstances.

Then, there are down payment assistance programs. Talk to a mortgage professional to understand the specific amount you should aim for.

Then, determine a realistic savings goal based on this amount and break it down into monthly or weekly savings targets. This way, you’ll have a clear roadmap to follow and stay motivated.

Then, make saving that money a no-brainer

Make saving easier by automating your savings process. One of the easiest ways is to dedicate a certain amount of each paycheck and automatically transfer it to your savings account.

This way, a portion of your income is saved before you even have a chance to spend it. Over time, your savings will grow without requiring constant effort or discipline.

Put together a budget

Developing a budget is key to managing your finances effectively. Track your income and expenses to determine what you’re spending on and which categories you can eliminate or reduce your spending.

Trim unnecessary expenses like eating out or subscription services. Consider cooking at home, packing lunches, or exploring free entertainment options. Redirect the money you save towards your down payment fund.

Check out these free budget templates:

Research down payment assistance

Look into down payment assistance programs. These programs, offered by government agencies or non-profit organizations, provide financial assistance to eligible homebuyers.

Depending on the program, they offer low- to no-interest loans, grants, or other assistance to help bridge the gap for your down payment. Consult with your lender for local sources and research, and contact local housing authorities or community organizations to explore these opportunities.

Check out BankRate.com for an informative breakdown of a number of down payment assistance programs.

Boost your income

Consider ways that you can make more money. Look for opportunities to earn extra money, such as freelancing, gig work, or a part-time job. Use the additional income solely for your down payment savings.

Every little bit counts and can bring you closer to reaching your goal faster. Here are some additional ways to pump up your savings account:

  1. Downsize or rent cheaper accommodations

If you’re currently renting a larger or more expensive place, downsizing to a smaller or more affordable accommodation can free up extra funds for your down payment. Look for other ways to reduce your housing costs, whether by finding a roommate, negotiating a lower rent, or exploring more affordable neighborhoods. Temporary sacrifices can lead to long-term gains.

  1. Tap into gift funds

Sometimes, family members may be willing to gift you funds toward your down payment. If you’re fortunate enough to have supportive relatives, discuss the possibility of receiving financial assistance as a gift. Remember that lenders may have specific requirements regarding gift funds, so understand and comply with any regulations.

  1. Save windfalls and bonuses

Whenever you receive unexpected windfalls like tax refunds, bonuses, or inheritances, resist the temptation to splurge and instead direct those funds toward your down payment savings. These unexpected financial boosts can provide a significant jumpstart to your savings goal.

Saving for a down payment requires discipline, but homeownership can become an attainable goal with these strategies. You may be surprised how quickly you’ve accumulated the money needed to purchase your dream home.

Remember, patience and perseverance are key.

 

DIY Water Heater Routine Maintenance

Water heaters are the unsung heroes of modern living, providing the luxury of hot showers, sanitized dishes, and clean laundry. Yet, their maintenance often takes a back seat until issues arise.

Regular maintenance is crucial to ensure their longevity, efficiency, and safety. Tucked away in the garage, as most are, the water heater is easy to forget about. Until it isn’t.

Before you start your maintenance, familiarize yourself with your water heater’s manual and the manufacturer’s recommendations. Different heaters (electric, gas, tankless) may have slightly different maintenance requirements.

 

Flush the tank

Over time, sediment and minerals can accumulate at the bottom of your water heater tank, reducing efficiency and causing corrosion. Perform an annual tank flush to mitigate these problems:

  • Turn off the water heater and disconnect the gas or electricity supply.
  • Connect a garden hose to the drain valve at the tank’s base.
  • Direct the other end of the hose to a suitable drainage area.
  • Open the drain valve to allow water to flow until it runs clear.
  • Close the valve, remove the hose, and restore the water supply.

Inspect the anode rod

The what?

The anode rod is a vital component that prevents corrosion by attracting minerals that would otherwise end up in the tank. Regularly inspect the anode rod, usually located on the top of the water heater. If the rod shows signs of significant corrosion or wear, consider replacing it. This simple step can significantly extend your water heater’s lifespan.

Turn down the heat

Check the temperature setting on the unit. If you haven’t ever fiddled with it, most likely it will be set to 140 degrees Fahrenheit.

Lower it to 120 degrees. Not only will this save on energy costs, but you’ll be less likely to have a scalding incident in the home.

Test the pressure relief valve

The pressure relief valve is a vital safety feature that prevents excess pressure from building up in the tank, reducing the risk of dangerous explosions. To test the valve’s functionality:

  • Turn off the water heater’s power and close the cold-water supply valve.
  • Position a container under the discharge pipe connected to the valve.
  • Carefully lift the valve’s lever for a moment to release some water. If water flows freely, the valve is working correctly.

If you’ve no idea where the pressure relief valve is located or even what it looks like (hey, I didn’t either!) check out this YouTube video from the pros at Rotor-Rooter.

Wrap your water heater

Wrapping your water heater with an insulation blanket and insulating the hot water pipes can help retain heat, reducing energy consumption and lowering utility bills. Ensure not to cover the thermostat or the top of the heater with the insulation blanket.

“Water heater insulation could reduce standby heat losses by 25%–45% and save you about 7%–16% in water heating costs—and should pay for itself in about a year,” suggests the U.S. Department of Energy experts. They even offer a handy walkthrough of the process, including how to measure the water heater to ensure you get the correct size blanket.

Detecting leaks early can save a bundle

Regularly check your water heater and the surrounding area for any signs of leaks. Even minor leaks can escalate into major issues if left unattended.

Address any water accumulation or dampness promptly to prevent further damage.

Call in a pro

While DIY maintenance is important, scheduling an annual professional inspection is equally essential.

Trained plumbers can identify potential issues that might be beyond your expertise. They can also perform more complex tasks such as checking gas connections, evaluating burner efficiency, and inspecting electrical components.

Water heaters are the unsung champions of comfort in our homes. By following these essential water heater maintenance tips, you can ensure their durability, efficiency, and safety. This means a steady supply of hot water, energy savings, and peace of mind for you and your family.

How schools impact property values

 

Take a look at your new home wish list. You’ve undoubtedly included the number of bedrooms and bathrooms you need, listed the amenities you hope to find, and perhaps even the type of neighborhood you hope to live in.

One aspect of the home purchase that few buyers consider is the house’s future resale value. Sure, you don’t have a crystal ball with which to read the future, but housing market experts and economists have studied home values for decades and understand the issues that impact value, both positively and negatively.

Since your home is also a hefty investment, jot down the words “resale value” on your wish list and read on to learn why, whether you have children or don’t, purchasing in a good school district is a wise decision.

The studies

The multitudes of studies on the influence of nearby schools on property values all agree that a good school district positively impacts value.

One study, with results published at BiggerPockets.com, claims that homes near schools with a 4 or 5-star rating at SchoolDigger.com held their value better during the Great Recession than those near schools with fewer stars.

David Figlio, a professor at Northwestern University, noticed that in Florida, homes near schools that had been awarded an A rating by the state realized an additional $50,000 in value versus homes near those schools with a B rating (Wall Street Journal).

“A study done by the National Bureau of Economic Research found that home values increased $20 for every dollar spent on public schools in a community,” according to a report from the National Association of REALTORS®.

Buyers agree

When the National Association of REALTORS® interviewed homebuyers for their “Profile of Home Buyers and Sellers, ” 25 percent of them wanted to live in a “quality” school district.

More significantly, for home sellers, 53.3 percent of those interviewed expressed a willingness to exceed their budget for such a home. The NAR broke that number down further:

  • 6 percent of buyers are willing to pay one to five percent above their home purchasing budget.
  • 7 percent will pay six to 10 percent above budget.
  • Almost nine percent would pay 11 to 20 percent above budget.

What makes a school district “good?”

One of the most common determinants of school quality is test scores. For instance, GreatSchools.org bases its ratings primarily on test scores.

U.S. News’ annual “Best High Schools” rankings are based on three criteria:

  • State-mandated test scores.
  • How effectively the school educates its minority and disadvantaged students.
  • Participation in and performance on International Baccalaureate (IB) and Advanced Placement (AP) exams.

Interestingly, a recent study sponsored by the Andrew W. Mellon Foundation suggests that “mean test scores are significantly related to property values.”

How much more is a good school district worth?

Determining a dollar value on the additional home values in high-performing school districts seems to be the only area the experts disagree on. One study claims that homes in school districts with high test scores are worth $16,000 more than similar homes in poor-performing districts. (Refs 6)

A Brookings report claims that, on average, homes in high-scoring school districts are worth $205,000 or more than those in low-scoring districts. (Refs 7)

Figlio says homes in top districts net a 23 percent premium over homes in other districts. The best news, at least from the professor, is that no matter the fortune of the housing market – whether it is rising or falling – the premium remains consistent. (Refs 8)

 

Proceed with caution

Doing your research is the key to shopping for a home with a quality school district as your top criterion. Two game changers to watch out for are the deterioration of quality schools and rezoning.

Check recent elections for how residents voted on school bond issues. A well-financed school is a good sign.

Inquire as to the teacher turnover rate. When many teachers leave a district for greener pastures, it may be a sign that the quality of the schools is going downhill.

Rezoning a school district typically occurs due to overcrowding. A few years back, Las Vegas parents with children in the Clark County Schools District discovered that 17 schools would be rezoned because of overcrowding and a lack of funds to build new schools.

Some schools subject to rezoning are located in the pricey Summerlin area of Las Vegas, where many folks paid a premium for their homes because of the area’s outstanding schools.

Although current Givens Elementary School students aren’t affected, homeowners who recently moved to the area hoping to enroll their child in the highly rated school will now be directed to one of two other schools with substantially lower scores.

Determining whether a school district will decide to rezone is challenging. Check the school board’s cap on enrollment, and if your school of choice seems to be approaching or exceeding it, proceed with caution.

Although the size and price of a home are always key components when considering the purchase of a home, choosing a home in the best school district you can afford is also an important factor.

When considering the home’s future value, the quality of the school district sometimes trumps all other considerations.

Understanding Umbrella Insurance Policies: Who Needs Them and Why?

So, you’ve got your car insurance, homeowners insurance, and maybe even a little something for your beloved furry friend. You’re feeling pretty confident that you’ve got all your bases covered.

But have you ever heard of umbrella insurance? No, I’m not talking about that handy accessory that keeps you dry in a downpour. I’m talking about an insurance policy that can provide you with an extra layer of protection and peace of mind.

Let’s dive into the details to help you learn if umbrella insurance is something you need.

What is umbrella insurance?

Think of it as an extra shield that extends beyond the coverage limits of your existing insurance policies, such as auto or homeowners insurance. It kicks in when the limits of those policies are exhausted, providing additional liability coverage.

For example, “An idle remark can get you sued for slander. A car accident can land you in court,” explains Richard Koreto at HouseLogic.com.

While none of these are covered under the typical homeowner’s insurance policy, you can obtain this coverage with umbrella insurance.

In a nutshell, umbrella insurance offers the advantage of extending the liability protection on your home and auto policies. It’s like having an insurance safety net to catch you when unexpected events or accidents exceed your other coverage.

Now, you might be wondering who exactly needs an umbrella insurance policy. There are a few situations where umbrella insurance becomes particularly crucial:

High-Net-Worth Individuals: If you’ve accumulated substantial assets, whether it’s a luxurious home, valuable investments, or a fat savings account, you become a potential target for lawsuits seeking large sums of money. An umbrella insurance policy can shield your hard-earned assets from being wiped out in case of a lawsuit or judgment exceeding your primary insurance coverage.

Homeowners: While your homeowners insurance policy covers you for many unforeseen events like property damage or theft, it may not be sufficient to cover certain liability claims. For instance, if someone were to slip and fall on your property and decide to sue you for medical expenses and damages, your homeowners insurance might fall short. An umbrella policy can step in and provide the extra coverage you need to protect your assets.

Drivers: We all know that accidents happen, and sometimes they can lead to costly lawsuits. If you cause a severe accident that results in significant injuries to others, the liability limits on your auto insurance might not be enough to cover medical expenses, legal fees, and potential damages. An umbrella insurance policy can help fill that gap and save you from a financial nightmare.

Pet Owners: As much as we love our furry friends, the truth is that accidents involving pets can happen. If your pet were to bite or injure someone, you could be liable for their medical expenses and any resulting damages. An umbrella insurance policy can offer that extra layer of protection in case your pet’s actions lead to a lawsuit.

So, you might be wondering, “Why can’t I just increase the limits on my existing insurance policies?” Increasing your primary coverage limits can be an option, but it has limitations.

Insurance companies often have maximum limits they can offer, and those limits may not be enough to cover you adequately in high-stakes scenarios. Additionally, umbrella insurance isn’t just about increasing the limits; it often covers claims not covered by your primary policies, like slander or libel lawsuits.

Why umbrella insurance might be worth considering

Now that we’ve covered who might need umbrella insurance let’s talk about the reasons why it’s worth considering. Here are a few key benefits:

Increased Liability Protection: The primary purpose of an umbrella insurance policy is to give you peace of mind by providing additional liability coverage. It acts as a safety net, ensuring you’re financially protected in the face of unexpected lawsuits or claims beyond your primary insurance limits.

Affordable Coverage: Umbrella insurance policies offer substantial coverage at a relatively low cost. Considering the potential financial devastation that can result from a lawsuit, the annual premium for an umbrella policy is often a small price for the protection it provides.

Broader Coverage: Umbrella insurance policies often include coverage for various liability situations that might not be covered by your primary policies. This can include things like defamation, false arrest, or even worldwide liability coverage for certain situations. It’s like having a safety net that catches you in various scenarios.

Peace of Mind: Let’s face it; life is full of uncertainties. Accidents happen, and lawsuits can arise from unexpected situations. Having an umbrella insurance policy in place lets you sleep better at night, knowing you have an extra layer of protection to shield your assets from potential financial ruin.

Before you rush off to purchase an umbrella insurance policy, it’s important to note that there are typically requirements for eligibility. Insurance companies often require you to have certain minimum levels of primary liability coverage on your existing policies before you can purchase an umbrella policy. This ensures that you have a solid foundation of coverage in place.

When it comes to choosing an umbrella insurance policy, it’s crucial to work with a reputable insurance provider. Shop around, compare quotes, and read reviews to find a company that fits your needs and has a track record of excellent customer service.

Feeling anxious about buying a home? There’s a cure for that

I think most of us remember buying our first home. Such a mix of emotions involved! Elation, fear, anxiety, and excitement all rolled together.

It’s perfectly normal to feel all of these things, but it is also necessary to try to curb the more negative feelings during the process.

There are numerous ways to deal with emotions without them becoming destructive or disruptive. Let’s take a look at a few of those.

Someone to lean on

Although a step we’ll explore later on will help you learn more about the home-buying process, nobody expects you to be an expert in the beginning.

In fact, most folks who have bought homes will tell you to hire an expert. That would be an experienced real estate agent.

Choose your agent carefully. If you need periodic check-ins by telephone, ensure the person you choose is responsive. If you crave knowledge about the process, choose an agent with patience who can put complicated financial terms into plain English. Finally, ensure your agent is someone you feel comfortable with and can build rapport with.

Visit with a lender early in the process

You’ve probably heard this “tip” before. Most of the advice you’ll find online claims that the reason for the early visit is to become pre-approved for a loan. Sellers, they say, are more comfortable with pre-approved buyers.

While that is largely true, a more important reason to see a lender early in the process is to determine how much you can spend on a home. This allows you to shop smart for a home that won’t break the bank when all is said and done.

Stick to a monthly payment figure (including principle, interest, taxes, insurance, and HOA fees, if any) that you know you can comfortably cover and refuse to go beyond that.

Once you know the maximum amount you will spend on a home, you can ask your agent to not show you homes over that figure. This will go a long way in helping get rid of anxiety.

Get educated

Most savvy homebuyer’s real estate agents understand there is much to know about buying a home that the average American can’t possibly know. Because of this, they provide lots of educational materials on their websites.

This is great for buyers who do best when teaching themselves.

Not all of us can learn that way; however, knowledge, as they say, is power. Consider attending a first-time homebuyer course.

Fannie Mae offers one you can take online; it is free of charge, it’s taught in English or Spanish, and you will receive a certificate at the end of the course.

Knowing the process and what to expect along the way is empowering and will build your confidence. No anxiety for you!

The Savvy Homebuyer’s Guide: Performing a DIY Home Inspection (in Addition to Hiring a Pro)

So, you’ve finally found “the one” – your dream home. The excitement is real, but before you dive headfirst into making an offer, it’s crucial to thoroughly understand the property’s condition.

That’s where a home inspection comes into play. While hiring a professional home inspector is highly recommended, there are a few things you, as a savvy homebuyer, can do to perform your own DIY home inspection. Today, we’ll walk you through the process, giving you peace of mind and helping you perform your due diligence.

First, we need to be very clear

A DIY home inspection does not replace the need for a professional inspection. A qualified home inspector has the experience, knowledge, and equipment to identify potential issues you might overlook.

However, conducting a preliminary inspection yourself can help you spot any obvious red flags and provide a foundation for meaningful discussions with the professional inspector. So, let’s roll up our sleeves and get started.

Start with a visual assessment

Take a good look at the exterior of the house. Look for any signs of damage, such as cracks in the foundation, peeling paint, or sagging gutters. Walk around the property, checking the condition of the roof, windows, siding, and doors. Take note of any visible issues that might require further investigation.

Inspect the electrical system

Begin by checking the condition of the electrical panel. Look for signs of rust, burn marks, or loose connections.

Test the light switches and outlets in different rooms to ensure they are functional. Pay attention to any flickering lights or buzzing sounds which might indicate electrical problems.

Feel the outlet plates. “Electric current may make a switch plate slightly warm to the touch, but if the outlet is uncomfortably hot, turn off whatever is plugged in and try it in another outlet.”

“If the outlet grows hot even without anything plugged in, it may be wired incorrectly,” according to the professionals with Underwriters Laboratory, a non-profit organization that performs testing for public safety.

They also recommend that you check the outlets in the kitchen and bathrooms. “… both require special shock-resistant outlets called ground fault circuit interrupters (GFCIs).” These are the outlets with two buttons on the face, often one red and one black.

Examine the plumbing

Check for leaks under sinks, around toilets, and in the basement or crawlspace. Run faucets in all sinks and showers to test water pressure and drainage.

Flush toilets to ensure they are in proper working order. Don’t forget to inspect the water heater and look for any signs of corrosion or water damage.

Assess the HVAC system

Test the heating and cooling systems to ensure they are working properly. Adjust the thermostat and listen for any unusual noises coming from the furnace or air conditioning unit.

Investigate the home’s structural integrity

Look for any cracks or unevenness in the walls, floors, or ceilings. These could be signs of foundation issues or settling. Rockford Mutual Insurance Company offers a list of additional things to look for that may indicate foundation problems.

Open and close doors and windows to ensure they operate smoothly. If possible, access the attic or crawl space to check for any signs of pests, water damage, or insulation problems.

Check for water intrusion

Inspect the basement or crawl space for signs of water intrusion, such as dampness, mold, or mildew. Look for moisture stains on walls or ceilings throughout the house, which could indicate leaks or previous water damage.

Evaluate the exterior

Walk around the property and assess the condition of the siding, roof, and gutters. Look for any signs of damage, missing shingles, or loose gutters that could potentially lead to water infiltration.

Don’t forget the yards

Stroll through the yard, paying attention to the grading and drainage. Ensure that water flows away from the foundation to prevent water-related issues. Look for overgrown trees or branches that threaten the house or power lines.

Remember, while a DIY home inspection can provide valuable insights, hiring a professional home inspector to comprehensively examine the property is essential.

A professional will thoroughly assess the structural elements, electrical and plumbing systems, and more, using specialized tools and expertise. Their unbiased evaluation will give you a comprehensive understanding of the property’s condition, helping you make an informed decision about your purchase.

When hiring a professional home inspector, do your due diligence. Seek recommendations, read reviews, and ensure they are licensed and certified.

Accompany the inspector during the inspection, ask questions, and take notes. This will further enhance your understanding of the property and any potential issues.

Combining your initial assessment with a thorough professional inspection gives you the confidence to make an informed decision about one of the most significant investments in your life – your new home.