You’ve just received another rent increase from your landlord and you’re starting to wonder if it’s time to buy a home or condo. That’s the question many people are asking as rents continue to escalate across the nation. Buying a home is not for everyone, however, if you are wondering if it makes financial sense, here are some indicators that it may be time to purchase your own place.
The average mortgage payment in the U.S. is now less than the average rent. The median rent for a two-bedroom apartment in the U.S. is $1,330. But if you are in a high-cost city like San Francisco or Seattle, rents can run as high as $5,000. Renters in Austin, Chicago or Denver can expect to pay $2,000 or $3,000 for that same two-bedroom apartment. Rents have skyrocketed in many cities across the country; so high that many of us are paying 50 to 60 percent (or even more) of our income just to keep a roof over our heads. Most financial experts say you should only pay 20 to 30 percent of your income for rent, so something is out of whack.
When you weigh that against the average mortgage payment in the country, which is just over $1,100 a month (obviously higher in cities such as New York, San Francisco and Washington, D.C.), and mortgage loan rates that continue dropping into the 3 percent range, home affordability looks better and better. With a fixed mortgage your monthly costs stay the same over the term of the loan, unlike rents which can (and usually do) go up at the end of the lease.
Other economic factors that lean towards buying a home:
Rents are predicted to rise 2 percent each year, eating more out of your paycheck
Housing prices are rising, meaning they are a good investment against inflation
More couples are having children and planning on buying a home, which may create shortages and push home prices even higher
The costs associated with purchasing a home aren’t much more than first and last month’s rent, application fees and the security deposit required for most rental situations
Proponents of renting site the lack of maintenance and repair costs, as well as the freedom to move to a new area as reasons not to buy. However, renters never gain equity and they miss out on the tax advantages homes afford.
If you still have doubts, Trulia and Zillow have calculators that clearly show the current cost of buying a home is much less than renting. Run the numbers and see for yourself.
Before you buy, these are important things to consider:
Length of stay – unless you are investing in a rising market, you should plan on staying in that home for at least five to seven years
Down payment – to avoid mortgage insurance you will need 20 percent down; that may drain your funds
Don’t forget about closing costs – you can often negotiate with the seller on these but there will still be inspection, title company and real estate commissions to be paid and they can add up to thousands of dollars
Costs related to owning a home – local taxes, maintenance, repairs and insurance all add to the monthly mortgage so make sure you factor these into your budget
But there are other benefits beyond the budget to being a homeowner. You get to paint it the colors you like, knock out walls or add a room, change appliances and create the landscape plan of your dreams.
This article is furnished by California Casualty, providing auto and home insurance to educators, law enforcement officers, firefighters and nurses. Get a quote at 1.866.704.8614 or www.calcas.com.
Spring is here. As we look forward to longer, warmer days, it’s a good time to look around your home or apartment and identify the elements that might pose a danger to you or others. You might also eliminate conditions that could cause unnecessary damage.
Here are five simple things that can make your home or apartment safer.
1. Prevent break-ins.
Did you know break-ins increase in the spring and summer? The Justice Department says a home in the U.S. is burglarized every 20 seconds. Many of these are crimes of opportunity from thieves looking for an easy target. Simply locking doors and windows, not leaving garage doors open and installing extra lighting and a security system can reduce the risk. Trimming back bushes from around the home, having a dog and joining a neighborhood watch group are also good ways to deter a burglar.
2. Fire-proof your home.
Many of us may not know that fires burn hotter and faster than in the past. New tests show the open floor plans of modern homes, synthetic furniture and tons of electronics can cause a spark or a flame to flash into a major blaze in just three to five minutes. It’s important that we eliminate clutter, install smoke detectors on all levels of the home and in all bedrooms, have fire extinguishers available, and have an escape plan. It’s also essential to create defensible space around your home in case of a wildfire. Remember, too, that smoking materials are the leading cause of fire deaths.
3. Eliminate trips and falls.
While you can’t prevent all of them, you can make certain that stairs are in good repair with firm handrails, toys, newspapers and other clutter are picked up, rugs have a non-skid backing and bathrooms and showers have safety handles and no-slip bathmats. Adequate lighting inside and outside also helps. Not only will these actions protect your family, but they help prevent you from being sued if someone hurt themselves at your home or apartment.
4. Prepare for natural disasters.
This is the beginning of storm season. Do you have a safe area in case there is a tornado or earthquake? Do you know your risk for flood, fire or weather events? Now is the time to make certain your home is as disaster proof as possible, that you have an evacuation and communications plan, and prepare an emergency kit with extra food, water, medicines, etc.
5. Check appliances, pipes and wires.
Water from broken pipes, loose fittings and clogged drains can cause serious damage to your home. Inspect the backs of refrigerators, washers and other water sources for cracked pipes or rusted connectors. Frayed wires and clogged vents can cause fires, as can fireplaces and heaters that haven’t been cleaned and checked.
No matter how well you plan, you need home or renters insurance to protect your most valuable asset and your possessions. Homeowners and renters insurance also provide temporary housing and additional living costs while your home is repaired, as well as liability protection in case you get sued. Don’t forget that earthquakes and floods are not covered under your homeowner or renters insurance. You need separate policies for those.
What’s more romantic than Valentine’s Day? It’s the day of love, and no other day has as much meaning for those true to the heart. Don’t make the mistake of forgetting your special person on February 14; 53% of women said they would end their relationship if they didn’t receive a Valentine’s gift.
With that in mind, The National Retail Federation estimates that Americans will shell out almost $20 billion to show their love this year. While the average bill will come to $146 for flowers, candy and other goodies, $4.4 million will be invested in jewelry.
Their survey also found:
20% will give a valuable gift of jewelry (ring, bracelet or necklace)
15% will just give a gift card
$681 million will be spent on pets
If the romance moves you to give a ring or another piece of expensive jewelry (keep in mind the average engagement ring costs around $5,000), make sure that you have it adequately protected. While your homeowners or renters insurance provides limited coverage for burglary or loss, high priced items need special insurance, often called scheduled personal property, to cover the amount they are worth. Scheduled personal property comes with no deductible and pays even if that diamond ring or necklace is damaged, lost, or accidently gets run through the garbage disposal. The Property Casualty Insurers Association of America recommends that you get a written appraisal of that special piece of jewelry to establish its value just in case it is lost or misplaced.
Odds are you or someone you know is getting married. June through September is the peak of the wedding season in the United States. Every year, 2.1 million couples tie the knot, which breaks down to nearly 6,000 weddings a day. But what happens if the groom gets food poisoning the night before the wedding or a fire burns down the reception hall? Believe it or not, there is insurance for that.
Wedding insurance typically runs from $155 to $550 dollars, depending on how elaborate your special plans might be. It covers the cost to reschedule the nuptials due to weather, injury, the wedding dress or tuxedos not showing up, the failure of a caterer, or if the location is unable to host your event. You can also insure the wedding rings, presents and the photographs.
Is wedding insurance worth it? One provider researched claims filed between 2011 and 2015 and found:
Problems with vendors (venue went bankrupt, photographers failing to deliver and DJs not showing up) accounted for 30 percent of payments
Illness and injury resulted in 29 percent of the claims
Weather issues caused 16 percent of the cancelations
Military deployment was the cause for 10 percent
The good news is that once the rings are exchanged and the honeymoon is over, there are important insurance decisions to make, some that could save you money.
Marriage Discount
Most auto and home insurance companies offer discounts for newlyweds. This applies to both men and women; however, men under the age of 25 see the biggest savings since they are usually considered high risk drivers. The lower rates can also apply to those in domestic partnerships.
Combining Autos
If you both have separate cars with different insurance companies, now that you are married you can save money by putting both vehicles on the same policy. Most insurance companies give discounts for multiple vehicles. It will also ensure that both drivers are covered no matter which car they use. You can find more savings by bundling your auto with your homeowners or renters insurance.
Increase Homeowner or Renters Coverage
You didn’t buy them, but all those wedding presents are valuable. You now have a new set of china, expensive new appliances and other things for your home. These assets need to be covered. Talk to an insurance advisor to make sure you have enough coverage to protect all the things you own and to increase your liability protection. If you rent, keep in mind that your landlord’s insurance does not cover your possessions and you need renters insurance to be certain you’ll be reimbursed if a fire or broken pipe in the unit above damages your furniture, appliances and electronics, not to mention all your clothes. Renters insurance will also pay for living expenses while the home or apartment you rent is repaired, and pays for any medical bills or lawsuits if someone gets injured at your place.
While you are at it, this is also a great time to create an inventory of all the things you own to help you purchase the right insurance protection and make filing a claim much easier.
Get Extra Protection for High Value Items
That beautiful new wedding ring and special gifts like fine art, china or silverware may need scheduled personal property protection, often called a “floater,” to make sure they are covered for their full value. Most homeowners and renters policies will only provide limited coverage for those high value items. Scheduled personal property coverage will also pay to replace a ring, without a deductible, even if it was misplaced or damaged in the disposal.
You worked hard, saved your money and bought a home. Now you want to protect the largest investment you have ever made with homeowners insurance. You’ll sleep better knowing that your insurance will help you rebuild if there’s a fire, tornado or a tree falls onto your home. What you may not know are the many things it might not cover. Your sweet dreams of protection could turn out to be a nightmare because you don’t have the coverage you thought you did.
Here are five things not covered by most home insurance policies:
Earthquake and land movement. As landslides and earthquakes have become more common in many states, many people are surprised to learn that earthquake or land movement damage is not covered by standard homeowners insurance. You need to purchase separate earthquake and landslide insurance protection.
Floods. Multiple surveys have found a majority of homeowners and renters thought their property insurance protected them from flooding; it doesn’t. If a river overflows its banks or storm surge sends tides into your home, you’ll need to purchase separate flood insurance, provided primarily by the federal government. Keep in mind there is a 30 day waiting period before any flood policy can go into effect.
Sewer backups. The sludge can do serious damage and make your home unsafe until it’s properly cleaned up, but it’s not covered under most homeowner insurance policies. Your insurance company can provide a special endorsement to cover sewer or sump pump backups. What you may not know is that homeowners are responsible for the maintenance of sewer and water lines through their property up to the sewer main, and many cities and utility departments will deny responsibility for most sewer incidents.
Maintenance issues. Insurance companies can dispute payment of damage or injuries if you fail to repair a broken step or other obvious hazards, or for mechanical breakdown of an appliance. In most cases, you will also need a special rider to cover food that might be lost due to a power outage or failure of a freezer or refrigerator.
Expensive jewelry, fine art, firearms, musical instruments, furs and collectables. Many people learn after a fire or tornado that their precious items only had minimal coverage. You’ll need special scheduled personal property coverage, often called a “floater,” to make sure they are protected for their full value.
And, if you have a swimming pool, trampoline or certain types of dogs, you need to call your insurance company to make sure you are protected. Many insurance companies are starting to exclude them from policies or refusing to insure homes that have one or more of these.
The Property Casualty Insurers Association of America (PCI) also warns that as many as 60 percent of America’s homes are underinsured because owners:
Didn’t update insurance after remodeling or adding on
Only purchased enough insurance to cover the mortgage
Underestimated costs associated with updated building codes
Didn’t factor in building material inflation in replacement costs
Another important step many homeowners fail to take is to do a home inventory. Nobody can predict when a fire or tornado might strike, but you can make sure your possessions are properly protected. A survey by the National Association of Insurance Commissioners found 60 percent of homeowners have not documented all the things they own. What does that mean to you? Completing a home inventory can speed up your claim and help you determine how much coverage you need. The Insurance Information Institute has created an easy to use home inventory brochure. Items to include are:
The flash of light and the crack of thunder can be scary and impressive, but it can also be deadly. Do you know what to do if a storm approaches?
Many of us still don’t know the danger posed by thunderstorms. The National Weather Service reports an average of 49 lightning fatalities per year, with 27 in 2015. Florida leads the nation in lightning deaths, followed by Texas. Many hundreds of others survive a strike, suffering varying debilitating injuries, some for the rest of their lives.
Lightning strikes the United States more than 25 million times a year. It is one of the most erratic and unpredictable elements of thunderstorms. Most victims aren’t struck during the most intense part of a storm; they are usually injured right before or after the main part of the storm passes. This is because a bolt can strike as far as 10 to 25 miles away from the parent thunderstorm and most people don’t seek shelter until the storm’s full fury. That’s why the lighting safety slogan goes, “When thunder roars, go indoors.” It’s recommended that you stay indoors until 30 minutes after the last thunderclap is heard.
Oh, and the myth that lightning never strikes the same place twice is false. Any tall tree, structure or tower that is isolated can be struck over and over. The Empire State Building is reportedly hit nearly 100 times a year.
It’s imperative that you and your family know what to do when a storm approaches. The National Weather Service has these important safety tips:
No place outside is safe
Seek immediate shelter inside a building or a vehicle (open-sided stands or vehicles like golf carts don’t offer any safety, neither do convertibles, even with the top up)
Don’t seek shelter under trees
Get out of and away from bodies of water immediately
Stay away from objects that conduct electricity like metal towers, barb wire fences, power lines or windmills (these cows were killed when an electrical discharge traveled through the fence where they were lined up)
Even in your home, lightning can still be a danger. Here are safety tips for when you are indoors during a storm:
Stay away from windows and off porches
Don’t touch or stand near metal pipes and plumbing, don’t wash your hands, take a shower, do dishes or laundry
Avoid using corded phones (most home lightning injuries come through charged phone lines)
Stay away from electrical devices like TVs, washer/dryers
Lightning damage to property and homes can be costly. Make sure you are covered.
This article is furnished by California Casualty, providing auto and home insurance to educators, law enforcement officers, firefighters and nurses. Get a quote at 1.866.704.8614 or www.calcas.com.
