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9 Tips for Filing a Home Insurance Claim

3/4/2017

9 Tips for Filing a Home Insurance Claim

Filing a home insurance claim is probably not something you think about very often. Your house is generally your most important asset, so it's not pleasant to ponder some worst-case scenario that could lead to a home insurance claim.

But if you're reading this article right now, I can safely assume you're either in the process of filing a claim, or you soon will be. So let's talk about how to file a homeowners insurance claim, and some of the key points you should keep in mind along the way.

9 Helpful Tips for Filing Insurance Claims

1. The claims process actually begins before disaster strikes. You should make a list of all your possessions kept within the house. It's a good idea to take pictures as well. You will need to store this inventory somewhere other than in your house. The last thing you want is to lose your inventory list and photos along with your home.

2. After an event damages your home, you should try to salvage whatever you can. For example, you can use tarps and other protective materials to shield belongings if you've lost part of the roof. If the home has been flooded, you can increase ventilation with fans to prevent mold build up.

3. Create a home insurance claims journal to keep track of the claim process. Use a notebook or notepad to document all of your correspondence with the insurance company. Any time you talk to somebody, make note of the date and time as well as the nature of the discussion. This kind of information can be useful later on, in the event you have to take legal action against your home insurance company.

4. Some insurance providers will make an initial payment when a claim is filed. But be careful signing any documents related to such payments. This technique is often used to circumvent future claims made by the homeowner. If you sign any documents to acknowledge that the initial payment was also the final payment, you've basically surrendered your right to additional coverage under your policy. It's a dirty trick, but a common one.

5. At some point, an insurance adjuster will probably visit your home to assess the damage. This may be a public adjuster that you have hired, or an adjuster who works for the insurance company. Whatever the case, you should be present when this person comes out to view the home. Make sure he or she sees the full extent of the damage and doesn't miss anything. This will help ensure that your claim covers as much of the loss as possible.

6. The adjuster mentioned above will also write up a report detailing the damages to the home. You should get a copy of this report and check it for accuracy. You should also ask your insurance company for a copy of the entire claims file, which you are entitled to by law (in most states).

7. Home insurance companies are known for giving homeowners the runaround and trying to avoid payouts. Don't let them treat you this way. If they tell you that a particular item is not covered in your policy, ask them to point it out to you in the policy. Don't just take their word for it.

8. It's an "unwritten rule" within the insurance industry that if you make the claims process difficult, people will be less likely to follow through on the claim. They'll be more likely to abandon it. Don't prove them right. Stick to your guns and get what you are entitled to, no matter how difficult they make it. Be patient and persistent.

9. If you file a home insurance claim, and have all or part of the claim denied, you may want to seek legal help. There are attorneys who specialize in these types of claims. Judges and courts often decide in favor of homeowners, as opposed to home insurance companies. So don't be afraid to take legal action if you feel you are truly being wronged.

Hopefully you won't have to go through all of these steps to file a home insurance claim with your provider. In a perfect world, you would simply file the claim, and the insurance company would cover your losses as outlined in the policy. But it doesn't always work this way, so I've outlined all of the steps you may have to go through ... just in case.

10 Things to Do Before Buying a Home

2/12/2017

10 Things to Do Before Buying a Home

Buying a home is often the largest financial transaction a person makes in his or her life. So it's critical that you make the right preparations and do the proper research. Regardless of unique situations and special circumstances, there are ten things you should do before buying a home.

1. Study the home buying process.

This will allow you to make better decisions and act confidently. Home buying lingo is a big part of this, so be sure to read through a few home-buying and mortgage glossaries before you get into the thick of things.

2. Obtain your credit report.

Get a copy of your credit report and review it for errors. You can get copies from all three credit bureaus at once by visiting AnnualCreditReport.com. Mortgage lenders will review your credit with a fine-toothed comb, so you should do the same ... before they review it.

3. Fix credit errors quickly.

If you find an error on your credit report, go to the company's website where the report came from (TransUnion, Equifax or Experian) to dispute it. It can take time to clean up an erroneous credit report, so get started as soon as you spot the error.

4. Check your debt-to-income ratio.

Most mortgage lenders prefer to see that a borrower's total debt is no higher than 45% of gross monthly income. If your debt exceeds this level, consider reducing it before applying for a mortgage loan. You'll have an easier qualification process and may even qualify for a better rate.

5. Determine your budget.

Use an online mortgage calculator to get an idea of how much you can afford to pay each month, and what that equates to in terms of the purchase price. This will give you a budget to work from, which will help you weed out the homes that are beyond your comfort zone.

6. Start saving your cash.

This is one of the best things you can do before starting the home buying process, for a couple of reasons. First of all, mortgage lenders like to see that you have some cash reserves on hand. Secondly, you'll need cash reserves for any unexpected fees or costs that might arise (which is common).

7. Get pre-approved for a loan.

During pre-approval, a mortgage lender will review your credit, finances, debt, etc. and conditionally qualify you for a certain amount of mortgage. Sellers will take you more seriously if you have a pre-approval letter. This process also helps identify any problems with your credit or other qualifying factors.

8. Avoid new lines of credit.

Try to keep your financial situation as "stable" and favorable as possible. It's a good idea to pay down some debt (see item #4 above) and to save up some extra cash. Those things are generally okay. But the worst thing you can do is take out a new loan or line of credit. At best, this could make the qualification process take longer. At worst, it could tip the debt scales into the unacceptable range, which will make it harder to get a loan.

9. Validate the asking price.

It's called an "asking price" for a good reason. No asking price is set in stone, and everything in real estate negotiable. So don't accept an asking price as being reasonable until you validate it through careful research. Compare the price to recent sales in the area, or "comps." Your real estate agent can provide a comparative market analysis (CMA) to help you with this step.

10. Get a home inspection.

It's wise to have the home inspected before finalizing the purchase. A house is a sizable investment. The last thing you want is to find a bunch of things wrong with it after you've taken ownership. Home inspections are very affordable, and you cannot put a price on the peace of mind you'll have as a result of your inspection.

6 Reasons to Stage Your Home Before Letting Buyers In

1/29/2017

Why should I bother staging my home?
What do I get back for all of the time and effort I put into it?

This is one of the most common home-staging questions among sellers, especially those who are selling in a seller's market.

Here's the bottom line: Staging your home can benefit you regardless of what type of real estate market you are in.

In a buyer's market, you will need every advantage you can get in order to sell your home for a decent sale price, so it's extra important to stage your home effectively. But even in a seller's market, staging can help you achieve a quick sale for the maximum price. So no matter what kind of real estate market you are in, it's always wise to stage your home for buyers. Here are some of the primary benefits you will get out of it:

Home Staging Benefits

  1. Staging forces you to organize and de-clutter. Clearing away shelves, closets and cabinets is a big part of the home staging process. It also helps with moving, because you'll have to pack things away at some point anyway. So when you stage your home, you will also get a head start on packing to move.

  2. Staging forces you to think like a buyer. When you set out to stage your home for the market, you will be looking at the home as if you were a buyer (and not the actual owner). Adopting this perspective early on will help you in many ways when preparing your home for the market.

  3. Staging increases the likelihood of a sale. When selling your home, you must do everything within your power to increase the chance of a sale -- and I mean everything. Professional home staging techniques can give you an extra edge in selling the home quickly.

  4. Staging reduces the home's time on market. When you put in the extra effort to stage your home effectively, you will move closer to a quick sale. Anyone who has sold a home before can attest to the fact that the least time the home is on the market, the better. This is especially important if you will be paying two mortgages until the home sells (as is the case when you buy a new home before selling the old one).

  5. Staging helps justify the asking price. If you are in a seller's market and you price your home correctly, you probably won't have to haggle over the asking price. But in a market that leans toward the buyer, you need everything in your favor to get top dollar. Proper home staging can help you justify the asking price by positioning the home more favorably in the buyer's mind.

  6. Staging can be fun! It may sound like all work and no play at first. Granted, you will certainly be putting some elbow grease into the process. But staging a home can be a creative process as well, and many people find they enjoy it once they've begun.

5 Most Common Questions Asked by First-Time Home Buyers

1/13/2017

First-time home buyers typically have a lot of questions about the buying process. This is understandable, given the size of the investment involved. This article answers five of the most common questions asked by first-time buyers.

1. How do I determine my price range?

Determining your price range should be one of the first steps you take. Once you know how much you can comfortably afford to pay each month, you'll be able to narrow your house-hunting process to homes that fall within your budget. This will save you a lot of time and energy.

To determine your price range, sit down and compare your monthly income to your monthly expenses (savings, credit card payments, car payment, groceries, entertainment, etc.). How much is left over each month? Your monthly mortgage payment should be less than this amount. Now you can use an online mortgage calculator to break each sale price down to a monthly amount, and determine if that amount is inside or outside your comfort zone.

2. Do I need a real estate agent?

The short answer is yes. If you're buying a first home, it's a good idea to have a real estate agent. Buying a home is one of the biggest financial transactions you will ever make. So it makes sense to have professional help.

Your agent will help you find homes that match your price range and desired features. He or she will also help you validate the asking process (see below), prepare a purchase offer, negotiate with the seller, and navigate the rest of the home buying process.

3. How do I research the asking price?

First, you have to realize that it's called an "asking price" for a reason. The price set by the seller is never set in stone. It's what they are asking for, but it might not be the true market value of the home. Your real estate agent will help you validate the asking price by looking at comparable, recent sales in the area. This will tell you if the asking price is reasonable or too high, based on current marketing conditions.

4. Which type of mortgage loan should I choose?

First, do some research on the basic types of home loans -- fixed rate, adjustable rate (ARM), FHA versus conventional, etc.

When researching the different mortgage types, pay attention to paragraphs that begin with: "This type of mortgage might be best for you if..." Generally, this type of statement is usually followed by a series of pros and cons that will explain the type of buyer who might choose that option.

As a general rule, if you're going to be in the home for quite a while (five years or more), it's probably best to choose a fixed-rate mortgage. On the other hand, if you think you'll only be in the home for two or three years, you might want to choose an adjustable-rate mortgage to save money during your short period of ownership.

5. What happens at the real estate closing?

The real estate closing (also known as a "settlement") is when property ownership transfers from seller to buyer. All remaining fees will be paid as well, and these are known as closing costs. The seller receives their portion of the payment, minus what they still owe on the mortgage. The deed of ownership is transferred to reflect the new owner.

As a home buyer, you would be wise to save more money than you think you'll need at closing, just to be safe. You should also make sure you receive a statement (or "settlement statement") at least one day prior to the closing date. This document gives you an itemized list of the costs you'll be expected to pay at closing. The Real Estate Settlement Procedures Act (RESPA) requires that the escrow agent or lender provide this document at least one day before the closing.

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