Costs Involved With Homebuying

So you’ve decide to buy a home. Congratulations! Before you go shopping for the home of your dreams, you should know that homebuying involves more than simply picking out a home and paying for it. There are many costs and expenses you need to know about before you sign on the dotted line. It is wise to be prepared and know the costs ahead of time so that you can budget accordingly.

Here is a list of expenses that every new homeowner should expect and budget for:

Homeowner’s insurance- While many home buyers don’t think about it initially, insurance is necessary to protect your property in case of fire and inevitable disasters. The cost varies from company to company, and it also depends on type of policy that you need.

Moving expenses- As you probably may already know, moving can be very expensive. From packing supplies to a moving van, the expenses can run well into the hundreds of dollars. The cost will be higher if you need to hire a moving company, and it also depends on how far you are moving.

Upgrades- Your new home may not come with the appliances and features that you desire. The base price may not include the finishes and flooring that the model home. Countertops, cabinets, marble flooring, crown molding and other fixtures may not be included with the house that you fell in love with.

Necessities- You may need to have things like window coverings, fences, gates and doors installed that weren’t included on the property. Even smaller expenses like mailboxes and having the locks changed can add up for a new homeowner.

Landscaping and gardening- While perfectly cut green grass and flowers are beautiful, they can be a big expense that adds up. If you can handle the workload, you will save money, but you still need the appropriate equipment. It should go without saying that the bigger your yard and lawn are, the more money it will cost in the upkeep and maintenance. Fertilizer alone is quite expensive, not including the tools. You can hire someone to do the job on a regular basis, but naturally it is much cheaper to do it yourself.

Cable, phone and internet services- Many people don’t account for the transfer of these services, and there are additional costs for companies to set up your services in your new home.

Décor and furniture- Of course you will want to decorate your new home as soon as you move in to give a personalized look and feel. You’ll need items such as blinds, draperies and rugs to create a lived-in environment. Chances are good that you are moving to a bigger home, so you will probably need to fill it with more furniture.

How Much Home Insurance Should You Get?

Homeowners seek to cover risks associated with damage to their property by buying homeowners insurance. However, not many homeowners have clarity regarding how much home insurance they should purchase. Most of them buy too much while some undervalue the risk proposition. There are no one-size-fits-all packages for the home insurance niche. The reason is simple—every home presents a totally different demographic. This includes parameters like overall safety associated with the neighborhood, geographic and climatic conditions, structural aspects, and household incomes. Here, we will help you understand the finer aspects of buying adequate and relevant home insurance.

Understand Your Home Insurance Premium

Most home insurance premiums are the collective sum of payments charged for the following type of coverage:

• Dwelling—this means paying for different types of damage to the main structure, the home, and some attached constructions like a garage.
• Loss of Utility—this part of premium partially covers your living costs when the home is rendered uninhabitable. For instance, widespread mold growth can leave your house dangerous to inhabit.
• Personal possessions—here, you pay for household items of value which can be stolen or damaged.
• Personal Liability—this payment ensures coverage in case you are held responsible for injury to someone on your property.
• Medical Expenditures—along with personal liability coverage, this takes care of medical bills of the person injured on your property.
• Other Important Structures—this payment is to cover damage to external, non-primary structures like fences.

Among these, dwelling coverage and personal possession coverage together form the biggest part of the premium. Dwelling coverage is the most basic, critical aspect of home insurance. Most households want a dwelling coverage sufficient to replace their entire home.

Personal Possessions: How much is good enough?

Coverage for personal possessions is often an argued part of home insurance. Though important, approximating the right value for various things in your home can be challenging. If you have lots of electronics items and valuable like paintings, expensive furniture, etc. ensure that the possessions coverage is close to the dwelling coverage. We suggest you keep the personal possessions coverage at about 50 percent of the dwelling coverage. This can go up to 60 percent in some cases.

Coverage that Compensates for Inflation: Ever thought about it?

Look at the last decade and it will become clear that nearly everything has become expensive. However, people forget that the same applies to the cost of construction. Supplies and professional labor is getting expensive with every passing year. So, what if you ever need to rebuild your home? Is your home insurance capable to cover for the rising cost of construction? Rather than thinking only about the current and near-future market value of your home, calculate the construction costs too. Your home insurance should be sufficiently spread to cover hikes in prices of property construction.

Standard Homeowners Policy Sounds Good? Think Again!!

Most standard home insurance policies don’t cover damage to property caused by floods! Though a natural cause, floods-related damages remain outside the realm of standard coverage. Check if your home insurance policy provides coverage against flood—don’t assume you have it. If not, ask for this coverage that is usually sold as an additional/add-on policy to the package. However, don’t be blinded by what insurance agents say about natural calamities. Do some basic research about flood-related susceptibility in and around your area. It is possible that you inhabit an area without any history or probability of floods.

Liability Coverage: Do you really need it?

Liability coverage is among the most commonly neglected aspects of home insurance. It seems people ignore the possibility of someone getting hurt on their property. This approach can have disastrous results. If sued, the financial damages can ruin you. It is better to pay a bit beyond your level of comfort to protect yourself. High net worth households are often recommended buying an umbrella policy. This comprehensive form of liability coverage covers most types of injuries sustained on any part of the property.