Topic: Insurance

An Easy Way To Estimate Homeowners Insurance

New River Valley homeowners insurance Homeowners insurance (also called hazard insurance).

If you’re going to own a home, you have to have it. Well, I take that back – if you own your home outright, you don’t HAVE to have homeowners insurance … Laws around insurance companies get complex, especially as you get into more about limited tort in Pennsylvania. but if you ever experience a catastrophic event (i.e. a fire, flood, earthquake, a derecho) and you don’t have homeowners insurance, than you’re out of luck. If you have a mortgage on your home, however, you’ll have to have homeowners insurance … the lender will require it. Click here to find out house insurance quote nz.

Your mortgage payment is made up of four components: Principal, Interest, Taxes, and Insurance … PITI.  Some homeowners will choose to pay their taxes and insurance separately, but for the purpose of this post, let’s assume that every month you make your payment, some is going to Principal, some is going to Interest, some is going to Taxes, and some is going to Insurance.

Find a home here.

Principal and Interest are easy to determine – these are based on the amount of money you’re borrowing, the interest rate, and the years of the loan (15 or 30 years, for example).  Taxes are also easy to determine … by using the tax rates found throughout the New River Valley and multiplying the assessed value of the house by that rate, you can easily find the taxes.  But how do you figure out the cost of hazard insurance?

My friend Eric Johnsen, at State Farm in Christiansburg, once mentioned that if I multiplied the value of the house by .0025 I could get a reasonable approximation of what the annual insurance cost for a particular home would be.  It assumes a couple of things, of course – (1) that the insured value of the home is the same as the sale price of the home, as well as (2) a deductible of $1000.  But it works really well – on the home I was living in at the time, for instance, it ended up being within $23 of the actual yearly cost of the policy.

Eric looked a little deeper, and found that over the policies he looked at, .002516 was the best average. So, the next time you’re looking at New River Valley homes and wondering just how much the mortgage payment on that beautiful home would be, you’ll have all the information you need to estimate your payments – including insurance, also make sure to get information about the Insurance Partnership company, which has the best deals to offer.

 

Do I Need Renter’s Insurance?

As mentioned before, Natalie and I are selling our house and moving downtown.  We want to try living downtown for a bit, and so we’ll be downsizing and renting an apartment.  I asked Eric Johnsen, of State Farm Insurance in Christiansburg, what we needed to do in regards to renters insurance, and what our homeowners policy on our current home would cover.  Our apartment will be ready in just a few days, and we’ll begin moving things into the apartment – I wanted to know when our renters policy needed in order to protect us.  His answer is below.

If I understand correctly, you’ll be moving items from the house into the apartment, and then selling the house in a few weeks.  The truth is, as long as you are still homeowners, that hazard insurance policy will provide coverage for your personal property wherever it is located.  Typically a homeowners policy will extend coverage to personal property that’s in transition for up to 30 days beyond the sale of the home, until a new homeowners policy – or rental policy – needs to be in place.  Once you’re no longer a homeowner, you’ll need to convert that hazard policy into a renters policy. 

The big difference between the two types of policies is that a homeowners policy covers not only your personal property, but also liability for damages done to others, or property.  A renters policy doesn’t provide coverage for the building, just your “stuff” inside the building.  Don’t let people rent without renters insurance! 

You heard the man.  If you need renters insurance on your current lease, contact Eric at his office, by email, or on Twitter.  Great service, and fantastic staff to walk you through the process.

A Quick Way To Estimate Homeowners (or Hazard) Insurance

If you’ve ever been looking for a home, or even contemplating buying a home, you’ve probably used an online home loan calculator (there’s a good one right on this page, in fact, labeled “Estimate Your Payment”) at some point.  Mortgage payments are typically made up of four components: Principal, Interest, Taxes, and Insurance … PITI.  I say typically because some borrowers choose to pay their Taxes and Insurance separately, but that’s another blog post for another day.

Principal and Interest is easy to determine – it’s based on the amount of money you’re borrowing, the interest rate, and the years of the loan (15 or 30 years, for example).  Taxes are also easy to determine … by using the tax rates found throughout the New River Valley and multiplying the assessed value of the house by that rate, you can easily find the taxes.  But how do you figure insurance.

My friend Eric Johnsen, at State Farm in Christiansburg, told me one time that if I multiplied the value of the house by .0025 I could get a reasonable approximation of what the annual insurance cost for a particular home would be.  It assumes a couple of things, of course – (1) that the insured value of the home is the same as the sale price of the home, as well as (2) a deductible of $1000.  But it works really well – on my home, for instance, it comes within $23 of the actual yearly cost of the policy.

Eric wrote me today and said that over the last 15 policies he’s looked at, .002516 is now the average.  So, the next time you’re surfing the web late one night and you wonder just how much that house down the street would be, you’ll have all the information you need to estimate your payments.

Thanks, Eric!

What, Exactly, Is Title Insurance?

“Hey Jeremy, do I really need to get title insurance?”  It’s probably the most common question I get from new buyers when we’re getting ready to close on a house.  So what, exactly, is title insurance?  Well … there are different kinds.  But we’ll get to that.

Title insurance is an insurance policy that protects a party’s “position” in the transaction (i.e. position = money).  What the policy does, then, is provide insurance that the real estate taxes were paid, for instance, or that there’s a clear line of ownership to the property.  Without title insurance, the insured would have to pay legal fees to remedy these situations.  You don’t want that, do you?

When you’re buying a property and financing it, the lender is going to require what is called lender’s title insurance, which means their portion of the transaction is covered by the policy.  As a buyer, you’ll have the option of choosing owner’s title insurance, which covers the whole of the transaction, not just the lender’s portion.  Let’s say you’re buying a $200000 home, and financing $150000 of it.  The lender’s title policy would be on only $150000, but adding owners title insurance would increase the coverage to the whole $200000.

So do you need it?

I can’t say.  Some clients get it, and some clients don’t, and what works for one buyer doesn’t work for another.  When I say that to a buyer, I seem to always get the response “okay, so what would you do?”

If I had a sports car, I wouldn’t just put half a cover on it to protect from rain.  Get my drift?

Thanks for the Ferrari pic, KlausNahr.

Updated 9/10/10 – Don’t want to read the post?  Watch the video, from www.RealCentralVA.com


5 Bills Montgomery County Homeowners Should Pay Attention To

There are five bills currently making their way through the Virginia General Assembly that homeowners in Virginia, particularly those in Montgomery County, should be paying attention to.  From the Virginia Homeowners Alliance:

  • HB570 – real estate taxes are based on a real estate assessor’s assessment of your property’s value, and is almost always based on a combination of a visual inspection of the exterior (read – sitting in the car) and a quick perusal of the property card.  If you don’t like the assessment, it’s up to YOU to defend whether the property’s value should have gone up or down.  This bill shifts the burden of responsibility from you to the assessor who valued the property.
  • HB552 – a scenario to consider – you want to build a detached apartment on your property, and you petition your local government to change the zoning to allow for just that.  You break ground, start building, and then … the locality changes its’ mind and makes you undue everything.  Hmmm … I can’t think of anything like that happening around here.  HB552 strengthens a property owner’s “vested rights”.
  • HB191 – this legislation unifies the process of filing formal complaints against a homeowners association.  Right now, the rules are different for each association.
  • HB205 – when your home gets damaged, your hazard insurance should pay to fix that damage.  However, there’s no guarantee that the brown roof you had on the house won’t be replaced with a green one.  This bill serves to make sure that you’re not stuck with a green roof when you ordered a brown one.  Unless, of course, you wanted the green roof … oh, nevermind.
  • HB430 – Remember HB570, up above?  HB430 focuses on values as well, but this time requires that real estate assessors have more education, and make the appeals process easier for homeowners.

I like that HB570 shifts some of the responsibility away from the individual who isn’t actively involved in the assessment process to the one who should be well-versed in the area.  There needs to be a balance, certainly, but it’s a step in the right direction.  And certainly more education can’t be a bad thing as it pertains to HB430, but certainly education doth not a good assessor make.  Interested to see what the final iteration of this one might be.

If you’re a homeowner in Virginia, I would highly recommend joining the Virginia Homeowners Alliance.  This service, provided by the Virginia Association of REALTORS, helps all of us protect our homes’ value by knowing what’s happening in legislation that affects each of us.  As someone who’s worked very closely on the implementation of this very important service, I can speak firsthand to the attention to detail that has gone into it.  The link to signup is here, and as always, it’s SPAM-free!

As a final aside, during the middle of this month I’ll be attending what’s called the Day on the Hill.  It’s an opportunity for the real estate community to talk one-on-one with our elected officials in Richmond, and some of the discussions might center around topics like these above, or most certainly the first-time buyer credit.  If there are housing issues you’d like addressed directly to your representatives, email me and let’s see if we can get it in front of them.

New River Valley Home Safety Tips from Eric Johnsen of State Farm

Earlier in December, Mother Nature dumped nearly two feet of snow across areas of the New River Valley, stranding residents and wreaking havoc.  Truth be told, we just don’t get snow storms like that around here, so when we do it causes headaches … in bunches.  I decided to ask Eric Johnsen, State Farm agent in Christiansburg, his thoughts on how homeowners should approach winter weather in the New River Valley …

Q: So with all of the winter weather we’ve been having, and scheduled to get, what precautions or things should homeowners be doing to prevent damage to their homes?

A:  Have you ever had the misfortune of cleaning up a smelly, wet and very cold mess on a freezing winter day? I hope you haven’t and never do. Thousands of people, however, suffer through this nightmare every year because unprotected water pipes in their homes freeze and break.

A more subtle destructive winter wonder is the phenomenon known as ice damming. Snow on your roof can lead to ice dams that damage the roof, gutters, walls, interior ceiling and even items inside the home.

There are ways you can prevent frozen pipes and ice dams, simple solutions to avoiding the hassles and costs of cleaning and repairing your home.

The value of two minutes

Two minutes. That’s about as long as it takes to begin a small trickle of water from your home’s hot and cold faucets and to open the doors of cabinets with water pipes running through them.

Two weeks. That could be the length of time needed to find and hire contractors to tear out smelly, water-soaked carpet and wallboard, dry the remaining flooring of your house and replace all that might have been destroyed by flooding from burst, frozen pipes. An eighth-inch (three millimeter) break in a pipe can spew up to 250 gallons (946 liters) of water a day, wrecking floors, furniture and keepsakes.

As you can see, there can be a tremendous advantage to spending a couple of minutes taking simple, no-cost precautions to prevent frozen pipes. The saying, “time well spent,” is certainly an under-statement when you consider the soggy consequences of doing nothing. Here are a few additional steps to protect your home or apartment:

  • Use heat tape to wrap pipes. (Use only products approved by an independent testing organization, such as Underwriters Laboratories, Inc., and only for the use intended (interior or exterior). Closely follow the manufacturer’s installation and operation instructions.
  • Seal leaks that allow cold air inside, near where pipes are located.
  • Close air vents leading under the house.
  • Disconnect garden hoses and, if practical, use an indoor valve to shut off and drain water from pipes leading to outside faucets.

What are ice dams?

After several days of melting-freezing cycles, it’s common for the melted water and ice to work up under the shingles until water enters the attic and eventually does damage to the ceilings, wall and contents.

In cases where the ice dam goes unnoticed for an extended period of time, it can do significant damage to the building and its contents.

There’s no way to guarantee an ice dam won’t damage your home, but you can take steps to cut the chances of an ice dam forming in the first place:

  • Thoroughly clean all leaves, sticks and other debris from your home’s gutters and down-spouts.
  • Make every effort to keep snow on your roof to a minimum. Long-handled devices on the market called “roof rakes” let you stand on the ground and pull the snow off the roof. Keeping heavy snow loads off your roof reduces the chances for both ice dam formation and roof failure due to the weight.
  • All winter long, keep gutters and down spouts clear of snow and icicles.
  • Evaluate the insulation and ventilation in your attic. Most experts agree the R-value of attic insulation should be at least R-30 (R-38 is preferable in northern climates).

   For more information on these and other home safety tips, stop by my office or visit statefarm.com®.

Consider Flood Insurance For Your Home

The animals came 2 by 2

The animals came 2 by 2

The New River Valley has been hit hard the last few weeks, with heavy rains and – unfortunately – some flooding.

The NRVLiving Real Estate Blog’s favorite insurance agent, Eric Johnsen, talked with WSLS Channel 10 about the recent weather and who is eligible for flood insurance.

The short answer?  Everyone.

There’s No Road Map On This Trip

Scratching head    
What a day.  We knew on Sunday that there were bad things waiting to happen when the markets opened on Monday, but in case you've missed it (and I don't know how you could):

        • the DOW dropped 504 points, the worst free fall since 2001
        • Lehman Brothers, one of the top firms on Wall Street, went bankrupt
  • Merrill-Lynch was forced to sell to Bank of America
  • American International Group (AIG) is looking for money in order to stay afloat

Are you wondering what this all means for housing in the US?  Yea, me too – I'm still trying to wrap my head around it all myself, but stick around and I'll try to get something logical up here shortly.  There's no guide book for today's news, time will tell how we fare.  Stay tuned …

New River Valley Home Expo

Don’t forget, the 2008 Home Expo will be held this weekend at the Christiansburg Rec Center on North Franklin Street.  Admission is $4, and will offer more than 140 booths, a silent auction and more!  I know Auz-Bloc will be there, you can meet Bill and check out this amazing product while you’re there!

Download home_expo.pdf

Here’s a video I did earlier this winter about the thermal mass of the house at 153 Gracie Lane: