Deb Tebbs Group

Cascade Sotheby's International Realty

Confused About Homeowners Insurance? Don’t Fall For The Myths

home-2119484_960_720

Homeowners insurance is typically one of the most important costs that many home buyers forget to budget for when they are buying a home.

Besides forgetting to budget for homeowners insurance many home buyers also fall for common home buying “myths” which include the following:

Myth No. 1: Home insurance is a rip-off

While home insurance costs vary by state—as well as factors like the square footage of the house, building costs in the area, and the location’s likelihood of damage from natural disasters—the average annual premium runs about $952 nationwide. But when broken down, that’s only an extra $79 that you need to add to your monthly housing budget (i.e., mortgage premium, property taxes, and interest).

Also, “considering the financial protection that you’re getting, it’s well worth the cost,” says Jeanne Salvatore, chief communications officer at the Insurance Information Institute.

For example, let’s say the average home insurance claim was $9,779 in 2014, with the average fire damage claim clocking in at a whopping $39,791. Many consumers don’t have anywhere close to that kind of cash lying around. (Indeed, 69% of Americans have less than $1,000 in savings, a recent survey by GOBankingRates.com found.) So if you’re in that group, experiencing a loss without home insurance could force you to rack up massive credit card debt in order to repair your house.

Myth No. 2: All of a home’s belongings are covered

Like car or health insurance, home insurance has limitations.

“A homeowners insurance policy is not designed to cover everything,” says Salvatore. “Each policy clearly states what’s covered and what’s not.”

While most standard home insurance policies cover damage caused by a natural disaster such as a fire, hurricane, or snowstorm, some types of personal belongings aren’t covered under basic insurance.

“If you have valuable art or fine jewelry inside your house, you might need a scheduled personal property policy to cover those items,” says Laurie Pellouchoud, a vice president at Allstate.

Myth No. 3: All injuries within a home are covered

If a visitor gets hurt at your house or on your property, your home insurance policy’s liability coverage will typically kick in to cover any claim that’s filed. But that’s not the case if you or a family member gets injured in your own home. If you slip in the kitchen or fall down the stairs, for instance, “your health insurance is what protects you from injuries, not your homeowners insurance,” Pellouchoud says. Got that?

Myth No. 4: I should base my coverage on the market value of my house

More than half (52%) of home buyers mistakenly think they should buy insurance coverage based on their home’s market value, a recent survey by Insure.com found. But for most home insurance policies, rates are based on the cost to rebuild the home—not the value of the house. In fact, “in most cases you need less coverage than the market value of your house,” says Salvatore.

Search For Homes In Bend

Interested in searching for homes in Bend Oregon? Contact the Deb Tebbs Group today by calling us at 541-323-4823 or click here to connect with us online. 

 

Share this article

Earnest Money Vs. Deposit – What’s The Difference?

6881505052_5c7434522b_b

Is there a difference between earnest money and the deposit? The answer to this question is yes.

In this article we will break down the difference between the two so you will be fully prepared to purchase your next home in Bend or elsewhere in Central Oregon.

What is an earnest money deposit?

Earnest money—also known as an escrow deposit—is a dollar amount buyers put into an escrow account after a seller accepts their offer.

Another way to think of earnest money is as a “good-faith” deposit that will compensate the seller if the buyer breaches the contract and fails to close.

Earnest money deposits usually range from 1% to 2% of the purchase price of a home—depending on your state and the current real estate market—but can go as high as 10%. If a home costs $300,000, a 1% earnest money deposit would be $3,000.

The buyer’s financing can also dictate the amount of an earnest money deposit. For example, if a buyer makes a cash offer, the seller may request more earnest money to show a true “buy-in” from the purchaser, says Matthews. In that instance, the seller of a $300,000 home might want a 3% deposit (or $9,000) versus the 1% deposit for an offer financed through a mortgage.

In any case, the seller can either accept, reject, or counter the buyer’s suggested earnest money deposit amount, says Realtor® Bruce Ailion, of Re/Max in Atlanta.

Earnest money deposits are delivered when the sales contract or purchase agreement is first signed. They are often in the form of the buyer’s personal check. The check is held by the buyer’s agent (never given directly to the seller) and is sometimes never even cashed, says Brian Davis, co-founder of SparkRental.com. If the check is cashed, the funds are held in an escrow deposit account. The money will be shown as a credit to the buyer at closing and will offset part of the down payment amount or closing costs.

So here’s the real crux of the matter: If a prospective buyer backs out of the deal, the seller might be able to keep the earnest money deposit.

Matthews advises sellers to comb through the contract to see if they can take legal action. But keep in mind that if the buyers back out for any reason allowed by the contract or purchase agreement, they are legally entitled to get their earnest money back.

What is a down payment?

A down payment is an amount of money a home buyer pays directly to a seller. Despite a common misconception, the down payment is not paid to a lender. The rest of the home’s purchase price comes from your mortgage.

The down payment money can come from the seller’s personal savings, the profit from the sale of a previous home, or a gift from a family member or benefactor.

Down payments are usually made in the form of a cashier’s check and are brought to the closing of a home sale.

Typical down payment amount

The exact amount of a down payment is often determined by the lender in relation to the overall loan amount. The minimum down payment required by mortgage lenders is 3% of the house’s price, and a 20% down payment is recommended by the real estate industry. But that’s not to say you have to put down 20%. After all, that’s a large chunk of change to have on hand, especially for first-time home buyers.

Search For Homes

To get started with searching for a home in Bend Oregon contact us today by calling (541) 323-4823 or click here to connect with us online. 

 

 

search-homes

Share this article

5 Rules For Buying A Bend Oregon Home

Bend Oregon Home

 

Planning on buying a Bend Oregon Home in 2017? If so, there’s no denying that today’s Real Estate market is more competitive than it was just five years ago and this means that home buyers have to be prepared before they start searching for homes and every home buyer can have the advantage by following these 5 rules for buying a home.

Rule No. 1: Prepare for a marathon house hunt

With today’s low housing inventory and strong buyer demand, it might take you three to six months to buy a house—and maybe even up to a year in some of the country’s tightest markets. Prepare accordingly.
You’re more likely to encounter a multiple-offer situation today than in years past, says Sanderfoot, vastly complicating many negotiations. So don’t presume you’ll be moving any time soon. If you do have a fast-approaching deadline for moving, you’d better get started on your home search. Like, now.

Rule No. 2: Secure financing before you start shopping

Gone are the days when you’d waltz into home showings without securing your financing first. If you need a mortgage to buy a home, you’ll want to get pre-approved for a home loan before you set foot in a home.

The reason: Without a lender’s pre-approval letter in hand, buyers will have a hard time getting sellers to take them seriously. Your offer, though sincere, could easily fall through for lack of funds. We told you it’s a competitive market, right?

To survey your mortgage options, meet with at least three lenders—which could be banks, credit unions, mortgage brokers, or any combination thereof (you can get recommendations from your real estate agent). You’ll want to get a good-faith estimate, which breaks down the mortgage’s terms, including the interest rate and fees, in order to make an apples-to-apples comparison for the best deal. Here’s more on how to shop for a mortgage.

Rule No. 3: Don’t lowball your offer

Bargain hunters, beware: If you’re making an offer on a home that’s priced to sell—meaning it’s listed at, or slightly above, fair market value—“you should present your best offer right out of the gate,” says Peggy Yee, supervising broker at Frankly Realtors in Vienna, VA.

In other words, you need to wrap your head around the idea that you’re more than likely going to be offering full list price. Although that can be tough for bargain hunters, “it’s the reality of many markets,” says Yee.

All that said, real estate markets vary by area, so look to your agent for advice on how much to offer. You can also check particular neighborhoods on realtor.com/local to get a base line for median home prices and more.

How long a house has been on the market can make a difference, too. If a home has been listed for more than 30 days, that might mean it’s overpriced—and that means you might have a little room to negotiate on price.

Rule No. 4: Curb the contingencies

When buyers make an offer, they can tack on contingencies—terms that must be satisfied before a deal goes through. For instance, you might require that the place pass a home inspection to ensure that it doesn’t need tons of repairs. If you’re getting a mortgage, your lender will require you to include an appraisal contingency where an appraiser makes sure the house is worth what you’re paying.

All in all, contingencies protect buyers, but sellers don’t always like them because they insert many “what ifs” into the deal, which might mean it falls through.

Since this is a seller’s market, buyers can stand out by attaching fewer contingencies to the deal. Not the biggies, of course, but ones that don’t really matter to you. For instance, you might want to consider letting go of a lead-based paint inspection since you can clean up this problem yourself. Or, many buyers may include a contingency that they have to sell their own home before the deal goes through; consider waiving that if you can.

Rule No. 5: Move fast

There’s no time to waste. In many cases, “a seller will list their house on a Friday, do a couple open houses over the weekend, and then review all offers on Monday,” says Yee. That could mean you have just a few days during which to view the property, confer with your agent, and submit an offer.

Given the time crunch, Lejeune says he asks buyers a simple question during his initial consultation. “I’ll ask, ‘If I show you the perfect house today, at a price that you can afford, are you ready to make a full-price offer right now?’ That question gives me a good barometer of how ready you are to buy a home.”

So if you’re serious about buying a house, you need to be ready to pounce.

Selling a house as well? The rules have changed there, too. Come back tomorrow for more advice on acing this end of the deal.

Search For Homes In Bend Oregon

To get started with searching for homes in Bend Oregon contact the Deb Tebbs Group today by calling us at (541) 323-4823 or click here to connect with us online. 

 

Share this article