What Every Homeowner Should Know

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When you are looking to buy a home, there are a lot of things you need to be aware of in order to make a successful home ownership deal. In order to help you acquire some of the key knowledge that you need, LoanMart is here to help you by providing 10 financial terms every homeowner should know.

1.      Principal

The principal is the amount of money that you initially borrow on any kind of loan. However, this does not include whatever amount you will owe in interest and other fees. When you pay more than you owe on a monthly payment, the extra money you pay will generally be taken off of the principal sum, rather than interest. This in turn lowers the amount of interest you have to pay and will put you that much closer to having your loan entirely paid off.

2.      Lien

A lien is a claim against the property for the money that is currently owed. A good example of this is when you give the bank a lien on your mortgage when you take it out. You will have your home seized from you if you do not repay the loan. A lien can also be given to a contractor like a builder. If you do not pay for their work, your home could be auctioned off so that they can get the money that they are owed.

3.      Loan-To-Value

Loan-to-Value is a ratio that will decide how much money the bank is able to provide to you in a loan. This is usually as a percentage of the value of your property.

4.      Fixed Mortgage Interest Rate

A fixed mortgage interest rate is an interest rate on your mortgage that will stay the same during the course of the entire length of the repayment of the loan. It will not fluctuate according to market conditions at all.

5.      Refinance

Refinancing is where you terminate the home loan package that you currently have and then taking on another one with a different bank. Usually this is done in order to get a lower interest rate, a lower monthly payment, a longer amount of time to pay back the loan, as well as better terms.

You can end up saving yourself quite a bit of money in terms of what you pay for your mortgage every month by refinancing the loan you currently have with a better one from a different bank.

6.      Equity

Equity is the difference between the amount of money that you still owe on your home and the current market value for it. When you go to sell your home and manage to make a profit from doing so, equity will be the money that you earn after you have managed to pay off your mortgage.

7.      Lock-In

When you have decided that you would like to go ahead with refinancing the mortgage on your home, you will need to make sure that you are no longer bound by your current mortgage’s lock-in period.

For those who might be unaware, a lock-in period is an amount of time that is agreed upon ahead of time when signing a mortgage with a bank where you promise that you will not pay off the mortgage in full either by complete settlement, sale, or refinancing. If you do end up breaking this agreement, you will be charged with an exit penalty fee.

8.      Early Repayment

Early repayment is pretty much exactly as the name would suggest. It essentially means that you are clearing your mortgage balance ahead of the originally scheduled date. This can be done either by repaying your mortgage in one fell swoop or by making an overpayment on your monthly mortgage payment.

As mentioned earlier however, there are often penalty fees charged to you for doing so, especially if you clear out the balance of your mortgage while you are still in the lock-in period you agreed to. There are other instances in which you will have to pay a penalty fee for paying off a home loan as well.

9.      Assumption Agreement

When you are in the process of buying a home and you decide to sign an assumption agreement, you are taking on the responsibility for the existing mortgage on the home. The person who is selling the home will then no longer be under any obligation to keep paying back the mortgage.

10. Closing Costs

Closing costs are essentially any of the additional fees that you will be required to pay on the date of closing on a house. This happens when the transactions are finalized, and you become the new owner of the home. These kinds of costs include things like transfer fees, disbursements (which are fees that your lawyer will have to pay for you and be reimbursed for), as well as legal fees.

Perfect Coverage Tips on Home and Auto Insurance Policies

Many people have the idea that home and auto insurance is as simple as finding the perfect price that fits their budget. Sometimes, we might consider our state minimums, as well as having coverage that fully covers the damage in case of a loss.  But in fact, there is a lot more to home and auto insurance that should be considered when shopping around for the best price with the most amount of coverage.

Have in mind, insurance is here to put in place to indemnify us in case of a loss. In other words, insurance is here to put us back to the same starting point we were at before the hail storm, theft or vandalism, fire, being rear ended and any other unforeseeable or at fault losses. Here are just a few insurance terminologies that you should be prepared to bring up while speaking with an insurance agent about a quote:

  • Bodily injury limits
  • Property damage
  • Liability
  • Full coverage
  • Back up and sewer for Homeowners
  • Roadside service
  • Deductible

What is the Difference Between Liability and Full Coverage?

Auto insurance can be branched into two separate categories – liability and full coverage. You will definitely want to know how to differentiate between the two, which is something your insurance agent should also cover, when quoting for auto insurance.

Liability coverage on a vehicle will cover (up to your limits) the damages incurred on another person’s property and bodily injury (if any) when you are found at fault. Property damage is not necessarily only the other party’s car which you have collided with but it can also be categorized as damage incurred on objects such as a house or a street lamp post; basically anything you have run into with your car that is not yours. Along with property damage, your liability-only insurance policy will cover any bodily injury caused by you in your vehicle, again, only up to your bodily injury limits.

One very important thing to note is that liability coverage may not cover damages on your vehicle regardless if you are at fault or not at fault. This means that if your car was parked and it was vandalized or you rear-ended the car in front of you, your insurance policy may not indemnify you.

Full coverage, on the other hand, will cover the damages to your vehicle as well as any other bodily injury and property damage you may have caused (up to your insurance limits) when you are found at fault or due to an event out of your control. This includes collision accidents, such as rear ending someone or running over the neighbor’s mailbox, which may seem crazy but it can certainly happen in the insurance world. When you are faced with unforeseeable events like a hail storm or vandalism while your car was parked, your insurance will throw in the “comprehensive” aspect of your full coverage insurance policy. They will gladly fix the damages on your car because you are in fact paying for full coverage.

How Do I Know if My Car Needs a Liability-Only Policy or Full Coverage Policy?

Now that we know what both these terms mean, which type of coverage is your vehicle best suited for? For the most part, vehicles with a lienholder on them, or ones that are still being paid off, will require a full coverage policy to be put in place. This is because your car is still an asset to your lender until you have finished paying it off. Keep conscious of the word indemnify. It makes sense for the lender to want to be put back to the same starting point before the loss because they cannot afford to lose thousands of dollars due to a loss when they still have a sharable interest on the vehicle.

Now, if your vehicle is completely paid off and there is no lienholder left in place, the truth of the matter is that only you can decide what is best. Of course your agent will give you a few suggestions but it is ultimately up to the consumer to decide what policy is best. A few tips that will help you choose the best coverage are considering the following:

  • What is the value of the equity of your vehicle?
  • What is the current mileage on your vehicle?
  • When was the purchase date of your car?
  • What is the year make and model of your car?

Such questions lead to an even bigger debate – how much money will you get back from the insurance company if you are involved in a total loss? You certainly do not want to pay hundreds of thousands of dollars annually on your car insurance policy, only to get back $1,000 to $2,000 if you are involved in a total loss with your full coverage insurance policy. Consider this tip when deciding what policy to get: weigh the amount of money you invest versus the amount of money you will get back, in case of a total loss, based on the value of your vehicle.

What Should I Set My Insurance Limits To?

We have mentioned the phrase insurance limits, but what do they mean and what should you set yours to? Insurance limits are the numbers you find within your insurance policy that set the bar for the maximum your insurance will pay out in case of a loss. In most states, there will be a state minimum for the limits that you are allowed to drive with. Although they are the state minimum requirements, they may not be the best way to go. A few tips to setting the insurance limits on your policy are:

  • Choose limits you would want to be covered by if another person were to crash into you: You do not want to be stuck paying for medical bills or medications out of your own pocket in case the other party’s limits were not sufficient enough to cover you.
  • Choose limits that protect all of your assets: If your insurance limits are not high enough, come pay out time due to an at fault accident, the other party may sue and go after your assets if your limits were not high enough to take care of their part of the loss.
  • Always keep in mind that family safety comes above all else: A certain price may seem very attractive to your wallet, but assuring that your limits are high enough to cover your passengers (which in most cases consist of your family), is more important, even if the higher limit policy is $10 more a month than that with state minimum limits.

What Company Can I Trust to Have My Back?

With the insurance industry growing day by day, it has become hard to keep track of all the rates offered by companies or brokers, which plays a huge role in deciding over the perfect insurance agent. While price is obviously a major contributing factor, customer service should also be considered. Here are a few tips to keep in mind when deciding what company you want to insure your home and auto with:

  • Choose an agent with extended hours: while most insurance agencies are opened 9am-5pm, some are opened until 7pm or 8pm. This is because some, not all, understand your busy work schedule so they try to work around it.
  • Chose an honest and straight forward agent: some agents are in it for the monetary compensation, but some are in the field to make sure you are well covered. Let the agent mention to you perks of insuring with them such as unlimited road side assistance or even the back up and sewer endorsement for your homeowners policy. Remember, an agent that offers their full service without fear of rejection is a well-rounded agent.
  • Always quote with several companies to see who has the most competitive rates along with the insurance limits of your choice, kind of like comparing apples to apples. While a policy with certain limits with one company may be at $500 for the six month premium, another company may be at $450 with the same limits and perhaps with better service.
  • Choose an agent that will work to meet your financial needs: although you may not necessarily be able to put the price on your insurance premium based on the limits of your choice, you can certainly set your deductible amount in case of a loss. Most insurance companies should be able to set your deductible as low as $0.

Once you have chosen the right agent and company, you will be on your way to being well insured and those sleepless nights of overthinking what crash sites you might encounter on your commute to work the next morning will be no more!

Insurance Fails: Avoid Doing These Things if you Want to Save Money on Home Owners Insurance

Money is a resource that unfortunately gets stretched a little too thin during inopportune times. Saving money when you purchase a home owner’s insurance policy is important. If you are not careful though, you could very well end up spending far more money than you need to in the long run due to oversight. Here are some things to avoid doing if you want to save money on home owner’s insurance:

Not Getting Multiple Quotes

It is in your best interest to shop around when looking to obtain home owner’s insurance, or any kind of insurance for that matter. If you go with the first quote that you receive, you will not know if there is a better deal out there for you. You will not know if what you are paying each month is the best deal, a standard deal, or actually a completely terrible one. It may take a bit of time to do all this research, but in the end, it will save you a ton of money. You will be grateful for having taken the time and effort to do so.

Going with Lower Deductibles

Going with a policy that has a lower deductible may seem like a rather enticing option, but it’s not necessarily as good of an idea as you may think it would be. The reason for this is that even though you will have to come up with more money if you do need to file a claim, you will end up having a lower monthly premium. Having a deductible that is set between $500 to $1,000 can save you up to 25% on your premium, thus leaving you with more money to use or put away in case you do need to file a claim and have a deductible to pay.

Not Asking About Discounts

If you want to save even more money on your home owner’s insurance every month, you will definitely need to ask your insurance company about any discounts they offer. You could receive savings that you may not have even known you could qualify for.

  • Age Discount: Folks who are over the age of 55 and retired are home more often, which means that they are less likely to become victims of thievery. Some companies will offer a senior discount, which could be as much as 10%.
  • Water Sensor Discount: Water sensors detect leaks in your home before they turn into full-on floods. You could buy active or passive sensors at any large home improvement shop. Once they have been easily installed, you may qualify to receive a discount up to 10%.
  • Claims-Free Discount: If you do not make any home owners insurance claims for 10 years, you could end up saving up to 20%. Naturally, this will mean that you must commit yourself to one insurance company during this stretch of time and not make any claims. This discount is an option some people receive.
  • Homeowner’s Association Discount: If you are living in a neighborhood that has a Home Owner’s Association (HOA), you could receive a discount of 5% to 10% due to insurers seeing these communities as less of a risk.
  • Nonsmoker Discount: If you are a smoker, you will end up paying more for your home owner’s insurance due to the increased risk of a fire. If you are a nonsmoker, you could qualify for a special discount worth up to 15%.
  • Gated Community Discount: If your home is located inside a gated community, then you may receive a discount, as it is less likely to be robbed. The average discount will usually range from 5% to 20%.

Keeping Policies Separate

Bundling your insurance policies is another great way for you to save money on your home owners insurance every month. By keeping your policies (such as home, life, auto, boat, etc.) separate, you are missing out on some serious discounts. Depending on what insurer you go with, you could save anywhere between 7%-20%. Asking about home owners and auto insurance simultaneously could end up making the shopping process take longer, but it is another thing for which you will thank yourself in the long run.

Not Making Sure You Have the Right Amount of Coverage

It is important to make sure you have the right amount of coverage when obtaining a home owners insurance policy. You do not want to have too much or too little. If you have too much coverage, you could be shelling out extra money every month for coverage you do not need. If you have too little coverage, you could end up having to come up with a lot more money on your own if something happens.

How to Prepare to Make a Home Owner’s Insurance Claim

When something goes wrong in a home, a homeowner with insurance may be curious to know how to prepare a home owner’s insurance claim. Every homeowner’s insurance policy is different and so it is important to read what your specific policy says. However, most policies ask their customers for a similar protocol when something goes wrong in their home. Whether it is your first time having to file a claim or it’s been a while since you’ve filed one, here are the necessary preparations to make in order to make a home owner’s insurance claim.

Filing a Claim: Does it Make Financial Sense

Even before filing a claim, you should think about whether it is financially smart to do so. Your homeowner’s insurance policies deductible amount should be a good indicator for whether or not to make that decision. If the cost of repairing the damage to the home or replacing a stolen item is less than the deductible (check your policy for the amount you have to pay), then you may be better off just paying out of pocket for the expense yourself.

Contact Authorities Immediately—If Applicable

If the house was burglarized, it is important to contact authorities right away—not just for safety—but for insurance reasons. Insurance companies may ask for a police report to get a complete understanding of what happened to your home, and to assess the damages and losses incurred. In addition, insurance companies may ask to speak with officers who showed up to the scene to get the complete details—so it may be helpful to ask for the officers’ badge numbers and names.

Contact the Homeowner’s Insurance Company About the Claim ASAP

The sooner the insurance company knows about what damages have been done to your home the better. This will give your insurance lender a heads up to get the process rolling. Getting in touch with the insurance lender will also give you more details about your specific policy. The insurance lender will then send the claim forms either through the mail or have them made available online. The sooner those forms are filled out and sent back, the sooner they could help.

Make a List of Damages for Your Homeowner’s Insurance Claim

Once you figure out all the damages to a home, it is a good idea to make a detailed list of everything that is broken or needs to be repaired. If this is not your area of expertise, then it is a good idea to get a professional for a more thorough second opinion. For instance, damage caused by burglaries can be much easier to assess than home repairs. It is also a good idea to photograph any damage with a time stamp attached to it.

Make Temporary Repairs Before Involving Your Homeowner’s Insurance Company

If possible, make temporary repairs before involving your homeowner’s insurance company. This is a good idea of you are dealing with a broken part of a home or are dealing with damage that may get worse. This can help prevent your home from being further damaged; and depending on how bad the repair is, extend the amount of time you can live in the home. If you do make small repairs or hire a professional to do so—make sure to keep receipts for the costs—as your insurance company may reimburse you for them.

Make Time for the Insurance Adjuster to Visit and Inspect Your Claim

Once your insurance lender knows about your claim and has the claim paperwork, they will then send out an adjuster—a person that inspects and assess the damages you are claiming. Be prepared for some type of interview and an inspection process that could take a few minutes to an hour (depending on the damage). At this point, it may be helpful to provide the adjuster with the list of damages that you had made earlier.

Keep Track of Expenses If You Need to Relocate While Repairs are Being Done

Sometimes the damages to a home (such as the aftermath of a natural disaster) can be so great that a person has to temporarily relocate until the insurance company fixes up their home. In this case, keep track of all the money spent on relocation—this means keeping a detailed history of expenses with receipts. Most insurance policies will cover the cost associated with relocation as long as the customer can provided proof of these expenditures.

Preparing to file a claim for homeowner’s insurance can be done fairly simply; it’s all about contacting the right people, keeping track of details, and doing a little bit of paperwork. To make things as easy and streamlined as possible, it is best to keep communication with your insurance company open and honest. Once a homeowner passes over the necessary information for their claim, they could sit back and let the homeowner’s insurance company handle the rest.

What Are Some Strategies To Reduce Clutter In Your Home?

If you are like many people, your house is probably full of things you don’t need. It can be difficult to know what things you can get rid of and where to start. Fortunately, there are a number of things you can do to reduce the clutter in your home:

  • Change your mindset
  • Develop a plan
  • Get rid of things
  • Organize the reminder
  • Avoid the tendency to re-clutter

How Do I Get In The Mindset For Straightening Up My House?

Getting in the correct mindset is one of the most important parts of decluttering your home. And you’ll have to find a strategy that works for you. People do things like:

  • Schedule a distraction-free time to declutter
  • Listen to a particular playlist
  • Put themselves in a state of mind where they are comfortable parting with things

It’s extremely important to make the conscious choice to declutter your home. Eventually, you’ll be faced with an item that you no longer need, but have a strong emotional attachment to. The idea of discarding your cherished thing will tug at your heartstrings. It’s great to acknowledge those feelings. Let them happen, then see how you feel. Ideally, you’ll be able to make an objective assessment of how useful the item is. Even if you can’t let it go at that moment, you’ll probably declutter your house multiple times over several years. Maybe you’ll be okay to part with it down the road.

How Do I Develop A Plan To Declutter My House?

Developing a plan for your home is critical. In many homes, all the available surfaces are covered by something. It would likely be frustrating and ineffective to simply start trying to straighten up without a strategy. Because each person is unique, it’s important to develop the specifics of your plan yourself.

That said, there are a number of methods that people have used to at least get started on the task of cleaning their homes. A common method is to select a small, manageable space, like a countertop, and start there. This is skipping a step however. Before you begin moving things around, you need to know where they are going to go.

What happens if you move everything from that countertop to your dining room table? You’ve got a clean countertop, but an even messier table. However, if you know what you want to throw out from your countertop and what you want to keep, you can free up your counter space without increasing clutter elsewhere.

Your plan should include at least a vague idea of how you want to work your way through your home, how you want your house to look at the end, and any other special considerations you may have. It’s also critical that you develop your plan with future usability in mind. It will be much easier to keep your house straightened up if things are stored in a natural place. Meaning, if the first thing you do when you come home is kick your shoes off, put a shoe rack near your front door. If you have a pile of books on your bedside table, consider replacing it with something that stores books more effectively but still provides the benefits of a bedside table.

How Do I Figure Out What I Can Get Rid Of From My Home?

There are a number of ways to figure out what you can get rid of. A great one is to think of some categories that your possessions can be sorted into, for example:

  • Clothing
  • Books
  • Old Photographs
  • Kitchen

Once you’ve made your categories, start with the one that you feel will be easiest to sort through; a lot of people start with their clothes because they have the weakest emotional attachment to them. Gather everything from that category into a big pile. Then, go through and physically handle each item. Decide whether or not it’s adding value to your life, or simply taking up physical and emotional space. If it adds value, put it in a keep pile. If it only takes up space, put it in a discard pile.

Other people prefer to organize by zone. A zone can be defined however you want, though using rooms is fairly common. Again, handle each item in your zone and decide if it’s adding value or taking up space and place it in appropriate pile.

Once you’ve adopted your mindset, made your plan, and completed your goal for the day, you’ll need to physically discard the things you no longer need. In addition to putting them in the trash, you can donate them or give away as gifts. Be careful though, it’s easy to put off donating or giving those things away and letting them continue to take up space.

How Do I Organize My House?

You’ve successfully executed the discarding phase of your plan. Now you probably have a pile of things you kept and you’re wondering what to do with them. Go back to your plan and your idea of how you want your house to look. If you organized by category, you’ll need to put each item away in the appropriate spot, wherever that may be. If you sorted by zone, you’ll need to put each item back in its new location, or move it to the zone where it belongs.

How Do I Keep My House From Becoming Cluttered Again?

If you’ve set up your organizational system around your natural movements through your home, it will help a lot. You won’t struggle to make sure all your things are where they belong. They’ll naturally end up in the appropriate spot. It’s also important to reduce the number of unnecessary things coming into your home. An easy way to do this is to keep a list of things you want with the date they were added to the list. If you still want it after 30 days, maybe it’s worth buying.

Decluttering your home can feel like a gargantuan task. You may not know where to begin. Fortunately, there are a number of great strategies people have developed to make decluttering easier. The best thing to do is experiment with what other people have done and see what works best for you.

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1Loan approval is subject to meeting the lender's credit criteria, which may include providing acceptable property as collateral. Actual loan amount, term, and Annual Percentage Rate of the loan that a consumer qualifies for may vary by consumer. Loan proceeds are intended primarily for personal, family and household purposes. Minimum loan amounts vary by state. Consumers need to demonstrate ability to repay the loan.

2Based on consumers who received a loan from LoanMart from February 2002 to October 2018.

3Application processes could take five (5) minutes to complete. Upon completion, a conditional approval may be given pending review of documentation. Funding time is based on the time from final approval following receipt and review of all required documents and signing, prior to 2PM PST on a business day.

4To exercise the right to rescind, the consumer(s) must notify the lender in writing by midnight on the third calendar day from obtaining the loan. Within one business day from notice of rescission, the consumer(s) must return any monies received and fees paid on behalf of the consumer(s) by certified funds.

5Lenders recommend and encourage consumers to pay early and often and more in order to avoid additional finance charges.

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