Your first home is a big step, financially and personally. Learn how homeowners insurance can protect you in both of those categories.
2020 was set to be a big year for homebuyers, as more millennials stepped onto the property ladder for the first time. It was also projected to possibly be a tough year even to find a home, however, since a lack of starter properties has been clashing with high demand. The coronavirus pandemic has thrown nearly all projections into flux, of course—so it’s unclear exactly how the real estate market will settle in the aftermath.
Regardless of broader trends: congratulations if you’ve become a homeowner. It’s a precious commodity, and the structure, its contents, and the people inside it need to be secured. And if you’re still searching, we’re going to list some helpful hints for all buyers and explain how home insurance protects that investment.
How to buy a home successfully
The first tip involves asking yourself if you’re really ready. Everyone knows the structure itself is expensive, but homeownership can be a big financial leap in other ways. Buying a home will add to the list of expenses you already have like healthcare, auto and travel costs, and any outstanding debts. Be sure you’re prepared to add mortgage payments, utilities, maintenance, and repair/remodeling costs to that list.
If you’ve drafted a budget to handle this new financial responsibility, you can begin the home search. Having a down payment set aside is essential; conventional mortgages usually require at least a 5 percent down payment for first-time buyers. You won’t know what that percentage amounts to until you see what you can afford and have a home in your sights. And that last part may require some compromise.
First homes are called “starters” for a reason. It’s a big deal to move in, but it likely won’t be the last property you purchase. As such, don’t get too downcast if your dream home doesn’t appear the first time. Realigning your goals with the most affordable mortgage markets is a financially savvy approach.
Whichever zip code you’re aiming for, always research it using sites like Area Vibes or Neighborhood Scout. Touring the neighborhood in person offers on-the-ground reality which real estate agents may try to hide—which, of course, may not be possible in the current climate.
With a budget, down payment, and the research complete, you can be sure that other homebuyers will also have the property in their sights. First-time buyers need to prepare for a bidding war before they win that front door key.
Make homeowners insurance a priority
Bid-war winners must consider the cost of homeowners insurance. First-time buyers are likely financially exhausted and want to put this coverage on the “later” list. But it’s usually not an option, as most first-time buyers don’t pay in cash, and lenders require a policy to secure the loan.
New York home insurance can cost as little as $105 a month, however, and it covers policyholders for hundreds of thousands of dollars in claims. So, the expense may be negligible in terms of potential return.
Home insurance is the only domestic expense that pays for other ones. Your utility bill keeps the lights on but doesn’t help if your home is left powerless. The mortgage keeps the roof above your head, but it doesn’t help if the roof gets blown off. Home insurance bundles property, possessions, and personal care under one umbrella and protects them all from minor incidents to the very worst.
Knowing how much your home is worth helps get this coverage off the ground; you’ll have a replacement value figure should the whole structure ever be lost. Also, become aware of what home insurance covers (and what it doesn’t) to avoid any nasty surprises.
A good policy will offer broad protection for the home and its contents, and contribute toward the medical fees of anyone injured under your roof while visiting. It may also pay for temporary living expenses if damage drives you out during repairs.
We always recommend inventorying your possessions as soon as you can. This will greatly simplify the claims process should your things be damaged, lost, or stolen, because you can prove they were there.
Let NICRIS help make your first home a safe success
Working with the NICRIS team can help you find the best and most affordable insurance solutions for your situation. We’ll make sure you avoid the classic first-time homebuyer mistakes like over-insuring, under-securing, and neglecting to bundle home, auto, and other coverage types to achieve potentially greater savings.
NICRIS Insurance focuses on providing clients with the appropriate suite of products to protect them, their interests, and their loved ones. If you need some insurance advice or would like a free, personalized insurance review, just drop us a line.