A little over a year ago, I wrote that HARP had received its final extension. I affixed the word “probably” to the end of it because the program kept getting extended over and over.
It reminded me of one of those “final day to save” sales…that seem to gather dust as the sale never actually ends.
Well, it turns out HARP has indeed been extended again, though this really is the last time. Seriously.
We know this because Fannie Mae and Freddie Mac have introduced their permanent replacements, which will go live once HARP is finally put to rest on September 30th, 2017.
In fact, HARP is only getting this bonus extension to bridge the gap to the new streamline refinance programs being offered by the pair next October.
Update: I spoke too soon. The FHFA extended HARP once again until December 31st, 2018, but this is the last extension, for real this time. Honestly!
That being said, let’s learn more about HARP’s permanent replacements, which will now go live on November 1st, 2018.
Fannie Mae’s High Loan-to-Value Refinance Option
While the complete requirements have yet to be published, Fannie Mae did release a fact sheet regarding its so-called “High Loan-to-Value Refinance Option.”
The program, like HARP, will give underwater homeowners the opportunity to refinance their mortgages to take advantage of lower mortgage rates, assuming low rates are still around in late 2017 and beyond.
There won’t be any LTV restrictions other than the fact that it must exceed the maximum LTV for a limited cash-out refinance. In other words, the LTV needs to be high…
Additionally, the mortgage being refinanced must not have been previously delivered as a Fannie Mae Refi Plus (HARP) loan.
So the borrower must either have used HARP, refinanced out of it, and then back into this product, or simply not used HARP in the past to be eligible.
The good news is that unlike HARP, there is no cutoff date to participate, and borrowers can refinance more than once via this program. You may recall that there was no reHARPing allowed.
Borrowers must also benefit from the High Loan-to-Value Refinance in at least one of the following ways:
– Reduced monthly mortgage payment (including principal and interest) – Lower interest rate – Shorter amortization period – More “stable product,” such as from ARM to FRM
The mortgage must be seasoned, meaning borrowers must have made at least 12 payments since Fannie Mae acquired the loan. Additionally, no lates are permitted in the six months prior to refinance, and only one 30-day late is permitted during the previous 12 months.
Only Fannie Mae mortgages can be refinanced via this program.
Freddie Mac Enhanced Relief Refinance
Brother Freddie Mac also unveiled details of its long-term streamline refinance solution known as the “Enhanced Relief Refinance.”
This program basically mirrors the Fannie Mae program in its entirety, though your loan has to be owned by Freddie Mac.
One key difference is that the loan needs to have been seasoned for 15 months instead of 12.
Additionally, the LTV limits are spelled out in detail. As far as maximum LTVs go, if it’s a fixed-rate mortgage there is no maximum, if it’s an ARM the max is 105%.
The table below displays the minimum LTV limits:
These are basically the cutoffs where you wouldn’t be able to get a mortgage from Fannie or Freddie because the LTV would be too high, so they make perfect sense.
Other than that it appears to be exactly the same, other than the name. It too will go live in November 2018once HARP is finally phased out. It replaces the Freddie Mac Relief Refinance Mortgage (Open Access).
Like HARP, there will not be a minimum credit score requirement or a maximum DTI ratio, and an appraisal shouldn’t be required.
The mortgage being refinanced must be owned or securitized by Freddie Mac and have a note date on or after October 1st, 2017. It cannot be a Freddie Mac Relief Refinance Mortgage.
Are We Banking on Another Crisis?
While it’s great that there’s going to be a long-term refinance solution available to those who find themselves underwater on their mortgages, it does seem a bit peculiar at the same time.
To me, it says we’re probably going to see another crisis in the near-term future where homeowners will need some form of systematic payment relief.
The fact that it will be built into the mortgage finance system is troubling, though you could argue that it’s good to have a safety net. There’s just that dilemma of how people act when they know there’s a safety net beforehand…
In its statement, the FHFA (which oversees Fannie and Freddie) said the new streamline program will be “more targeted than HARP,” which I interpret as more limited in availability.
They added that giving responsible borrowers (those current on their mortgages) the chance to lower their rates reduces credit risk exposure for the pair.
Perhaps it’ll come in handy once all those 1% down mortgages come home to roost.
If you’ve been comparing mortgage rates for the purchase of a second home versus investment property, you’re already on a promising path: You’ll either have a place to go for vacations, or one that’ll generate income and put more money in your pocket.Either way, the opportunity to own more than one property is an enviable position to be in, but how you classify that property makes a difference in how much you’ll pay to finance and own it.
What is a second home?
A second home is like a vacation home — one you purchase for enjoyment purposes and live in or visit during part of the year. It is separate from your primary residence.
What is an investment property?
In contrast, an investment property is one you plan to rent out with the goal of generating income.
It might be confusing to differentiate between a second home versus investment property. That’s true especially if you’re thinking about occasionally renting out the property — using it regularly for vacation, for example, but also making it available on Airbnb for some of the time you’re not using the property.
Earning some money from your property doesn’t automatically make it an investment, however. Accurately defining the piece of property depends on how much time you spend in it.
Elliot Pepper, co-founder, CFP and director of tax at Northbrook Financial in Baltimore, says that you need to pay attention to what he calls “the 14-day limit rule.”
“Very broadly speaking, if you personally live in your second home for 14 days or fewer — or less than 10 percent of the days it is rented — during a year, then it would be considered a rental property and the income earned would be taxable,” Pepper says. “But you would also deduct the expenses associated with the property.”
On the flip side, if you use the property for more than 14 days or more than 10 percent of the time it’s rented, any rental income you receive isn’t taxable, but you also can’t deduct expenses, Pepper says.
Lender requirements for second homes vs. investment properties
Second home lender requirements
Investment property lender requirements
Credit score minimum
620-680 or higher
700 or higher
Down payment minimum
5%-10%
15%-25% or more
Debt-to-income (DTI) ratio maximum
45%
45%
Making the distinction between a second home and investment property is important not only for tax purposes but also when you seek financing for the home.
Julienne Joseph, senior advisor for Homeownership, Office of the U.S. Department of Housing and Urban Development Secretary, says that credit score and loan-to-value ratio (LTV) requirements vary based on what the buyer plans to do with a property.
“Investment properties typically have more stringent underwriting guidelines than second homes and primary residences because there is an assumed [greater] risk of default on properties that borrowers don’t occupy,” says Joseph.
Put another way, if a borrower has trouble making mortgage payments, they’re more likely to keep up with the payments on their primary residence, which they live in more often, than payments for a second home — a riskier prospect for lenders.
The stricter standards for an investment property might also include a larger down payment requirement.
For instance, Navy Federal Credit Union requires a 15 percent down payment for an investment property, but if you’re looking at a second home, the down payment could be as low as 5 percent.
That’s a huge difference: For a home with a sale price of $500,000, second-home buyers might be able to put down just $25,000 (or 5 percent), while investment property owners would need to come up with $75,000 (or 15 percent).
Tax implications for second homes vs. investment properties
Second home tax rules
Mortgage interest is tax deductible if it falls within the $750,000 total debt limit
Cannot rent out your property for more than 14 days per year to deduct mortgage interest
Investment property tax rules
Mortgage interest is fully tax deductible
Can also deduct many expenses related to the property, including property taxes, maintenance, advertising to attract renters, materials and supplies used to maintain the property, utilities and insurance, as well as for depreciation.
If you rent out the home for more than 14 days per year, the rental income is taxable
Homeowners enjoy the ability to deduct mortgage interest, but Pepper points out that this can get a bit tricky if you own a second home, due to the $750,000 total debt limit for interest deductions. Essentially, if you have more than $750,000 in mortgage debt between the two (or more) properties, you’ve maxed out the amount you can use to deduct interest.
However, “interest on a mortgage related to an investment property is fully deductible on [Form 1040] Schedule E for a taxpayer and can therefore be used to offset any income generated from the property,” says Pepper.
Investment property owners can use depreciation to their advantage, as well.
“For a personal residence, the owner is not allowed to deduct the actual cost of the home for tax purposes,” says Pepper. “However, for an investment property, the taxpayer will be allowed to take a deduction every year for depreciation. This deduction is based on the price of the house purchased and will be used to offset any income from the property.”
Pepper notes that this deduction isn’t a permanent write-off, “as the amount of depreciation taken will reduce the basis in the house. When the taxpayer goes to sell, they may end up with a larger tax gain that year.” This gain, known as depreciation recapture, is taxed at higher rates than traditional long-term capital gains.
In addition, whenever the selling year arrives, an investment property owner can be subject to income tax if the sale results in a profit, Pepper says.
For more on the tax implications of second homes and investment properties so that you can calculate your eligibility for tax deductions, review IRS Publication 936 and Publication 527.
Mortgage rates for second homes vs. investment properties
As they have with primary residences, mortgage rates for second homes and investment properties have increased in recent months. You’ll also pay higher rates, in general, for investment properties and second homes than you will for a primary mortgage loan. That’s because second homes and investment properties are considered riskier prospects for lenders.
Can you call an investment property a second home?
Tempted to call your investment property a second home and take advantage of some of the second-home perks, like a lower down payment and interest rate?
Don’t be. In the mortgage world, you need to call it what it is — whatever “it” might be.
“It is absolutely imperative that borrowers are completely transparent when disclosing to their lender the intended use of the property to ensure that they receive the appropriate product and rate,” says Joseph.
Joseph adds that borrowers might be asked to sign a document verifying their intended use of the property, so they’ll have to indicate in writing what they plan to do with the home. Deceiving a lender otherwise could have serious consequences.
“Intentionally misleading a lender constitutes mortgage fraud,” says Joseph. “Not only is it unethical – it’s illegal and could result in criminal prosecution.”
Bottom line
Make sure you understand both lender requirements and tax implications before purchasing a property you intend to both use as a second home and rental. When in doubt, consult a real estate agent or broker and an attorney or CPA to learn what rules might apply to your individual situation.
As a renter of a home or apartment, you may be considering whether it’s worth the cost to purchase a renters insurance policy. Renters insurance is a type of coverage that is designed to provide financial protection for your personal property in your rental unit, and it also provides coverage for your liability exposure, should someone become injured on your property. And, the good news is that this type of coverage offers you extra protection, purchasing renters insurance generally won’t cost you a ton of money.
Savings
Compare rates and save on home insurance today!
On average, renters insurance costs about $174 per year as of 2022, according to the Insurance Information Institute (Triple-I). And, much like the right auto insurance policy, renters insurance can be an invaluable part of your financial plan. That said, you may be wondering what is covered under renters insurance, and what may not be covered under this type of policy. By understanding your renters insurance coverage, you may feel more comfortable with your policy and more in control of your finances. Here’s what you should know.
What does renters insurance cover?
Your renters insurance policy provides several areas of coverage and may be able to be customized to fit your unique needs. The coverages discussed here are fairly standard, but all renters insurance companies are different. Checking with your agent regarding the specific coverages included on your policy may be a good idea.
With these coverages, you will first pay a deductible as determined in your policy before your insurance provider helps cover costs.
Liability coverage
Liability coverage is designed to provide financial protection for you if someone is injured on your property. It could also help pay for attorney fees and legal representation. In fact, your liability coverage may even extend to injuries you are found at fault for that occur off of your premises, such as your dog knocking down a neighbor while you are on a walk.
Liability coverage is an integral part of a renters insurance policy. Most companies offer liability coverage starting at $100,000, although $300,000 and even $500,000 are not uncommon coverage levels. These amounts may seem high, but if someone is injured and sues you, the bills can add up quickly.
Personal property coverage
Personal property coverage is the backbone of a renters insurance policy. Because your landlord is responsible for the structure of your rental home or apartment building, a renters insurance policy does not include dwelling coverage like a home insurance policy does. However, you are responsible for your personal belongings, like your clothing, furniture and electronics, and that is where renters insurance comes in.
Renters insurance policies cover your personal belongings on a named peril basis, meaning that your belongings are only covered for certain situations. The named perils most commonly included are:
Fire or lightning
Windstorm or hail
Smoke
Vandalism
Theft
Damage caused by the weight of ice, snow or sleet
Damage caused by the accidental discharge of water or steam from a household appliance, or from a plumbing, heating, air conditioning or sprinkler system
Damage caused by the sudden and accidental cracking, burning, tearing apart or bulging of a steam or hot water heating system, air conditioner or sprinkler system
Damage caused by the freezing of a household appliance or plumbing, heating, air conditioner or sprinkler system
Damage caused by a sudden and accidentally generated artificial electrical current
Keep in mind that these perils only refer to your personal property. If your ceiling caves in after a heavy snow, for example, your renters insurance policy will help pay for the damage to your belongings, but your landlord’s policy will pay for the damage to the building itself.
Actual cash value vs replacement cost
Typically, you will have a choice between two types of personal property coverage on a renters insurance policy: actual cash value or replacement cost. You may even have a third option, called guaranteed replacement cost coverage. These will determine how your coverage applies after the deductible is taken into account.
Actual cash value (ACV) coverage will pay to replace your belongings at their depreciated value. For example, if you purchased a TV for $1,000 and it loses 10% of its value each year, after five years it will only be worth $500. If your TV is damaged, your insurance claims adjuster will calculate the depreciation to determine how much to pay you for it. More or less depreciation may be taken out depending on the condition of the TV. ACV policies are typically the least expensive option.
Replacement cost coverage will pay you the amount it will take to replace your damaged or destroyed items with comparable new items. For example, even if the TV in the example above is five years old, a replacement cost policy will give you the $1,000 that it would take to buy a similar new TV. Replacement cost policies are typically more expensive than ACV policies since they agree to pay you a higher amount.
Guaranteed replacement cost takes things a step further. If your damaged or destroyed items cost more than the original value to replace, a guaranteed replacement cost policy will pay the higher amount. If it would take $1,500 to replace your damaged TV, even though you only paid $1,000 for it when you purchased it, a guaranteed replacement cost policy should pay the $1,500. Guaranteed replacement cost typically costs the most of these three options, and may not be available from every company.
What does renters insurance not cover?
Although renters insurance offers a good amount of financial protection for its relatively low cost, not everything is covered. Some common exclusions on renters insurance policies include:
Flood damage: If you live in an area prone to flooding and are worried that your personal belongings could be damaged in a flood, you may want to consider a separate flood insurance policy.
Earthquake damage: You may be able to add earthquake coverage to your policy by endorsement. If you live in an area of the country where earthquakes are common, you may need a separate policy.
Damage caused by pests: Because it is your landlord’s responsibility to maintain your rental home or apartment building, pest damage, even to your personal belongings, is usually excluded from a renter’s insurance policy. If your landlord is found negligible for allowing a pest infestation, the liability on their landlord insurance policy should cover your damages.
Damage to or the theft of your vehicle: To get coverage for your vehicle, you need to have auto insurance. Your personal belongings may be covered under your renters policy if they are stolen, but the car itself or any damage to it is never covered under a renters insurance policy.
Your roommate’s belongings: Unless you and your roommate have a joint policy where you are both listed as named insureds, your roommate’s belongings are not covered under your renters insurance policy.
Damage in excess of your policy limits: If you have a renters insurance policy, you should consider how much coverage you need to replace your belongings. Your liability coverage will also only pay up to the limit you choose. However, damage you cause to the unit or injuries you or your family sustain are not covered by renters insurance.
Every renters insurance company is different, so talking to your agent is the best way to determine what is and is not covered by your policy.
What customizations can you make to a renters insurance policy?
Renters insurance policies often come with endorsements that you can add to customize your coverage. Common endorsement options include:
If you are not sure how much renters insurance you need or what coverages to choose, talking to a licensed agent may help you to decide on policy options that are appropriate for you.
Frequently asked questions
Deciding which renters insurance company is right for you can depend on a range of personal factors and preferences. There are numerous renters insurance companies on the market, and one of the best ways to find coverage that fits your needs is to request quotes from several companies. This lets you compare the available coverages, discounts and price before making a decision on a policy.
Your renters insurance policy may extend your liability coverage to cover injuries that your pet causes to others, although there are certain dog breeds that are frequently excluded from coverage. Exotic pets may also be excluded. If you are looking for health insurance coverage for your pet, you will need to purchase a pet insurance policy.
No, your renters insurance policy will not pay for your medical bills if you hurt yourself. Your renters insurance medical payments coverage only applies to your guests, and your liability coverage only provides financial protection for injuries and damages that you are found at fault for. If you are injured on your property and your landlord is found at fault, their landlord insurance may provide coverage for your medical bills. Otherwise, you would need to have health insurance to cover your injuries.
Save more, spend smarter, and make your money go further
Over the past five months, I’ve had the unexpected pleasure of traveling the country with Mint to talk in 11 different cities about money in celebration of the book my company recently released, The Financial Diet. My partner Lauren and I, along with our spouses or other members of the TFD team, joined Mint up and down both coasts and in the middle of the country to speak honestly with our audience about what money means to them, and the unique challenges that their city brings, financially. (Oh, and we also drank awesome wine and had tons of great finger food — but that joy was somehow secondary to the genuine love we felt being with the community we have grown over the past few years.)
And talking about money, for us, isn’t just a hashtag, or a way to promote our book. It is the very reason we have done what we do these past few years, the thing that motivates us when we get up each day for work. Because if I hadn’t been lightly pushed by my exasperated then-boyfriend to download Mint four years ago, and forced myself into a conversation about my finances that has grown past anything I could have ever conceived, I would still almost certainly be in a position where money alternately terrified and bored me. I was terrible with money because I refused to talk or even think about it, and everything from ruining my credit score to going into credit card debt felt completely irreversible because of that fundamental fear. But I know now that in talking about money, in confronting it head-on and making it a value-neutral, ongoing conversation in your life, you can overcome any obstacle or fix any mistake, financially. Life is long, and today is always the best day to get started living it well.
It was interesting, though, seeing that even amongst the groups of women who came to our events, who came from incredibly diverse backgrounds and approached their individual finances in entirely different ways, that there were themes which kept reappearing over and over. Yes, there were unique challenges to each city (Austin is growing much too quickly for its residents to keep up, Atlanta is in desperate need of improved public transportation), but there were also common threads that we heard almost without exception at each stop. Here, the four things we heard most frequently while talking about money on the road.
“My partner and I don’t agree about how to deal with money. How do we overcome that?”
One of the biggest recurring themes at our tour events was the idea that couples fundamentally disagreed on how to handle, or even talk about, money. And that’s not surprising — everyone comes to a relationship with money baggage, whether it comes from being raised with a lot of it, very little of it, or something in-between. Some people were raised to avoid the topic entirely, others were taught to micromanage every detail. And as our money and relationships expert Olivia Mellan explains in our book, the most common dynamic in relationships is a spender who is married to a saver, in whatever form they may take. One person simply plays closer and more conservatively with money than the other, and from that fundamental disagreement can stem near-endless problems.
But two fundamental components of any healthy, long-term relationship from a financial view are 1) speaking openly and frequently about money, so that secrets cannot accrue or small cracks cannot expand, and 2) having a separate, independent bank account for each member of the couple which is totally their own. Even if it’s just a very small amount, a tiny discretionary fund, it is so important for each person to feel empowered and fulfilled by what they want to spend (or save) on without having to ask the other person for permission.
In your “fun fund,” you might want to devote half to saving for a girl’s trip and half to spending on skincare products. Or you might want to use it to take yourself to movies and dinner sometimes, or just save for something big you can’t even imagine yet. But having money that is entirely individual provides a release valve for all of the other compromises that will be made on the money you share.
Two people never have to fully agree on money, but they do have to learn to live with one another’s money baggage and differing approaches. Having the topic be an open, value-neutral one, and having that separate money for individual spending, allow that to happen.
“What do you do when you earn much more than your friends, or much less?”
One story I found myself telling over and over on the tour was the experience I had through high school and college, when I was a decidedly middle-class person in an undeniably rich-kid town. I socialized with many, many people whose parents earned (literally) ten times what mine did, and whose lives and access looked wildly different as a result. And aside from profoundly skewing my idea of what “normal” was — I didn’t know then that it wasn’t normal to have many friends who went to a $30,000-per-year high school — it also led me to spend money I didn’t have in an effort to keep up appearances.
I went into credit card debt, tanked my credit score, and drained eight years’ worth of summer job savings all in the span of about a year, wasting that money on a lifestyle that never belonged to me. And from that experience, I learned that the most important thing anyone can do for their mental health when it comes to the finances of your social life is to make sure that you have at least some friends who are close to your level, financially, because being the only one on one side or another of the spectrum will only lead to a distortion of perspective and deep self-consciousness.
” data-medium-file=”https://blog.mint.com/wp-content/uploads/2018/04/TFD_0007_8.png?w=300″ data-large-file=”https://blog.mint.com/wp-content/uploads/2018/04/TFD_0007_8.png?w=530″>The Financial Diet book tour in Chicago
Beyond that, it is up to the person who is more comfortable financially to lead the conversation, offer options, be candid with costs, and not expect the other person to follow suit. Having more money in a friendship is a great place of privilege, and one that requires both sensitivity and understanding that the conversation might not come easily to the person with less. But above all, no matter how much you earn, the phrase “it’s not in my budget” needs to be in everyone’s vocabulary. There is nothing chic about going into credit card debt to pay for someone else’s idea of a social life.
“Do I really have to have a retirement account?”
At the risk of sounding like your parents, yes. Absolutely yes.
And although the women at our events were almost universally savvy, motivated women, this question came up again and again. Having a retirement account can feel like that sort of vague, important-in-theory thing you can easily put off, but every day you are not putting that pre-tax money away (and particularly if you are missing out on an employer match) is a day you will be kicking yourself for later.
Although it may not feel that way, we will all want to retire one day, and not having the option to leave our jobs is something that no one should have to face. The younger you start saving, the more time you have to let that money grow and work for you, and although it may not be as immediately-satisfying as spending that money on something you want in the short term, once you start your retirement saving, there is a profound comfort to be found in watching it grow over time and knowing that that money is the nest you are building for yourself, because you care about yourself enough to take care of Future You.
“How do I balance paying off my loans with living life?”
Ultimately, the biggest question that most people face when it comes down to the day-to-day of personal finance is how to live the life you want while doing what is right for you. And for many people, that means balancing their loan payments (which for many people can feel overwhelming) with the other things you’d frankly much rather be doing with your money. But something we have learned over the years at TFD is that, first of all, you probably need much less than you imagine you do to be happy.
The Financial Diet Dream Team: Annie Atherton, Chelsea Fagan and Lauren Ver Hage
” data-medium-file=”https://blog.mint.com/wp-content/uploads/2018/04/TFD_0001_2.png?w=300″ data-large-file=”https://blog.mint.com/wp-content/uploads/2018/04/TFD_0001_2.png?w=530″>The Financial Diet Dream Team: Annie Atherton, Chelsea Fagan and Lauren Ver Hage
When we were first starting the company and could not take a salary for over a year, Lauren and I suddenly saw our household incomes drop by nearly half, and had to severely reduce our lifestyles as a result. And though it was self-imposed in starting a business, it taught us that so much of what we were spending on, so much of what we felt was necessary to our happiness or fulfillment, was really just mindless buying.
Lauren as an example lived at home until she was 25 in order to help pay down her loans, and though she certainly longed to live on her own earlier, she was able to find a readjusted idea of happiness while living with her parents. When I went to community college instead of the four-year schools I dreamed of to save money, I wished I could sign on the dotted line to go to those dream schools, but I learned to be happy in the life I was living.
The greater the gap you can create between “what you could technically afford to spend” and “what you need to spend in order to live well,” the wealthier you will feel, regardless of what you earn. And if repaying loans is part of your day-to-day money life, you must learn to treat that money as never yours in the first place — you can’t count what your life would be like with that loan money and then watch it go out the door, or you will be full of resentment and envy each month.
You have what you have, you owe what you owe, you are who you are.
Now with all that information, take stock of your life. Go through every purchase last month and highlight every one you don’t remember making. Realize how much of your spending is done without even thinking, and how many purchases really don’t bring you much happiness in the long run. And if you can start thinking about your money like that — reduced down to the essence of what matters, and what has real value — suddenly the balancing act won’t seem nearly as hard as you thought.
Dependable Home Warranty was founded in California in 1974. When they became a subsidiary of Old Republic International in 1982, they continued to provide reliable coverage to all of their customers.
They have since earned a spot among the top three home warranty companies in the country with an A+ rating from the Better Business Bureau.
Old Republic offers efficient and friendly service with comprehensive plans and straightforward pricing.
Their goal is to be a long-time service provider for your household by building a relationship with your family and earning your trust.
Old Republic Home Protection Review: Main Features
Table of Contents
Old Republic offers many ways to protect your investment by covering common home repairs to help keep your house safe and sound.
With Old Republic, you can expect to find a variety of plans tailored to meet your coverage needs. Across plans, there are a number of features that stand out.
The following are some of our favorite Old Republic coverage features included in all plans, features which put it on our list of top home warranty companies.
Heating System
Heating units not exceeding five tons are covered under all of Old Republic’s warranty plans, and they don’t limit the number of units you can cover.
Most companies only allow coverage for one unit, and you have to pay extra for additional units, so this is a really excellent coverage option.
If you have multiple heating units in a large house or you have an outbuilding you use for your hobbies and projects, this coverage provides you with a great solution. Heating system coverage includes parts like the heat pump, ducts, thermostat, floor heater, and drain pumps.
Plumbing System
When a part of your plumbing isn’t working, it can disrupt your entire routine from dishes to showers to bathroom breaks.
Old Republic’s plumbing system coverage includes the following:
Drain line stoppages
Toilet tanks
Pipe leaks
clogs/leaks: in your water heater, water dispenser, garbage disposal, sump pump, and water pressure regulator parts
Electrical System
You use your electrical system for almost every part of your day. Making toast for breakfast, watching TV in the afternoon, and playing games with your kids in the evening all require electricity.
To keep the lights on, Old Republic covers your outlets, switches, panels, breakers, wiring, fuses, fans, and more.
If something goes wrong with your electrical system, they’ll restore power quickly so you can keep moving.
Home Appliances
Old Republic covers home appliances like your oven, cooktop, range, dishwasher, exhaust fan, built-in microwave, and trash compactor.
Every component of these systems is included in the event you experience normal wear and tear or an unexpected outage.
With this coverage, you can keep your kitchen in proper working order to cook meals, do dishes, or gather with family and friends.
Old Republic Warranty Plans
Old Republic offers customizable warranty plans based on location. While there’s not a standard set of plans for you to preview, Old Republic has brochures available that detail the specific coverage in your area.
Old Republic offers location-based plans to provide better coverage based on common problems in your region.
For instance, you won’t pay for air conditioning coverage when your home doesn’t have an air conditioner.
They can provide superior options and more valuable service by segmenting their warranty plans this way. Experts servicing your location will be more knowledgeable about the problems you encounter and be able to fix them more quickly.
The Good – Old Republic Home Protection
Old Republic offers some benefits in addition to their exceptional features, giving you not only great coverage but fantastic conveniences that make your life easier. Here are just a few of our favorites.
Easy Quotes
You don’t have to call Old Republic to request a quote, and you won’t be hassled by their representatives.
They provide online brochures listing the coverage options in your area so you can do the research on your own and find what’s right for you.
The quoted estimate is highly accurate and lists the service call fee along with the warranty plan price.
Online Claims
Most of your home warranty claims can be handled online, adding convenience to the process. If you find faulty wiring in the basement and you can live without spending time in that space for a few days, the online option is easy to use and eliminates the need for you to pick up the phone.
You should always call instead of filing a claim online in the event of an emergency or if you need to make multiple requests like bringing up previous services or getting the status of an existing claim.
Great Reputation
Old Republic prides themselves on having an outstanding reputation, and they do everything they can to maintain it. They’re reliable, professional, and competent.
The company lists their values online so you can always see how important it is to them to provide you with the best possible service.
They value honesty, and they are always open with their customers. With this kind of transparency, you can rest assured they’ll do whatever they can to give you the best service at the best prices.
Online Resources
Old Republic’s website includes a number of educational tools that can help you make an informed home warranty purchase.
With a blog full of home improvement tips, real estate marketing tools, information about home warranties, and more, you’ll be able to find what you need quickly.
The FAQ page includes answers to the questions that customers ask Old Republic most frequently, so when you’re on the hunt for more information about the company or their plans, it’s all right there.
Real Estate Professional Options
For real estate professionals who prefer to add perks to their sales, Old Republic has packages just for you.
You can cover all of the homes you sell with a fantastic starter warranty, enticing your buyers and giving you an edge.
These plans include extensive tools like customizable e-cards and newsletters, open house kits, and other marketing items.
The Bad – Old Republic Home Protection
As with anything you buy, Old Republic has some downsides, none of which are too significant.
Coverage Areas
They don’t provide nationwide service, so their warranty plans aren’t available everywhere.
However, Old Republic has chosen to focus on areas where they feel they can offer the best value, so in the areas where service is available, it’s the best service you can get.
Customer Support
Old Republic doesn’t offer email or online support. Sometimes the most convenient thing you can do is hop online and chat with someone if you have a quick question.
Support Options Limited
The lack of online support forces you to call in a situation where it would typically be simpler to chat.
However, they do have phone representatives, and their online help section is more comprehensive than many other providers. They have an extensive FAQ section as well as a blog that provides even more advice and answers.
Pros
Cons
Comprehensive Coverage
Old Republic Home Protection offers a wide range of coverage options, including for major appliances, systems, and optional add-ons such as pool and spa coverage.
Ease of Use
Old Republic Home Protection makes it easy to request service and track claims online or through their mobile app. They also have a network of pre-screened contractors to provide service.
Strong Reputation
Old Republic Home Protection has been in business for over 45 years and has a strong reputation for customer service and claims handling.
Customizable Plans
Old Republic Home Protection offers a variety of plans and optional add-ons, allowing customers to tailor their coverage to their specific needs and budget.
Alternatives to Old Republic
Old Republic is one of several great home warranty companies. Take a look at the top alternatives below to decide which provider is best for you.
#ap24978-w-placement-top10-v2 .company-table .company-item .overview ul li
list-style-type: disc;
text-align: left;
margin-top: 5px;
margin-bottom: 5px;
font-size: 1em
#ap24978-w-placement-top10-v2 .company-table .company-item .overview ul li p,
#ap24978-w-placement-top10-v2 .company-table .company-item .overview ul li span
font-size: 1em
Ads by Money. We may be compensated if you click this ad.Ad
The Bottom Line – Old Republic Home Insurance Review
[embedded content]
While Old Republic doesn’t have online chat support or coverage in all areas, they do have a fabulous reputation for being honest and upfront with customers.
Their integrity standards are some of the best in the business, giving you peace of mind that your warranty coverage will be honored.
Their quotes are easy to find without having to reach out to a representative, they have a no-pressure sales process, and they offer location-specific coverage for more comprehensive plans and solutions.
When it comes to home warranty coverage, Old Republic provides excellent options for all of your home warranty needs.
FAQs – Old Republic Home Insurance
What does Old Republic Home Protection cover?
Old Republic Home Protection offers a range of coverage options, including for major appliances, heating and cooling systems, plumbing, and electrical systems. Optional add-ons, such as pool and spa coverage, are also available.
How does Old Republic Home Protection work?
If a covered item in your home breaks down, you can file a claim with Old Republic Home Protection either online or over the phone. Old Republic will then send a pre-screened contractor to your home to assess the problem and perform any necessary repairs.
How long does a contract with Old Republic Home Protection last?
Old Republic Home Protection requires a one-year contract. The contract automatically renews each year unless canceled.
Product Description: Old Republic Home Protection is a home warranty company that offers coverage for home systems and appliances.
Summary of Old Republic Home Protection
Old Republic Home Protection is a home warranty service that offers coverage for major repairs and replacements for important home systems and appliances. It provides coverage for items such as heating and cooling systems, plumbing, electrical, water heaters, and more. The company also offers additional services such as repair scheduling, 24/7 emergency service, online account management, and an annual maintenance plan.
Cost and Fees
Customer Service
User Experience
Product Offerings
Overall
3.9
Pros
Predictable Coverage: A one-year contract with automatic renewal means that homeowners can count on having coverage for a set period of time without having to worry about renewing the contract themselves.
Continuous Coverage: Automatic renewal ensures that there is no gap in coverage, which is especially important for homeowners who rely on their home systems and appliances.
Budgeting: With a one-year contract, homeowners can budget for the cost of the home warranty and plan accordingly for the renewal.
Cons
Long-Term Commitment: A one-year contract means that homeowners are locked into the service for a set period of time, even if they are dissatisfied with the coverage or service provided.
Cancellation Restrictions: Cancelling the contract before the end of the term may result in penalties or fees, depending on the terms of the contract.
Automatic Renewal: Automatic renewal means that the contract will renew automatically unless cancelled, which may catch some homeowners off-guard if they forget to cancel before the renewal date.
Chase announced today a ‘Month of More’ with the month of May having increased redemption rates and higher portal rates:
Redeem Ultimate Rewards points for Apple products at increased rates. This includes 1.5 cents rate on the Sapphire Reserve, 1.25 cents on the Sapphire Preferred and INK Preferred, and 1.1 cents on the Freedom and other no-annual-fee cards. Now that PYB 1.5 cents is dead, this might be more interesting to some people.
Redeem Ultimate Rewards points for select gift cards at a 10-15% discount. The most interesting one here is Home Depot at a 10% discount. There are a few other brands like Chipotle, Gap, Applebee’s, and a few others as well.
Increased shopping portal rates on select brands like 5% at Walmart/Sam’s, 10% at Nike and Lowe’s, and a few more. I typically just compare on cashbackmonitor before making a purchase.
Save more, spend smarter, and make your money go further
Finding an insurance policy can be a tedious process, especially dealing with the jargon involved. Insurance policies are, after all, legal contracts between you and your insurer. These contracts have to navigate the conditions of a wide range of claims, for a wide range of scenarios. They tell you who is and isn’t covered, and what is and isn’t covered.
Insurance policies become so abstract that even everyday words we take for granted — like “you” and “we” — need to be clearly defined. Doing so leaves no ambiguity, no snags. At least, that’s the idea.
But because you have a life, you probably don’t speak insurance. That’s not a problem. We’ll outline car insurance terms that don’t usually come up during family dinners or on a first date. And “we’ll” do so (meaning, I’ll do so) in plain English. That way “you” (as in you, the reader) can be a savvier shopper.
Deductibles
Your deductible is what you pay out of pocket before coverage kicks in. Say someone careens into your car while it’s parked. They cause $3,000 worth of damage and your deductible is $500. You’d first pay the deductible toward repairs, and your insurer would pay the remaining $2,500.
Whether you choose a higher or lower deductible is up to you. Higher deductibles usually mean lower premiums because you’re taking on more of the financial risk. A lower deductible means a higher premium, but you’d pay less out of pocket for a claim.
Binder
To put it simply, a binder is a temporary insurance policy. It can come in handy when you need proof of insurance on-the-spot.
If, for example, you’re getting a car loan, your loan company will likely ask for proof of insurance. Your insurer can provide you with an insurance binder so that you’re not waiting for your insurance policy to be processed. A binder is typically good for 30 or 60 days and falls off once your formal insurance policy is produced.
Full Coverage Car Insurance
It’s a phrase used frequently, but truth be told, there’s actually no such thing as “full coverage.” When people use this term, they’re likely referring to comprehensive and collision. Together, these guard your ride against an array of perils.
Comprehensive helps cover you for most damages not caused by collisions. That means vandalism, falling trees, theft, fires and mudslides, to name a few.
Collision coverage helps pay for damages caused by — you guessed it — collisions, be they with another car or an object. In order to add collision to your policy, many insurers require you to have comprehensive coverage, too.
Gap Insurance
Financing or leasing a car? This coverage could help pay the difference — or the gap — between what you owe on it and how much it’s worth when you have an accident.
Especially if you’re leasing, your contract will likely require you to have gap coverage. What’s more, it might be included automatically.
If it isn’t, however, you may want to seriously consider adding it ASAP. There’s a good chance the gap will be there for at least a couple years. You’d be responsible for the difference, and it could save you from being thousands of dollars in the red.
It’s also important to note that comprehensive and collision are typically required in order to add gap insurance. If you’re unsure about that, you can always check the declaration page on your policy.
What’s the declaration page, you ask? Perfect segue.
Declaration Page
Also simply called “dec,” this is typically the first page of an auto insurance policy. It provides the who, what, where and when of your insurance plan. You’ll find pertinent info like:
The names of everyone listed on your policy
Excluded drivers
Your policy number
The start and end dates of your policy term
Your address
Your insurer’s address
You’ll also find info on your coverages, limits and deductibles, which can be especially helpful. The dec doesn’t provide all-encompassing detail, but it is an easy-to-read summary.
Loss Payees
You might notice another individual listed on the dec page — the loss payee. This is either a person or an institution that has a stake in your vehicle.
So if you’ve just financed a car, say, then the lender would be listed as the loss payee. Because they’re loaning you money for the purchase, they have an “insurable interest” in it and want to protect their investment. By being listed on your policy, the loss payee can stay up to speed with its status and have peace of mind — just like you — knowing that coverage is still in effect. You’ll also find your loss payee’s name, address and contact info on the dec page.
Anything Amiss? Ask.
If anything’s ever unclear, don’t hesitate to ask your insurer. That’s what they’re there for, after all. Besides, asking questions can be a skillful way to gauge just how top-notch and transparent an insurance company is.
Familiarizing yourself with the basic nomenclature of insurance can not only help remove its otherwise ominous-sounding tone. It can help you fully understand what you’re looking at when it comes time to evaluate your insurance needs — without having to make a day of it. You have better things to do.
Eric Madia is Vice President of Product Design at Esurance, where he is responsible for designing the company’s personal lines products. Eric has 23 years of experience in the insurance industry, focused primarily on underwriting, pricing, and product innovation. You can learn more about Esurance home and auto insurance policies by visiting their website.
*This blog post does not constitute, and should not be considered a substitute for legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.
Save more, spend smarter, and make your money go further
Previous Post
What to Know About Collecting Social Security and How to…
Next Post
How to Calculate Your Debt-to-Income Ratio (and What It Means)
Browse Related Articles
Housing Finances
What Is and Isn’t Covered by Homeowners Insurance
Housing Finances
3 Halloween Accidents Your Homeowners Insurance Might N…
Financial Planning
Think You Don’t Need Extra Insurance While Travel…
Financial Planning
5 Different Types of Insurance Policies & Coverage…
Financial Planning
How to Choose an Insurance Plan for Your New Smartphone
WTFinance is Cyberbullying Insurance?
Financial Planning
Common Questions About Renters Insurance
Rethinking Insurance: What You Really Need; What You Do…
Although inflation may be cooling, interest rates remain high. As a result, you may find yourself opting to rent rather than own, either by choice or by extenuating circumstances. The good news is that renters insurance is significantly cheaper than home insurance at around just $174 per year on average, according to the Insurance Information Institute (Triple-I). This is because renters insurance only provides coverage for the home’s contents along with the renter’s liability, rather than including coverage for the structure of the home. To help you identify which renters insurance company best meets your needs, Bankrate reviewed the largest renters insurance companies by market share based on a variety of key metrics.
Why renters insurance is important
Renters insurance is relatively inexpensive at around $15 per month on average, but its value can significantly outweigh its monthly cost in the event of a claim.
In addition to replacing your personal belongings, renters insurance also offers coverage for incidents that affect your guests. Perhaps a guest slips at your residence, sustaining an injury. In this case, renters insurance could help pay for their medical costs. If the injury results in legal action, renters insurance could also help pay legal fees. Insurers commonly offer coverage for relocation and food if your rental becomes temporarily uninhabitable due to a covered claim.
Add-ons are generally available for your renters insurance policy as well to help provide more robust coverage. For example, if you need extra coverage for your jewelry or other high-value items, you may be able to add additional coverage on top of your standard renters insurance.
Best renters insurance companies
Bankrate has researched more than a hundred companies offering renters insurance policies to narrow down some of the best renters insurance companies of 2023. The following companies have all been selected based on positive customer satisfaction ratings by J.D. Power, a leading third-party source for industry research, and have received “Excellent” or “Superior” credit ratings from AM Best. Having a positive rating from AM Best indicates that an insurance company has historically been able to meet ongoing financial obligations like operating costs and claims. Additionally, the companies below either include additional protections or offer them as add-ons for your renters policy, such as pet insurance and flood coverage.
*Not rated by AM Best, but rated A (Exceptional) by Demotech for financial stability
**Not officially ranked by J.D. Power due to eligibility restrictions
Allstate
Best for: Discount opportunities
Allstate tied with USAA for Best Home Insurance Company Overall in the 2023 Bankrate Awards. Although the Bankrate Awards focus on homeowners insurance rather than renters, many of the same homeowners features also translate to the company’s renters insurance product. For instance, Allstate won partly thanks to its highly-rated mobile app and wide network of brick-and-mortar agencies. Additionally, Allstate offers even more savings opportunities with its multiple policy discount, 55 and retired discount and Easy Pay discount for scheduled monthly payments. However, Allstate received a slightly below-average rank in the 2022 J.D. Power Home Insurance Study for renters insurance customer satisfaction. While the score is not significantly lower than the industry average, customers seeking exceptional customer service may want to carefully weigh how the carrier stacks against other options.
PROS
Checkmark
Access to other policy types for a multiple policy discount
Checkmark
Easy-to-use mobile app and online web portal for policy management
CONS
Close X
Slightly lower J.D. Power score than the other companies on this list
Learn more: Allstate Insurance review
Erie
Best for: Regional coverage with robust options
Erie Insurance has a stellar reputation built upon affordable rates and an easy-to-navigate claims service. Erie offers considerable discounts on bundles, additional living expenses if you need to find a temporary place to live and the option for extra coverage for things like identity recovery and your more expensive personal items. Unfortunately, Erie only offers renters insurance in roughly a fifth of the U.S., but could be an excellent choice if you live in one of the areas it services. States covered are Illinois, Indiana, Kentucky, Maryland, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and Wisconsin. Erie also offers coverage in Washington, D.C.
PROS
Checkmark
Ability to work with a local insurance agent
Checkmark
If requesting a quote seven days from policy start date, renters insurance could qualify for an additional discount
CONS
Close X
Limited state availability compared to other national carriers
Learn more: Erie Insurance review
Liberty Mutual
Best for: Renters on a budget
Liberty Mutual could be a great choice for renters on a tight budget. The company advertises that its policies start at just $5 per month. Although the coverage options available are fairly basic, you might be able to add replacement cost coverage for your belongings, as well as jewelry coverage or earthquake coverage. However, Liberty Mutual does have a higher-than-average complaint index score with the National Association of Insurance Commissioners (NAIC). A score of 1.00 represents a baseline number of complaints. Liberty Mutual’s overall score is 2.66, indicating that the NAIC receives more than two and a half times as many complaints for the company than average.
PROS
Checkmark
Option to add replacement cost, meaning personal belongings will be replaced without factoring in depreciation
Checkmark
With blanket jewelry protection, renters have one set amount to cover their jewelry with no need for appraisal or deductible after a covered loss
CONS
Close X
High NAIC score indicates Liberty Mutual receives more complaints than other similar-sized carriers
Learn more: Liberty Mutual Insurance review
Lemonade
Best for: Digital policy management
Lemonade is another 2023 Bankrate Award winner for Best Digital Home Insurance Company. Lemonade terms itself as “insurance for the 21st century.” Its mobile app, powered by Maya, its artificial intelligence bot, helps renters get a quote, manage their policy and file a claim all in one place. Renters who want an insurance company focused on global causes will appreciate that leftover premium is donated to many different causes like the Malala Fund, the Trevor Project and March for Our Lives. However, the all-digital experience means renters won’t be able to have in-person customer service. Additionally, Lemonade renters insurance is only available in 28 states and Washington, D.C.
PROS
Checkmark
Simple mobile app interface for all your insurance needs
Checkmark
Policies can be started in 90 seconds and claims paid out in as little as three minutes
CONS
Close X
Renters insurance is only available in 28 states and Washington, D.C.
Close X
Lemonade car insurance is only available in a few states, making it difficult for renters to qualify for a multiple policy discount
Learn more: Lemonade Insurance review
Nationwide
Best for: Customer service experience
If you’re looking for world-class customer service, then Nationwide might be worth checking out. Out of all the renters insurance companies that J.D. Power officially ranked in 2022, Nationwide earned the top spot. Although Nationwide might be a little more expensive than average (the company states that its renters policies start at $20 a month), the added expense could be worth it to the right shopper. Additionally, Nationwide offers a Brand New Belongings endorsement, which could help you replace your items for their replacement value rather than actual cash value (which takes into consideration depreciation).
PROS
Checkmark
May get a bundling discount for purchasing renters and auto
Checkmark
Optional coverage-add on could help make for a robust renters policy
CONS
Close X
May be more expensive than average
Close X
Customer service is not 24/7
Learn more: Nationwide Insurance review
State Farm
Best for: Local offices
State Farm offers renters insurance in every state throughout the U.S., making it a great option for renters in underserved rural areas or areas. But it’s not just State Farm’s wide availability that may make it a good option. The company also has exceptional ratings from companies like J.D. Power and AM Best, which could make it a safe bet for your renters policy. Although State Farm doesn’t offer nearly as many discounts as some of the other providers we’ve chosen, you might lower your premium if you insure your car with State Farm or if you have security devices installed in your apartment.
PROS
Checkmark
Excellent customer service and financial strength ratings from third-party agencies
Checkmark
Knowledgeable local agents to help you with your insurance journey
CONS
Close X
Fewer discount opportunities compared to other carriers
Learn more: State Farm Insurance review
The Hartford
Best for: Policyholder perks
To qualify for The Hartford, you must be a member of AARP — and to be a member of AARP, you must be 50 or older. However, AARP members get exclusive access to a long list of discounts and perks as well as access to The Hartford renters insurance. The Hartford policyholders could save on hotels, gas, plane tickets, cell phone plans and more. The carrier’s New for Old protection also comes standard in its renters policies, which offers replacement cost for your items if they are damaged or destroyed in a covered loss. Additionally, The Hartford may give you a discount on your renters policy simply for living in a gated community.
PROS
Checkmark
Flood coverage is standard on renters insurance policy
Checkmark
If moving or deployed overseas, personal belongings would be insured with overseas coverage
CONS
Close X
Not available to the general public
Close X
Can only do business over the phone or online, no local offices
Learn more: The Hartford Insurance review
USAA
Best for: Military-centric coverage
USAA tied for Best Home Insurance Company Overall in the 2023 Bankrate Awards, partly due to its high J.D. Power scores and nationwide availability. The company has a stellar reputation among consumers and the insurance industry, and it offers renters insurance policies particularly supportive for those in a military lifestyle. The basic policy includes coverage for personal property, personal liability, medical payments and additional living expenses. Flood coverage is also included in standard USAA renters insurance policies, which is notable considering that flood insurance typically has to be purchased separately.
However, USAA is not available for everyone, which could be considered a major drawback of the company. Only military members, veterans and immediate family members may be eligible for coverage. Unless you fit one of these categories, you will not be able to purchase a USAA policy.
PROS
Checkmark
May get a bundling discount for purchasing renters and auto
Checkmark
Optional coverage-add on could help make for a robust renters policy
CONS
Close X
May be more expensive than average
Close X
Customer service is not 24/7
How to compare renters insurance companies
With so many renters insurance companies on the market, how do you choose which provider is right for your needs? Finding the best renters insurance policy will depend largely on your particular living situation and coverage preferences. The first step to finding a provider who can best cover your unique circumstances is to take some time to consider what you may want from a company.
For example, if you run a business or keep business-related items in your home, you may find that an add-on for extended coverage or business personal property is necessary. This may cause you to look for a provider which specializes in renters insurance for business personal property.
Additionally, it may be helpful to review third-party reviews from companies like J.D. Power and AM Best. J.D. Power runs numerous studies each year, including evaluating renters insurance companies. Scores are out of 1,000 points and evaluate customer satisfaction based on a number of factors. AM Best rates the financial strength of insurance companies based on their historical ability to meet financial obligations and pay claims. This measure may be comforting when predicting how future claims are likely to be handled, especially if a company is inundated with numerous claims at once.
Once you have identified a handful of companies that could meet your needs, you can start requesting quotes. This can often be done online or by phone, or you could contact a local agency. Getting quotes from several different insurance carriers allows you to compare premiums, coverage options, discounts and policy features.
Additional considerations before choosing a renters insurance policy
Like any insurance policy, renters insurance is not one-size-fits-all. No two rental circumstances are the same, and neither will the insurance for them be. When choosing a renters insurance company and personalizing your policy, you may want to consider:
The value of your belongings. To help ensure you do not over- or under-insure your belongings, you could create a home inventory. This exercise could help you estimate the total value of your belongings so that you choose an appropriate personal property coverage amount.
If you have any high-value items. Possessions like fine jewelry, collectibles, fine art, guns or antiques often have set coverage limits included within a policy. For example, without alterations to a policy, you might only have $1,000 in coverage for jewelry, regardless of how much personal property you buy. Scheduling your high-value possessions can provide more accurate and broader coverage.
If you have a pet. You might not consider your pet when you buy renters insurance, but you should. While many pets are covered for liability, some dog breeds and exotic animals are often excluded. If you have one of these animals, you probably want to look for a company that will extend liability insurance to it. That way, if your pet injures someone, your insurance can step in to help pay for the bills.
How often friends and family visit. If you like to host events at your home, or often host large parties of people, having this in mind could help you determine the right amount of liability insurance for your needs.
What company insures your vehicle: Many car insurance companies also offer renters insurance. When you bundle your policies together, you could see significant savings. Plus, there’s the added convenience of having all your insurance policies in one place.
If you aren’t sure where to start in your search for renters insurance, sitting down with a licensed insurance agent can be helpful. An agent can listen to your needs, circumstances and concerns and help recommend companies, coverage types and policy features that fit your situation.
Save more, spend smarter, and make your money go further
Self-driving vehicles are coming much sooner than expected — and the general consensus is that car ownership will bid us farewell. After all, with a dominant ride-sharing model in place, upfront purchase prices and ongoing maintenance costs seem less appealing. On top of that is the surging trend around “access vs. ownership,” where the car-owning value proposition is taking some real hits.
In the future, getting around will be much easier and cheaper, and the hassle of owning a vehicle may quickly outweigh the benefits. What’s more, as driverless taxies become ubiquitous and accrue revenue 24/7, their prices will only drop.
A report published last year by RethinkX, an independent think tank based in San Francisco, estimates fully autonomous vehicles will make up 95 percent of passenger miles in the U.S. within a decade of the anticipated 2020 rollout. The study says that cars will be owned by companies like Lyft and Uber rather than individuals. This firm estimates the windfall of savings to be around $1 trillion for Americans each year. That’s about $5,600 per household, “generating the largest infusion of consumer spending in history.” What’s more, that figure only accounts for improvements in general overhead costs and doesn’t factor productivity increases and reduction losses due to traffic accidents. Talk about a bang for your buck.å
Researchers at consulting firm KPMG similarly predict that by 2030, households will no longer need sedans — only keeping larger vehicle models for road trips — and that fully autonomous vehicles will be used as ride-hailing services from the outset. Anticipating the upended car market, Waymo and General Motors’ already have pilot ride-hailing programs in the works, set to launch in select urban and suburban areas. Likewise, Ford bought out their ridesharing company, Chariot, as part of their self-driving vehicle initiative. Further, public officials in Helsinki are pushing to make car ownership obsolete by 2025.
Don’t believe how big a business this is? Just look at the rift between Google and Uber — and the nose-bleeding $245 million settlement over alleged “trade secrets” in 2016. Autonomous cars are big business…and all the tech firms want in.
But while logically sound, these forecasts focus heavily on the economic disruption caused by full automation, not so much the cultural implications. For instance, few consumer goods have profoundly molded our cultural ethos as much as the automobile, and the majority of Americans are still wary of self-driving cars — not to mention a slew of other important factors.
How Is Safe Safe Enough?
Critical to the success of automation is proving that it’s safe. Although researchers say it’ll reduce auto accidents by a whopping 90 percent, “better than human” might be a weak benchmark when you consider that people have a greater tolerance for deaths caused by humans than robots. For this reason, Mobileye CEO Amnon Shashua proposed a formula to ensure self-driving vehicles are virtually infallible — in effect, laying the groundwork for how policymakers and manufacturers can manage the deployment of wholesale driverless cars without constricting innovation.
The Home Away From Home
Considering many of us like to keep personal belongings in our car, the allure of the private car could hold sway for a lot of people — especially commuters who can get a jump-start on work without having to watch the road. It’s not so implausible that consumers are willing to pay extra for the flexibility of being able to travel when, where and with whom they want — without compromise. An article published by Yale points out that while ride-sharing has soared in popularity, it hasn’t directly dissuaded people from buying cars for this very reason.
The “shared autonomous” firms of the future would do well to ensure that they can “user integrate” consumer preferences whenever they pick up a new rider. Making the autonomous vehicle feel “owned” is a great way to bridge this gap, and it can be as simple as a Bluetooth integration and content sync.
What If You’re Too Far Away?
Waymo and General Motors are set to test their pilot programs in select urban and suburban areas. After all, 81 percent of America’s population lives in areas that are dubbed “urban or suburban.” But what about rural settings, or even remote suburbs? A driverless cab might arrive in just minutes in a densely populated area, but it might not be as readily accessible for those living in areas where houses can be miles apart. The automobile has made it easier for people to live on the outskirts, enabling folks to leave at the drop of a hat. Those living in rural outposts may not be keen on relinquishing that level of control, even when driverless cabs are ubiquitous in cities.
Suburban Sprawl and Environmental Strain
On the other hand, more people might be apt to live in remote locales if a robot can schlep them to work every day. That could mean more emigration to rural areas and thus higher demand for driverless cars. But a policy brief from UC Davis warns that without proper oversite, self-driving technology could increase suburban sprawl, which was already spurred by the invention of the automobile.
This is especially true in places like California, where sprawl is a huge point of contention among developers and public officials. The policy brief reasons that if passengers can work or rest more during their commute, then they’ll likely be willing to travel further. As a result, affordable housing developments will be on the rise. That’s a win for housing, but a loss for a decreased eco-footprint.
Drivers Licenses on the Decline
In fairness, there’s another cultural phenomenon that ought to be called out: Since 1983, fewer and fewer people have been getting their drivers licenses. To understand why this is happening, the Transportation Research Institute at the University of Michigan conducted a survey of 618 respondents, ages 18 to 39. They found the three main reasons people forewent getting their driver’s licenses were busy schedules, the cost of owning and maintaining a car, and the ability to get rides easily from others.
Looking to the Future
It’s important to note that predictions, however researched, shouldn’t be confused with conclusions. The one thing we can say for sure, however, is that the culture of tomorrow’s automobile won’t be a carbon copy of what it is today.
Haden Kirkpatrick is the head of marketing strategy and innovation at Esurance, where he is responsible for all initiatives related to product and service innovation. Haden is an innovator writes about how smart technology—from IoT to machine learning to self-driving cars — will impact the insurance industry. To view Esurance’s car insurance options, click here.
Save more, spend smarter, and make your money go further
Previous Post
How to Find the Best Travel Deals
Next Post
Move Like a Minimalist: How to Avoid New Nest Syndrome
Not everyone has the financial means to put 20 percent down on a home purchase. The good news is, forking over 20 percent upfront is not a requirement to buy a home. Plus, you might also be eligible for down payment assistance programs.
How do down payment assistance programs work?
Down payment assistance can potentially give you money that can help you afford a down payment, or it can help with closing costs, which are the fees and charges you pay when you finalize your mortgage. These total approximately 2 percent to 5 percent of the loan principal (and more when you factor in the escrow for insurance and taxes). For instance, on a $200,000 loan, the closing costs could be around $4,000. If all of your money has gone to saving for a down payment, you might need help paying for closing costs.
While a few programs exist at the federal level and even with some individual lenders, the majority of down payment help is offered at the local level through state, county and city government programs, and come in the form of a loan, grant or matched savings.
Down payment assistance eligibility requirements
The vast majority of down payment assistance is offered to first-time homebuyers. Many cities and counties have other housing programs available, but down payment assistance is typically reserved for those who have not owned a home in the last three years.
Many programs restrict owners of rental or investment properties from participating, so you’ll need to be a first-time homebuyer (or haven’t owned a home in the past three years) and the home should be your primary residence. If you’re unsure if you qualify, contact the program before you apply.
Types of down payment assistance
Grants: Grants are a type of housing assistance that provides a one-time cash sum, often in the form of a no-interest second loan, to cover all or part of a down payment or closing costs. The funds don’t have to be repaid.
Low-interest loans: These are similar to grants, but they must be repaid, usually over the course of a few years. Since you’ll be repaying this loan in addition to your regular mortgage, you’ll have a higher monthly payment.
Deferred-payment loans: These types of loans generally don’t charge interest, but usually need to be repaid in full when you sell your home or refinance your mortgage. Many times, these are zero-interest loans, which means you are only responsible for repaying the amount you borrowed initially.
Forgivable loans: These are similar to other kinds of assistance, but you might never have to pay them off. Generally, forgivable loan debt is erased after a certain period of time so long as you still own the home and are up-to-date on your mortgage payments.
Individual Development Accounts (IDAs): Also called a matched-savings account, with an IDA, the account holder’s contributions are matched by either private or public money. To get this kind of account, there are typically income caps and employment requirements, and participants usually need to complete free financial literacy training.
Some mortgage lenders offer their own down payment assistance. For example, In many states, Chase offers up to $3,000 that can go toward closing costs and down payment needs. While this program is just for first-time homebuyers, it does have other stipulations: You’ll need to get a 30-year fixed-rate loan and live in the home as your primary residence. You’ll also need to attend a homebuyer education course to receive the full amount.
What mortgages can down payment assistance be applied to?
Down payment assistance is available for all kinds of mortgages. Government-backed mortgage programs like FHA loans, VA loans and USDA loans often come with their own down payment assistance built-in. You can also apply for down payment assistance with conventional mortgages.
Individual lenders are likely to have their own requirements and restrictions when it comes to how down payment assistance is accounted for and applied to your loan. So, if you know you’re planning to take advantage of a down payment assistance program, it’s a good idea to talk to prospective lenders about how this will affect your mortgage.
How to find down payment assistance programs
Most payment assistance programs are local, though there may be a few statewide ones too. Some of the places to check out for down payment assistance include:
State housing finance authority: Many state housing finance authorities (HFAs) offer homebuying assistance and education. Find your state’s HFA here.
City and county government programs: As a means to boost homeownership, many counties and cities offer down payment assistance programs for first-time homebuyers. Check your municipality’s website for more, or speak to your loan officer to get more details about local DPA programs in your region.
U.S. Department of Housing and Urban Development (HUD): Check HUD’s website for local homebuying programs by state. Every state also has HUD-approved counselors who will simplify the finer points of homebuying and help you find financial assistance.
Down Payment Resource: Down Payment Resource provides a plethora of resources for homebuyers, real estate agents and lenders, including an eligibility and lookup tool.
How to apply for down payment assistance
There is no shortage of down payment assistance options, but there is also no universal application that will go to all of them. Because of this, you will need to apply to each one individually. Depending on the program, you might call to see if you are eligible, complete the application online or in-person and possibly take certain education courses.
Some programs require you to have a specific loan to qualify. For instance, you might need an FHA loan instead of a conventional loan.
Aside from being a first-time homebuyer, eligibility is usually based on income. Many programs target low- to moderate-income earners, so if you are in a higher bracket, you might not qualify. You might also need to contribute a certain percentage of your own income to get the assistance.
Pros and cons of down payment assistance programs
There are a lot of benefits to receiving down payment assistance, but it is not all upside. Here are some key things to keep in mind.
Pros
Can help you become a homeowner faster
Can save you money upfront
Can help you afford more house or get more favorable loan terms
Cons
Can cost you more in the long run if it’s an interest-bearing loan
Can be time-consuming due to the amount of down payment assistance available; you’ll need to do your research and apply to each one individually
Not everyone qualifies
You need to be even more careful about sticking to your budget and refrain from using assistance to overextend yourself financially
You might be required to occupy the home for a minimum number of years in order to have certain types of assistance fully forgiven
Alternative forms of down payment assistance
Not everyone qualifies for down payment assistance programs. If you have owned a home in the last three years, your income is too high or you are planning to rent out the property or otherwise use it as an investment, you might not qualify for many programs.
However, there are other housing programs you might qualify for. Visit HUD.gov/states, select your state and click “Learn About Homeownership.” From there, you can find ways to avoid foreclosure, find home counseling services and get money for home renovations or repairs. Depending on where you live and your needs, you might find housing resources geared towards seniors, disaster relief and help to pay utility bills.
Home assistance programs are vast and vary by needs and location. You might find that if you do not qualify for down payment assistance, you might be eligible for assistance in other ways.
Down payment assistance FAQ
Since programs are usually administered at the local level, the time it takes for them to disburse funds can vary widely. It’s best to initiate your research and applications as soon in the home-buying process as possible to give yourself as much runway as you can. Your lender will work directly with the assistance program to secure the necessary funds.
This, too, depends on where you are. Terms and funding amounts are determined primarily by individual states — find out what’s offered in your area, and what you need to do to apply, by contacting your state’s HFA.
In most cases, yes, you can use multiple sources of down payment assistance, provided you qualify. Check with your lender to ensure you’re obtaining a mortgage through a program that allows for more than one source of assistance.