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Thinking about retiring early? The idea can be tempting, but before making any decisions, you’ll want to carefully consider your financial situation.

It is possible to retire early at age 55, but most people are not eligible for Social Security retirement benefits until they’re 62, and typically people must wait until age 59 ½ to make penalty-free withdrawals from 401(k)s or other retirement accounts.

People with 401(k)s at work may be able to to withdraw money early from those accounts penalty-free — if they leave their jobs at age 55 and up (this is often called the “rule of 55”).

Can I collect Social Security and other retirement benefits at age 55?

If you retire at age 55, you probably won’t be eligible to receive Social Security retirement benefits for several years or be able to withdraw money from your retirement accounts without paying a 10% early withdrawal penalty. Additionally, for most people, Medicare won’t kick in for another 10 years.

Typical minimum age for benefits

Social Security

Individual retirement accounts, or IRAs

Although you can begin receiving Social Security benefits at age 62, that’s often not the best time to start. The Social Security Administration reduces your check by as much as 30% for life if you start taking benefits before you reach full retirement age. However, you’ll receive 100% of your benefit if you elect to wait until full retirement age, and you’ll get a bonus for every year (up to age 70) that you delay taking benefits

.

One other thing to note is that the more you pay in Social Security tax (typically through payroll taxes withheld from your paychecks), the higher your Social Security retirement benefits are. Accordingly, leaving the workforce early could affect the size of your eventual Social Security retirement benefit

.

Estimate your Social Security retirement benefits

Your actual benefit may be lower or higher than estimate made with this calculator, because it does not take into account your actual earnings history.

We assume you have earnings every year until you begin receiving Social Security benefits. If you had several years of noncovered employment or your earnings changed significantly from year to year, this calculator will overestimate or underestimate your benefit.

How can I bridge an income gap if I retire at 55?

Although retiring early at age 55 doesn’t make you eligible for Social Security or most government benefits for retirees, there are a few exceptions and strategies to know that could help you bridge an income gap.

Exceptions to 401(k) early withdrawal rules

In most cases, you’ll be subject to a 10% early withdrawal penalty if you take money from your 401(k) before you’re 59 ½. But according to the IRS, these circumstances may allow you to skip the penalty:

Exceptions to IRA early withdrawal rules

Generally, money taken out of an IRA before age 59 ½ is subject to a 10% early withdrawal penalty unless one of these exceptions applies:

  • You become totally and permanently disabled.

  • You have qualified higher education expenses.

  • You agree to take “a series of substantially equal periodic payments over your life expectancy.”

  • You are a first-time home buyer (for withdrawals up to $10,000).

  • You had tax-deductible medical expenses that exceeded 7.5% of your adjusted gross income.

  • You were a reservist called to active duty

    .

Pension plans

Depending on where you’ve worked, you may be able to take withdrawals from a pension on or before you turn 55. Check with your employer to see if you’re eligible. Teachers in California, for example, might be able to retire at age 55 if they have at least five years of service credit

. Members of the U.S. military, meanwhile, typically can retire at any age after 20 years of service.

Nonretirement accounts

Although most types of retirement accounts limit how much you can contribute in a year, there are usually no limits to how much you can invest in high-yield savings accounts, stocks, bonds, mutual funds, exchange-traded funds or other investment vehicles. In particular, bonds, bond funds, dividend stocks and dividend funds might provide monthly income regardless of your age.

HELOCs

Do you own a home? If so, a home equity line of credit, or HELOC, may be an option. These loans let you borrow against the equity in your home without needing to sell or refinance your home. The fees for a HELOC vary, and you must repay the loan.

Source: nerdwallet.com

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I saw the news about the new FHFA lending fee structure for Freddie Mac and Fannie Mae and thought, as usual, things were being blown out of proportion. Then I saw the table for the new fees and I could not believe how they have made it more expensive for high-down-payment borrowers than low-down-payment borrowers. I don’t mean the fees decreased for low down payment mortgages and are closer, but still lower than high down payment mortgages. The total LLPA fees are lower across the board for those who put 5% down or less than those who put 20 percent down.

What are FHFA and LLPA Fees?

LLPA stands for loan level pricing adjustment. They are fees that were put in place after the 2008 crash to help Freddie and Fannie Mae stay solvent during another downturn. The Fees are applied on most conventional mortgages and were set high for low down payment and low credit borrowers because those borrowers are more likely to default. If the fees are higher the banks will typically raise the interest rate on those loans. In the past, people with high credit and high down payments paid lower fees and had lower interest rates.

FHFA is the Federal Housing Finance Administration. FHFA announced that they changed the fee structure in April and has received a ton of backsplash after many sources claimed mortgages for high credit and high down payment borrowers would be more expensive than mortgages for low credit and low down payment borrowers. This is not exactly true in all cases, but it is true that the interest rate will be higher for some people with higher credit and higher down payments than those with lower credit and down payments.

Why did FHFA change the fee structure?

FHFA said:

“It had been many years since a comprehensive review of the Enterprises’ pricing framework was conducted. FHFA launched such a review in 2021. The objectives were to maintain support for purchase borrowers limited by income or wealth, ensure a level playing field for large and small lenders, foster capital accumulation at the Enterprises, and achieve commercially viable returns on capital over time.”

From: https://www.fhfa.gov/Media/PublicAffairs/Pages/Statement-from-FHFA-Director-Sandra-Thompson-on-Mortgage-Pricing.aspx

There have been other articles that have claimed race inequality was part of the reasons for the change, but the just of it is, they wanted to make it cheaper for low-income and low-credit score borrowers to buy houses.

FHFA officials have justified this move by saying:

“An FHFA official told The Post the agency was “tasked with ensuring [Fannie and Freddie] fulfill their role in any market condition,” adding that shifts in long-term mortgage rates are a far bigger factor in determining finance conditions in the US housing market.

The latest recalibration to the pricing framework that FHFA announced in January 2023 is minimal, by comparison, and maintains market stability,” the FHFA official said in a statement.”

This is from a New York Post article: https://nypost.com/2023/04/16/how-the-us-is-subsidizing-high-risk-homebuyers-at-the-cost-of-those-with-good-credit/

What they said was that interest rates went up a ton, so you shouldn’t worry about what we are doing. Worry about interest rates instead.

How much more will good credit buyers pay for a mortgage?

While some buyers getting a mortgage will pay less than before, overall the fees will be higher now. The people paying the highest fees will be those with high down payments and low credit. That’s right. I said high down payments. Some high down payment borrowers with good credit will now pay a .2 to .3% higher interest rate than they paid before. In fact, those high down payment borrowers are paying higher fees than those putting less money down! While high credit, low down payment borrowers, may be paying lower fees than before.

On a $400,000 mortgage, a borrower with good credit putting 20% down may pay $40 more a month because of the higher rates. That is not a huge amount but it is tough to bear with interest rates already 2 to 3 times higher than 18 months ago.

How much less will bad credit buyers pay for a mortgage?

Those with lower credit and a high down payment will be paying less than before, but those with low credit and a low down payment get the biggest discount. Some of the worst buyers will now get a .4% discount on their interest rate compared to what they are paying now. Those low-credit borrowers won’t be paying less than high-credit, high-down-payment borrowers, but the gap shrunk significantly.

For someone with a 620 credit score and 5% down or less, they will now save about $80 to $100 off their mortgage payment thanks to the interest rate decrease.

All buyers will now pay more LLPA fees for 20% down vs 5% down or less

The crazy part of these changes is that across the board for good credit or bad credit, all buyers will be paying less LLPA fees for having a lower down payment (unless they put more than 25% down). Someone with an 800 credit score will pay three times the fees when putting 20% down versus putting 5% down or less. Even someone with a 620 credit score will pay less LLPA fees when putting less than 5% down verse 20% down.

Below is the table showing the new fees:

This is from: https://singlefamily.fanniemae.com/media/9391/display

The left side of the table shows the credit scores and the top shows the loan-to-value ratio (the higher the number the less money people are putting down). There are also many other factors that will impact these fees like debt-to-income ratios, type of property, refinance vs new purchase, etc. The video below goes over the changes in detail.

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Were the FHFA LLPA fees always structured to reward low-down payments?

I am always skeptical of headlines and crazy stories like this. Many of you probably think it has always been this way, but the old fees were structured much differently. You can see them below:

This chart is from 2020 and can be found at: https://www.freeandclear.com/guides/mortgage-topics/loan-level-price-adjustments.html

As you can see, the fees were higher for low down payments and lower for high down payments. The fees were also higher for lower credit and low down payments. I think common sense tells us this is what the chart should look like.

Do high down payment borrowers really pay more?

FHFA said in a statement that while the fees from FHFA for high down payments are higher than the low down payments, that does not mean those high down payment borrowers will pay more. If you put less than 20% down on a mortgage you most likely will be paying mortgage insurance which would be higher than the LLPA fees. So those who put more than 20% down, will still most likely pay fewer fees. Those who put 15% or 10% down, will still have mortgage insurance and have higher fees and mortgage insurance than those putting 5% or less down.

What the spokesman for FHFA did not mention is that you can often get mortgage insurance removed after a couple of years on conventional mortgages. After the mortgage insurance is removed, many buyers who put less down would be paying a lower rate without mortgage insurance than those who put 20% down.

What is one of the craziest scenarios with LLPA fees?

The Mortgage Interest Rate Is now lower for someone with a 680 credit score putting 3% down than for someone with a 730 credit score putting 15% down. If you look at the chart from FHFA, a person with a 730 credit score putting 15% down would have a 1.25% LLPA fee, and the person with a 680 credit score with 3% down would pay a 1.125% fee. Both of those buyers would pay mortgage insurance.

Conclusion

I could not believe the numbers when I saw them on the LLPA fee table. The media was not overblowing what had happened, in fact, I think they missed how bad it was. These guidelines do not apply to FHA, VA, or USDA but for Freddie Mac and Fannie Mae. Most people with good credit and debt-to-income ratios will be using Fanie Mae and Freddie Mac and are being punished for putting more money down.

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Source: investfourmore.com

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Savings

Compare rates and save on home insurance today!

What is renters insurance and why should I consider it?

As of 2019, roughly 36% of U.S. households were living in rental properties, meaning that a large percentage of the population opts to rent instead of own. While renters don’t own the property they live in, it’s still important to have some protection in place, which renters insurance, also referred to as an HO-4 policy, can provide.

A comprehensive renters insurance policy can help cover your personal belongings, liability exposure and additional living expenses, should your home become uninhabitable due to a covered event. Purchasing renters insurance is typically easy and the premiums are usually affordable compared to many other types of insurance. If you’re in the market for renters insurance, here’s what you need to know before purchasing a policy.

What does renters insurance cover?

Renters insurance can cover numerous situations, depending on the endorsements that you add to your policy. However, the main coverages on a renters insurance policy are:

  • Personal property coverage: This coverage is designed to pay for your damaged or destroyed belongings after a covered loss. Covered personal property generally includes your furniture, clothing, household items and some electronics.
  • Liability coverage: Your liability coverage may pay for medical bills and your legal fees if you are found at fault for someone’s injuries or damage to someone’s property.
  • Additional living expenses: If you are unable to live in your rented home or apartment after a loss, this coverage could help pay for the cost of a hotel and other expenses, like laundromat services or pet boarding. Living expenses coverage only covers the necessities. You should ask your insurance agent to see what exactly is covered when you purchase your policy.

You may also have the option to add additional coverages, like identity theft coverage, pet liability coverage and scheduled personal property coverage to your policy. If you are not sure what coverages you should consider, talking to a licensed agent could help.

Most renters policies also exclude damage to your personal items caused by earthquakes and flooding. While earthquake coverage can often be purchased as an endorsement, you may need to buy a separate policy if you live in a high-risk area. Flood insurance is most commonly offered as a separate policy, although a few companies offer endorsements or include this as a coverage option.

How much does renters insurance cost?

Renters insurance costs, on average, about $179 per year, per Triple-I. However, the cost of your renters insurance policy will vary based on several factors, including how much personal property coverage you purchase, the level of liability coverage you select, what additional coverages you choose and your claim history.

What states offer renters insurance?

Renters insurance is available in all 50 states and Washington, D.C. However, states that have a high density of renters, such as California, New York and New Jersey, may have more active renters insurance markets with more companies and endorsements to choose from.

Renters insurance is not just for those who rent apartments. Renters in condos and homes also have the option to purchase renters insurance. In warmer states like Florida and Georgia, homeowners may choose to rent their homes out for part of the year if they live elsewhere. The renters who occupy those homes can also purchase renters insurance policies to cover their belongings and liability exposure.

What companies offer renters insurance?

There are numerous renters insurance companies on the market, but your options will depend on what state you live in. Not all companies are available nationwide, and not all companies offer renters insurance in each state where they operate. If you are looking for the best renters insurance company, you may want to get quotes from these providers:

  • Geico: Renters who want to handle their policies digitally may want to consider Geico. The company has one of the most highly-rated apps in the industry.
  • Progressive: If you are looking for a highly customizable policy, Progressive could be a good choice. The company offers a long list of optional coverages, including water backup and personal injury.
  • State Farm: Renters looking for an in-person agency experience might want to get a quote from State Farm. The company has over 19,000 agencies across the country.

How do I save on renters insurance?

Although renters insurance is generally much less expensive than homeowners or condo insurance, there are still ways to reduce your premium.

  • Bundle your policies: If you also have an auto insurance policy, consider bundling your renters insurance with the same insurer — you might earn a discount on both policies.
  • Install protection devices: If your apartment has smoke alarms, a carbon monoxide detector or a home invasion alert system, you might save money on your policy.
  • Consider how you pay: If you can pay your annual premium in full, you might save money. If you do need to pay in installments, many companies offer discounts if you sign up for an automatic withdrawal.
  • Increase your deductible: Your deductible is the amount you will pay out of pocket if you file a claim. Generally, the higher your deductible, the lower your premium. Just be sure to choose a level that you can afford to pay if you file a claim.

Every insurance company is different, so discussing your policy with a licensed agent could help you find additional ways to save.

Frequently asked questions

    • Everyone’s situation is different and purchasing any kind of insurance policy is a highly individualized decision. Renters insurance is not required by law in any state, but a landlord has the right to require tenants to purchase a policy. However, even if you are not required to carry coverage, renters insurance does typically offer quite a bit of coverage for a relatively low cost. If your budget is particularly tight, you may be able to take advantage of discounts to lower the cost of a renters insurance policy while still getting valuable coverages.

    • The process of purchasing renters insurance is generally simple and there’s typically no waiting period, which means you may be eligible to get coverage on the same day you apply. For most people, the first step to getting a renters insurance policy is to obtain quotes from multiple insurance companies. Most companies offer personalized quotes online or by phone, or you could visit a local agency to speak to an insurance agent about your needs. During the quote process, you typically need to provide personal information, like your name, address and date of birth. This information can help determine the options and levels of coverage that are right for you. Once you have chosen a renters insurance policy to purchase, a representative will discuss the next steps. You may need to sign an application, and you will probably need to make at least one month’s payment for your policy to be active.

    • Because there are several insurers that offer renters on the market, you may not know where to start your search. Determining what kind of coverages you need and what features you want — like a digital app, 24/7 customer service or a live agent — may help you to find carriers that fit your needs. You can then request quotes from several companies to compare prices, coverages, discounts and features.

    • If you rent out a property, you may want to consider a landlord dwelling policy. This type of policy covers the structure of the home, detached structures and any personal property that you provide for the home (such as furniture). Your renters should consider purchasing a renters insurance policy, though, because a landlord dwelling policy does not provide any coverage for renters’ possessions.

      If you operate a short-term vacation rental, you may want to speak with your insurance agent to make sure you have adequate insurance coverage. Your short-term vacation rental tenants likely will not need a renters insurance policy. If they already have a homeowners, condo owners or renters insurance policy, their personal property coverage should transfer to a short-term rental, just as it would transfer to a hotel room.

    • That depends on the situation. Your pets are generally not considered personal property, so damage or injury to your pets is not typically covered by a renters insurance policy. For that, you need pet insurance. However, your liability coverage may cover damage or injury that your pets cause to others. However, some dog breeds and exotic animals are often excluded, and any animal that you do not disclose to your insurance company could also be excluded from coverage. Discussing your pet with your insurance company is often the best way to confirm your carrier’s guidelines.

    • Yes, renters insurance is a common policy. There are about 109 million renters in the United States, and most financial experts agree that renters insurance is a prudent purchase. Because of the prevalence of renters in the country, many different insurance companies offer renters insurance.

Source: thesimpledollar.com

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Regardless of your age or your employment status, life insurance can be an integral part of your overall financial planning. Why? The proceeds that are received from life insurance, which beneficiaries can obtain free of income taxes, can be used for a multitude of purposes:  the payoff of debts, the supplementing of income for ongoing expenses, or for ensuring that other promises are kept, such as paying for the future college education of a child or a grandchild.

When you are in the process of purchasing life insurance, there are several things to keep in mind. These include making sure that you have the proper type and amount of insurance coverage. It is also essential that you review the carrier you are considering purchasing your coverage through, to determine whether it is secure and stable financially. 

The History of Guarantee Trust Life Insurance Company

Guarantee Trust Life has been in the business of offering its products and services to individuals, families, and businesses for more than 80 years. During that time, the company has grown and expanded.

Today, Guarantee Trust Life offers a broad range of products that can help its customers to build and protect wealth. 

For over eight decades, the Holston family has directed the operations of Guarantee Trust Life. The company believes in integrity. Guarantee Trust has a consistent track record of success, and in maintaining the confidence that its employees and policy holders place in it.

Guarantee Trust Life Insurance Review

Guarantee Trust Life posted record operating gains in the year 2016, making the company’s overall financial condition the strongest that it has ever had in its 80+ year history. The company grew surplus by 10% and assets by 11%, while increasing its reserves by 12 percent, and achieving net premium of approximately $219 million.

At the end of 2016, Guarantee Trust Life held more than $500 million in assets, of which $523 million is invested. The company has $445 million in total reserve for insurance policies and contracts.

The company also holds more than $77 million in net surplus – making it a prime candidate for being able to pay out its current and future policy holder claims. Guarantee Trust Life offers its products to 49 of the U.S. states, as well as in the District of Columbia. The primary headquarters of Guarantee Trust is in Glenview, Illinois.

Insurer Ratings and Better Business Bureau Grade

Due to its stable financial footing, Guarantee Trust Life has been rated as a B++ (Very Good) by A.M. Best Company. Also, even though Guarantee Trust is not an accredited company via the Better Business Bureau (BBB), the company has been given a grade of A+ by the BBB. This is on an overall grade scale of A+ to F.

Over the last three years, Guarantee Trust Life has closed out 19 customer complaints – of which three were closed out within the previous 12 months. Of the total 19 customer complaints, 11 had to do with problems with the company’s products/services, four had to do with advertising/sales issues, two were related to billing/collection issues, and another two had to do with delivery problems.

Life Insurance Coverage Offered Through Guarantee Trust

Guarantee Trust Life provides a variety of different life insurance coverage options. Unlike many other insurers that provide essential, individual term and/or permanent coverage, Guarantee Trust offers some other types of niche life insurance coverage alternatives. These include:

  • Critical Provider
  • Juvenile Life
  • MultiLife – Group Term Life Insurance

With the critical provider coverage, policy holders have the option of obtaining a ten or a twenty-year level, renewable term life insurance policy, along with a critical illness accelerated benefit rider. These plans offer death benefit coverage only, with no cash value build up – which can help to ensure that the premium is kept affordable. This is particularly the case when the insured is in good health at the time of policy application. The critical provider plan can be issued to qualifying individuals who are between the ages of 0 and 60.

These policies will pay a benefit upon the death of the insured or will pay out a “living benefit” if the insured is diagnosed with a covered health condition while his or her policy is still in force. If this is the case, the critical provider plan will pay out a lump sum benefit directly to the insured. These funds may be used to cover direct and/or indirect costs that are associated with the insured’s condition, as well as any other needs that the insured sees fit. The money that is received can help to replace lost income, to pay bills that are not covered by one’s health insurance plan, and/or even to take a recuperative vacation.

The critical provider plans also can be converted over to a permanent form of life insurance. This means that there will be both death benefit protection, as well as cash value build up. There will also no longer be a “time limit” on the coverage, provided that the premium continues to be paid.

The cash that is in the cash value component of a permanent life insurance policy can grow tax deferred, meaning that there is no tax due on the gain of these funds unless or until it is withdrawn.

Guarantee Trust Life also offers the Great Start juvenile life insurance plan. While nobody ever wants to think about the passing of a child, the reality is that unanticipated illnesses and injuries can and do occur. If this is the case, having the financial protection that is needed can be helpful, and it can provide one less thing to worry about at an already stressful time in life.

The Great Start life insurance policy offers life insurance that can grow with a child over time. This modified premium whole life insurance policy offers not only death benefit protection but also a cash value that builds up money on a tax deferred basis over time. These funds can be used by the child in the future for things such as the down payment on a home, funding the cost of college education, purchasing a new vehicle, or any other want to need.

Also, because this is a whole life policy, the amount of the premium will be locked in – guaranteed never to increase, even as the child becomes older (and even if he or she were to contract an adverse health issue).

With the Great Start plan, life insurance coverage may be attained for $5,000, $10,000, or even $20,000. There is no medical exam as a part of the approval process, and there is no waiting period before coverage begins. There are only three simple health questions on the application for coverage – and, all children who are under the age of 25 have just one set premium. When the child / insured turns age 31, 34, and 37, they will have the option to increase the amount of their coverage. The Great Start plan can offer an excellent opportunity to lock in a low rate of premium now, and to make sure that a child has the life insurance coverage that he or she needs – no matter what.

There is also a MultiLife group term life insurance plan that is offered via Guarantee Trust Life. This plan covers two people, and it provides death benefit amounts that are as high as $500,000. If both insureds should die within a period of each other, the death benefit can help family members with the financial needs that they may have.

The MultiLife group term is an all-risk coverage, which means that the benefit is paid out by the insurance carrier for any cause of death – including illness or accident – with only just a few exceptions. The interval periods (i.e., the amount of time in which both insureds on the policy must pass away for the death benefit to be paid out) include 30, 180, and 365 days.

There is also a single life benefit of $15,000 that can be added to this plan for helping to cover the cost of a funeral and other final expenses if one of the insureds on the policy dies before the other.

The MultiLife plan can help with providing affordable life insurance coverage that can help with protecting loved ones who may depend on one or both insureds for their financial support.

The Advantages of Guaranteed Issue Products

Typically, when you apply, you’ll have to wait to schedule the medical exam, wait for the paramedic, wait for the results, then wait for them to go through the underwriting. The process can take several weeks. With the guaranteed issue plans, you can get life insurance coverage in a fraction of the time. With some policies, it could be a matter of 24 hours.

Another advantage is that these plans can give life insurance coverage to applicants that wouldn’t be able to be accepted otherwise. A lot of people can’t get coverage before of their health or some pre-existing conditions such as severe diabetes. This is where no exam coverage can be beneficial.

Cost of Guaranteed Trust Life Products

Guaranteed Trust Life is a great company for those that have some sort of high risk addition and can’t get approved for traditional underwriting.  Without having to take a medical exam and essentially getting approved with no medical exam whatsoever, makes the cost of these products that much higher.

It is clear that shopping for life insurance may not be pleasant.  However Guaranteed Trust Life will make it easy for you.  If you are chronically ill you may want to look at a Guaranteed Issue Life Insurance or Guaranteed Acceptance Life Insurance policy.  These plans will help you to manage these expenses without burdening your loved ones.

Other Products and Services Available

In addition to life insurance coverage, Guarantee Trust Life also offers an extensive list of other goods and services from which to choose. These include the following:

  • Hospital Compensation
  • Critical Disease
  • Cancer, Heart Attack, & Stroke
  • Short Term Care
  • Accident Coverage
  • Group Gap
  • Association Gap
  • Group Accident
  • College and University Sports Coverage
  • College and University Accident Coverage
  • K – 12 Student Accident, Sickness, and Athlete
  • Child Care Facility Accident Coverage

How to Get the Best Premium Rates on Life Insurance with Guarantee Trust

If you are in the process of looking for life insurance coverage through Guarantee Trust Life – or from any other insurer – it will be helpful to work in conjunction with an independent insurance agent or broker. That way, you can compare the available policies and premium prices more carefully. Once you have located a price point, you can settle on which one will be perfect for you.

When you’re ready to see which life insurance policies and premium rates are open to you, we want to assist you. We are an independent life insurance brokerage, and we can help you with finding all the essential details that you need for making a wise buying decision. We will do this for you very promptly and smoothly – all directly from your computer. Therefore, if you are able to get started, all you need to do now is just merely click here and fill out the quote.

We know that buying life insurance coverage can be stressful. There are so many different plans and companies to choose from – and of course you want to move in the right direction. This can be done much easier if you have someone like us to help you. So, reach out to us – we’re ready to support you.

Source: goodfinancialcents.com

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Have you ever gone looking for a home to buy in an up and coming market neighborhood and noticed a home hideous enough to rival the infamous Neibolt House from Stephen King’s classic, It? You blink in disbelief, half expecting Pennywise to lunge from an untrimmed hedge at any moment. Who would want to buy that fixer upper, you may wonder? Well, you’d be surprised!

Other homes may appear gorgeous, with their fancy manicured lawns, symmetrically placed light fixtures and intact windows. But what if you took a peek inside and saw potential in this ugly duckling? What if an architectural gem was hiding beneath the chipped paint, cracked floorboards, and giant portrait of Barry Manilow on the bathroom wall? The truth is that buying a fixer upper can help you save big time … if you know what to look for. Take a look below to find out how you’ll be laughing all the way to the bank when you turn your dowdy step-sister into the Cinderella of the street.

Don’t Judge the Cover, Judge the Content

All that glitters is definitely not gold. This is especially true with staged homes, which according to the Real Estate Staging Association sells 72 percent faster than non-staged ones. Staging is basically an on-the-surface alternative to renovating where hired stagers create real live-in scenarios with exquisite furniture, artwork, and accessories. In essence, it’s a form of embellishment. But while it’s true that staging plays a fundamental role in marketing a property, not everyone is good at it. A home you might drool over with proper staging may look like an eyesore with zero or little staging.

In fact, one of the great perils of home buying is to judge a book by its cover. What if the seller chose not to hire a stager, or what if the stager was all willy-nilly and cattywampus in presenting the home in the best possible light? Just because the home wasn’t presented with all the bells and whistles, doesn’t mean it cannot be amazing with all that sweet modern furniture you just bought with the money you saved selling with Homie. It’s therefore vital to peek beneath the surface and envision what the fixer upper would look like with a bit of elbow grease and improvements.

Alternatively, if a home is impeccably staged, it does not automatically mean that you’ve discovered a great buy either. You may still need to investigate for potential red flags. Now, we’re not saying you should invest in a giant magnifying glass and deerstalker cap (although that is a mighty allurin’ look) but you do need to scratch the surface luster to see what lies beneath. Here’s a list of some vital areas to focus on before you allow yourself to be seduced by those gleaming door knobs and that “chef-grade” percolator.

Checking the Plumbing, Foundation, and Electrical Outlets

For plumbing, be sure to check the main sewer line. You wouldn’t want to experience clogging in that region if lines need repairing or replacing. Sewer clogs are a bad deal. Maybe write that down.

If you discover a damaged line and still want the ugly house, make provisions in your budget for plumbing repairs or use that as a negotiating point. You should also check for toilet leaks and the condition of the water heater tank. Remember, a geyser lasts about a decade, so take that into account when budgeting for potential replacements.

Have an electrician or property inspector check the wiring and signs of overloaded circuits. Also check the electrical outlets for any physical defects. You could check the foundation by looking for poor drainage, mold, and moisture. Be on the lookout for fissures and cracks in the foundation.

Are there vertical cracks along the walls or does the stairway have zigzag slits? Horizontal cracks on a foundation wall are a definite red flag, as well as chipping or crumbling concrete. The best way to decipher any foundation damage is to hire a professional. Don’t know where to find one? No worries, as you can hire one of our super-efficient inspectors by clicking on our service provider marketplace. Our trained inspectors will also inspect your plumbing and electrical outlets. All providers charge a service fee but it’s well worth the investment.

Checking Location, Noise Levels, Traffic, and Schools

Location is definitely a deal breaker here. If your ugly house is in an upscale neighborhood, you may have hit the jackpot, as this would increase your updated home’s value. Be careful of ‘big home envy’ though. Remember that if you buy small in an upmarket neighborhood, your Phoenix real estate fixer upper could score you more pennies when you sell.

It’s also great if the direction of your home lets you experience the full effect of the sun, as this would keep your home warmer during winter. Also check for noise levels and whether traffic volumes are tolerable. It’s always a good idea to check the crime statistics from Statista. You could also check if the area has good schools and whether you’ll be central to major arterial roads.

Buying Ugly Could Work to Your Financial Advantage

Bear in mind that because the house is freaking ugly, the owner wants to flush the whole thing out, like yesterday. They may even be over zealous in sealing the deal. Heck, even the neighbors may treat you like a celebrity, especially when the ugly duckling becomes a swan. You may even get a fancy gift basket (remember to share).

Sellers may price these homes lower than the market average and fast track negotiations so they can secure a contract sooner rather than later. They’re also more willing to accept a re-negotiated offer. Also, other buyers may turn up their noses with one glance at the fixer upper, removing all competition, and placing the seller at the sole mercy of your offer. And if your offer is good, you may include accepting credits. This will lower your closing costs. And remember, if you buy via Homie, you’ll get a credit of up to a $2,500 as part of the Buyers Agent Commission. You can use this to cover moving expenses, do some renovations, or simply plan an awesome vacation after you’re all moved in!

Did you know that most banks are stingy when it comes to financing a decrepit house? Your seller knows this, and may extend some leniency by applying for the finance themselves, and charging you interest. Eradicate the stress of not knowing whether you can afford the house, by using Homie Loans, our sister home-financing company. We’ll get you pre-qualified and pre-approved in record time, so you can negotiate with a gleam in your eye.

Make the buying process as smooth as a private jet ride when you select Homie as your agent. Our agents will help you understand all the fine detail of your buyer’s agreement contract, collaborate with your seller, relay vital information to you, and assist with any renegotiation.

Okay, So Your Diamond in the Rough May Need Some Polishing

Remember that your work does not end once you’ve signed on the dotted line. You have yet to transform your home from a diamond in the rough to a perfectly cut and gleaming rock that Liberace would have been proud to wear. If you’ve conducted a home inspection with us, you’ll be given a detailed report of the necessary repair work. Prior to settling, it’s a solid idea to include all these costs into your budget and use this as a negotiation tool to get the seller to lower the sale price. Repair work should include anything from paint work to repairs.

One advantage of buying an older house is that existing landscaping like plants and trees could bolster your curbside appeal and home value. You could even add to the aesthetic by creating new features like a fountain or some pathways. Painting, additional landscaping, and customized remodeling also gives you the chance to make the home your own. Unkempt historic homes may also have hidden architectural gems like high-profile moldings, stained glass windows, or meandering stairwells. Imagine unraveling all of that underneath tons of dust and grime? Sweet, right?

Convert Your Ugly Into a Lovely

Not all sellers are great at staging an ugly home. The seller may even feel that the ugly duckling isn’t worth the effort. This leaves a nifty little gap for an astute buyer to see that diamond in the rough.

Keep an eye out for foundation, plumbing, and electrical issues. You could use a repair budget as a negotiation tool when making your offer. Negotiations should also be pretty easy here, since the home has probably turned off all your competition. And if you use Homie agents, negotiation will be even more streamlined. Just draft your offer via our digital platform and a Homie agent will call you to review your offer. We’ll then submit your offer to a listing agent and oversee all your paperwork, from negotiation through to final sale. We make it easy!

Sign up with Homie today and you can keep up to 50% of our commission* to help make your new fixer upper like new!
 

*Subject to terms and conditions outlined in the Buyer Broker Agreement.

Source: homie.com

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As a renter, your landlord may require purchasing renters insurance as part of your contract. But even if not required, a renters policy can provide an extra layer of protection for your personal belongings, as well as financial liability if someone is hurt in your home. To make renters insurance work for you, learn how much renters insurance you need and what coverage options are available.

How much renters insurance do I need?

Experts recommend purchasing enough renters insurance to help you replace all of your personal possessions if they are stolen, lost or damaged.

A good way to figure out the value of everything you have is to create a list, or inventory, of all of your possessions and include dates of purchase, serial numbers, appraisal documents and any receipts. Use your cell phone or an app to take photos and save your inventory so that you can add to it if you make any new purchases. Include all expensive items and electronics, including computers, devices, home security systems, jewelry, instruments and any appliances you’ve purchased. Use the internet to identify what it would cost to replace those items, and then use that result to decide the minimum amount of renters insurance coverage you need.

If you have a large dog or a specific dog breed, you may need to purchase additional liability insurance.

How much does renters insurance cost?

According to the latest data available from the Insurance Information Institute (Triple-I) the average cost of renters insurance is $174 per year, or about $15 per month.

What affects the cost of renters insurance

While the annual cost of renters insurance may be relatively low , several factors will ultimately determine how much your renters insurance policy costs. These include considerations for:

  • ZIP code
  • Credit score
  • Home inventory
  • Deductible
  • Rental size
  • Actual cash value (ACV) vs. replacement cost value (RCV)
  • Security and fire systems
  • Pets
  • Discounts

There may also be other factors that influence your rate, such as the insurer you choose and amount of liability you opt for. By considering factors such as these, you could begin receiving quotes based on your personal selections for a personalized rate.

Is renters insurance worth it?

What does renters insurance cover that makes it worth the cost? It typically includes personal liability protection to pay for attorney fees and damages or medical treatment for someone who is hurt in your rented home, apartment or condo. The liability protection will likely include no-fault medical coverage so that if someone is hurt on your premises, they can submit their medical bills and expenses to your insurance company and you can prevent a lawsuit.

Renters insurance also covers your personal possessions if they are damaged in a covered natural disaster or stolen. It may also reimburse you for items that are lost and stolen from your car or when you are away from home.

While some people may assume that their personal belongings are not worth an additional monthly cost, it may be worthwhile considering the cost of replacing those items in unplanned circumstances that cause damage. You might own a small wardrobe and a few decorative items, for instance, but a theft could cost you upwards of $1,000 for your home office set-up between your television and electronics. This and similar scenarios are why insurance experts recommend insuring your personal property. Renters insurance also generally covers additional living expenses in case you are displaced by a fire or another covered scenario that makes your rental unlivable.

How do I calculate renters insurance coverage?

Determine your desired deductible

The deductible of your renters insurance policy is that amount that you would be responsible for paying before the insurance company covers the rest of the cost. For example, if you have a $500 deductible and you filed a claim for damage from a fire, you would pay $500 towards the repair and the insurance company would pay the remaining cost. The higher the deductible, the lower your insurance premium, but make sure that it’s an amount you’d be comfortable paying out-of-pocket at any time.

Decide if you intend to purchase additional coverage

You can check whether your financial and personal possessions are sufficiently covered if you are affected by a disaster or involved in a lawsuit. If you do not think you have enough coverage on your renters insurance policy, you can also purchase an umbrella policy. This is an additional liability insurance policy that covers you when you reach the limit on your renters or auto insurance policies, and it also covers you for libel and slander.

Off-premises coverage for travelers

If you travel, it might be worth checking that you have off-premises coverage to insure possessions (such as a laptop or cell phone) that you take with you when you travel with the same coverage that you would have if you were using them at home.

Consider adding a floater

If you have expensive items or one-of-a-kind, collectible items like sports memorabilia, original artwork, antiques, expensive jewelry or furs, consider adding a floater to your renters policy. The floater adds additional coverage for more expensive items if they’re lost, damaged or stolen.

Double check your policy for additional living expense coverage

If you live in an area where there are natural disasters like fires or severe thunderstorms, it could be important that your policy includes enough insurance for Additional Living Expenses (ALE). Additional living expenses include paying for a hotel, eating at restaurants and other expenses from having to live away from your rental home while it is being repaired.

Insurers will pay the difference between your regular living expenses and your added living expenses from being displaced after a covered event, but they may only do so for a limited time. Read the fine print to make sure you have enough coverage for any anticipated future disaster. Also, consider checking that your insurance covers things like floods because not all policies cover every type of natural disaster. Flood damage is usually excluded from standard renters insurance policies, but may be purchased either through your provider or directly from the National Flood Insurance Program (NFIP).

Source: thesimpledollar.com