Home Buying Advice

What are the most important things to consider when evaluating your homeowner’s INSURANCE policy?

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Dear Dave,

We recently bought a house and have been looking at what exactly our homeowner’s insurance covers.  We are quickly learning that there is a lot more to it than we initially thought and it is actually more complicated that we imagined it would be.  What do you think are the most important things to consider when evaluating your homeowner’s insurance?

Linda – Grand Junction, CO



Linda,

 

I will admit, your question is going to teach me a thing or two about homeowner’s insurance, as I must admit it is not something I have spent any significant time looking over.  I have spent the past 15 years trusting my insurance agent, Mike Daniels at American Family Insurance, to make sure we have the right insurance coverage.  So where better to turn for a little help in giving you a credible answer?  I asked Mike to give us some insight into what you need to look for when reviewing your homeowner’s policy.

 

“Keep in mind that every homeowners needs are different and very personal, finding a local company and a local representative is a leading factor to ensure you are getting proper guidance and counsel.  There are a lot of great people in the business.  There are

2 homeowner’s policies that are very popular, HO3 and HO5.  Both of these will cover all named perils, however the form 5 will throw in some supplementary coverages that some will find important and some will not.

 

Everyone should pay close attention to look over the named perils of how the home is covered.  These primarily include fire, smoke, theft, windstorm, hail, explosion, vandalism, and frozen and broken plumbing.  Every company or agent should provide you with a brochure of all the named perils and supplementary coverages included with your policy.  When the policy comes in the mail, take the time to review the coverages and then also spend time reviewing the exclusion section of your policy.  It is important that if you have questions to call your agent to answer your questions or correct anything that may need to be fine-tuned.

 

As a home owner you need to consider the dwelling amount, how much will it be to re-build your home?  Make sure the insurance policy will cover that amount in full.  It is also important to know how much the deductible amount is on your policy.  Make sure to ask yourself how much you can afford if you have a loss?   The higher the deductible the lower your premium costs will be.  Generally speaking, if you maintain your property, you should be able to go with a higher deductible.  Lastly you also need to consider personal property loss.

 

When we are looking at personal property coverage, the questions to ask are how much? And how is that covered?  Also consider any specialty items you want covered such as jewelry, coin or gun collections or just any collection or specialty items you want to make sure are covered.  Lastly, look for discounts including Alarm systems, age and type of roofs, age of home, complete renovations.  It is also possible to save by combining other insurance needs including automobile and umbrella policies.  MOST IMPORTANTLY, review your homeowner’s policy at least every two years!” 

 

Well, that about covers it and as you can see, there is a lot to it and being a bit overwhelmed is completely understandable.  I always recommend, find an agent you can trust and build a relationship with.  I know, for our family, when we need our insurance to kick in, we can trust Mike has us properly covered.  Consistently review your policy with your agent to ensure you are both staying on top of your policies and things that may have changed so you are properly covered if you ever have to make that call.  

 

Dave Kimbrough

The Kimbrough Team 


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Advice For Providing Banking Passwords For A Mortgage Loan Application Portal?

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Dave,

We were applying for a 30-year fixed-rate mortgage. Our credit scores are in the 800’s, and we were applying for a mortgage in order to avoid IRA withdrawals and the taxes. This mortgage company is pushing us to use an internet portal that requires all of our passwords to our banking and investment accounts. Having had my security hacked twice, I refused. They said I could furnish copies of the accounts, but when I did, they made it so difficult for me that my only course would be to furnish my passwords. Am I wrong to be concerned about this?

- Kathy, Grand Junction



Kathy,

First, I think congratulations are in order for the 800+ credit scores! It's not very often that we see those kind of credit scores so a little pat on the back is in order. As for your question, I do believe you have good reason to be concerned, but to be sure I posed your question to James Pulsipher, Branch Manager of Fidelity Mortgage.  He knows the Mortgage industry better than anyone I know, so I figured who better to ask than James!

Here’s what he shared with me, “I think that you are right to be concerned. In today’s tech-forward culture there are many solutions like this that are designed to make the process of obtaining a loan easier. However, it is just an option – not a requirement. The reason that this option has become available is that many people would prefer to provide that information instead of providing the documentation. I would simply let the lender know that you are happy to provide them what they need outside of this automation. What they will likely need is a 60-day statement on any banking accounts of reference. Hope that helps.”

Good to know that you have the option to provide the information outside of their internet portal.  EVERYTHING is going the route of being easy and less cumbersome as our lifestyles are busy and time becomes more and more valuable. On a personal note, I know when I applied for a loan a couple of years, back with James, that Fidelity also uses a portal. I was intimidated and concerned at first, but quickly found that I fell in love with the ease of following the process and providing documentation online versus delivering paperwork. By the time we were done, I very much appreciated the collaboration of my accountant, James’ office and the ease of sharing needed documentation through the portal. Keep in mind it is always good to be wary of how you provide SS#’s and bank accounts to those requesting them. 

One note is to NEVER send either your bank account numbers or SS numbers via email. There are hackers and scammers that are CONSTANTLY scanning each and every sent email for numbers that fit the right character configurations of both and when they find a match consider yourself in serious jeopardy. I have several stories I could bore you with that would provide you with the proper amount of fear to never email either. 

The bottom line…you are right to be concerned as our information is no doubt under constant assault! You know the old saying (my mom would be proud!), “It’s better to be safe than sorry!” Great question and thanks for reading “Ask Dave”.

Dave Kimbrough
The Kimbrough Team

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Can We Require Our Listing Agent To Inspect Our House After Each Showing?

Hi Dave,

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This may sound like someone just complaining but it actually is more serious than that. Our home has been listed with a reputable firm for four months. Whether or not our house has sold by mid‑July, we will be relocating to Denver to start new jobs. The concern we have is that after leaving the house during a showing, we frequently come back to find a door unlocked, lights left on and occasionally our bathroom used. With us no longer in town, can we require our listing agent to inspect our house after each showing? Unfortunately, we do not have a relative or a friend nearby that we feel comfortable asking to oversee, or burdening them with our property. This issue is concerning now but was even more so when our house was being shown during winter with freezing conditions. How do you deal with these problems?

Thank you, 

Gayle and Tom, Grand Junction


Gayle and Tom,

This is a common problem and a very real concern as it is too often for our sellers that they come home after a showing and find exactly what you describe.  The simple answer is sell your home, but I, as much as anyone I know, fully appreciate that sometimes it is easier said than done. 

First, I must point out that from time to time all showing agents make mistakes and overlook details like locking doors and turning off lights after they leave for a showing. I will admit that one time, as careful as I try to be when showing a house, we went in through the front door and out through the back door and I forgot to lock the front door and actually left the key in the front door lock!! Luckily the showing agent was extremely forgiving and showed me quite a bit of grace, but as good as my intentions were that day, I failed to show the attention to detail and respect for the seller’s home that I should have. My point is, it happens to the best of us, but will not happen to me again! Should it happen, no, but does it happen more often than it should, yes.  That being said you have hit on a couple of points that could help alleviate your concerns.

It is very reasonable to request your agent check up on the house after showings. This may be difficult for your agent to manage, depending on how busy he/she is and the frequency of showings. If you are getting 3-4 showings a week, this can be more difficult, but if it is 1-2, then becomes a much more manageable. Most agents want to make the selling experience as trouble free for their sellers as possible and thus are typically very quick to accommodate their seller’s needs, if at all possible. Do not be afraid to ask your agent for their help, that is what they are there for. 

You have options, explore them. First and foremost, ask you agent and his/her company to help you solve the problem and alleviate your concerns, as I am sure you will find them very resourceful and helpful in finding a solution you are comfortable with.

 You mentioned, you did not have any friends or family nearby that you felt comfortable asking for help, but I would consider a reassessment of your friends and family and re-think who might be able / willing to help. I understand you may not have close neighbors, but any neighbor or friend who has kids (teenagers) who would like to pick a few extra bucks each week for checking in on your house, may be just the ticket. As I recall, teenagers are eager to earn a few extra bucks, but I must admit there may be a generational gap between then and now. : ) Young people today do not seem as money motivated as I was when I was younger! You might even check around at church, as many times the youth group, etc... have folks who are looking for odd jobs and extra sources of income. As I have mentioned in this column before, you may see this as a burden to your friends or family, but believe it or not there are many people who love to help. There are also two types of house sitters, those who would live there while you are gone and watch over the property and those who you can hire to come out once or twice a week to check things over. 

You have options, explore them. First and foremost, ask you agent and his/her company to help you solve the problem and alleviate your concerns, as I am sure you will find them very resourceful and helpful in finding a solution you are comfortable with. Here’s to praying for a worry free move and your home selling soon!

Dave Kimbrough
The Kimbrough Team

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Refinancing Your House: Adjustable vs. Fixed Rates

Dear Dave,

We’re considering refinancing our house and have gotten lots of advice on the type of loan we should go with. What is your opinion on adjustable rate mortgages these days? I have heard adamant opinions both ways. We would really like to hear your take on this.

Thanks -

Steve and Lynne - Grand Junction, CO


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Steve and Lynne,

Well, amazingly enough the interest rates are still incredible and we are seeing 30 year fixed rates just over 4.25%, 15 year fixed rates at about 3.75 % and 5/1 adjustable rates hovering right around 3.875%. These are all fantastic interest rates, regardless of if you choose a fixed rate or an adjustable one. 

Adjustable rates are quite attractive as they are set for a specific number of years, in the case of a 5/1 ARM it is set for the first 5 years at a low or “teaser” rate that is very attractive and generally lower than a fixed mortgage, however after the initial “fixed” rate time frame it will periodically adjust in response to the treasury bill rate or the prime rate. The initial low rate is a very attractive and that incentive provides the “teaser” for the potentially higher rate to come as it potentially adjusts and increases your monthly payment. Generally these adjustable rate mortgages have a “ceiling rate” that would be the maximum rate it could achieve and that offers some protection against a potential run away upswing in interest rates. 

In my opinion Adjustable Rate Mortgages only make sense, in our current low fixed rate climate, if you are positive you will only have the mortgage for less than the initial fixed rate time frame. If you believe you will remain in the house for the long term, go with the fixed rate and enjoy the benefits of what is again, near historical low rates and not have to worry about potential market fluctuations. 

Dave Kimbrough
The Kimbrough Team

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From a Value Perspective is an Older Home as Good as a New Home? 

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Dave,

My wife and I are moving this spring. She likes the charm of older homes, but I tend to like new construction homes. We’ve talked a lot about the pros and cons of each but when it comes down to it, we’ve decided that value is the “make it or break it” for us. From a value perspective is an older home as good as a new home? 

Thank you!

Betty & Steve, Grand Junction


Betty & Steve,

Value, like beauty, is in the eye of the beholder and very subjective to “what” value means to you. What you value, another may not, and thus the reason true value is a very individual determination and really must be done on a case by case basis. Keep in mind that “value” to some people is measured in happiness, peace, comfort, or a myriad of other things and may only be minimally impacted by monetary considerations! For others, monetary value is the “bottom line”. How much will the value go up on one house vs. the other? For the purposes of this article we will simply look at the monetary perspective, as that is typically the main goal when people are seeking information about “value”.

I would say, in my experience, appreciation will be greater on newer homes than it will on ones that are older. This is of course a broad generalization and not an “absolute truth”. For example, if you have two homes in the same neighborhood and one is 4 years old and one is 15 years old, the newer home will gain value at a comparatively accelerated pace. This does not mean that the older home is not a good home, it simply means that the newer home is most likely more in tune with current buyer wants, finishes, and floor plans because it is only 4 years old. The house that is 4 years old most likely has oil rubbed bronze or brushed nickel finishes and the older one may have polished brass fixtures. It is simply not as up to date and thus will not gain value at the same pace. 

On the flip side, while we are on the topic of value, your best value in the long run can also be the older home! If you can purchase the home that is 15 years old for a good price, change out some of the dated features and finishes and bring it up to a more current look and appeal then your best “value” may be the older home that just needs some cosmetic updating. Let’s add one more twist, the older home has an incredible view and the newer one does not. Which one will do better given that change in scenario? I would say, all things being equal and age being the only major difference, the home with the view will outperform the newer home!  Homes with unique features or benefits tend to have exaggerated value gains. As you can see, there are so many things that go into measuring value that it gets very difficult to determine which houses will perform best over time from an appreciation perspective.

You have to evaluate each one on a case by case basis and by using all the factors involved to make the best decision possible at that point in time.

You have to evaluate each one on a case by case basis and by using all the factors involved to make the best decision possible at that point in time. Go with the one you love and the one that you will most enjoy living in and don’t focus only on monetary value, but  lifestyle, peace and happiness value! Focus on your house being your home and don’t worry about what you can’t control, like the future of the real estate market! Live happier, live longer! Now that’s what I would call “real” value. Hope this helped a little! Best of luck.

Dave Kimbrough
The Kimbrough Team

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5 Tips for Getting a "Good Deal" When Buying a Home

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Dave,

We have recently married and are hoping to start a family in the next year or two and want to purchase our first home before having children. We currently rent, but feel the time is right to begin looking for our first home. It is extremely important to us that we get a good deal. Getting a good deal is number one on our list of priorities, as it will help ensure that our home purchase will not only turn out to be a great place to live, but also a good investment when we eventually need to sell. What tips can you provide for getting a good deal?

Stephanie and Mark, Fruita


Stephanie and Mark,

Great question as getting a good deal is always at or near the top of many home buyer list. First make sure you define your idea of a “good deal”. There is a difference between a “good deal” and a “steal”. Steals are a lot harder to come by and there are many lost good deals in the quest of a getting a steal. I have heard a saying that says, you make your money when you buy, not when you sell and I believe it to be true. There are several things you can do to help ensure that you get a good deal when you purchase.

  1. Get Educated: The more you know about the market and the price range in which you are purchasing, the more likely you are to get a deal when you purchase. Knowledge is power and part of getting a good deal is being able to recognize one when you are presented with it and making a realistic offer.  I have seen many a “good deal” lost because the buyer did not recognize the deal and did not make a realistic offer.

  2. Find a Knowledgeable Real Estate Agent:  Notice I said knowledgeable. Again an agent who can help you not only find, but identify a good deal is a huge asset. You need an advocate who is scouring the market for you, looking for that “just right” deal.

  3. Use a Reputable Local Lender and Get Prequalified: Once you have found your “good deal” you need to be ready to pounce and pounce with confidence that the sellers can appreciate. A reputable lender behind you will help you beat out other bidders. Trust me, sometimes it’s not all about how much the offer is, sometimes it’s more about how likely is it to close. The prevalence of fly by the seat of their pants lenders adds weight to an offer backed by a reputable and trusted lending partner.

  4. Be Decisive: Part of the art of getting a good deal is the skill of being decisive. Don’t hem n’ haw, when you decide to act, act decisively and don’t look back. Steps 1-3 above will help you be decisive. I have also seen many deals get lost, while waiting on a decision.

  5. Get a Good Inspection: Part of getting a good deal is making sure that your good deal is still a good deal after you close. Your good deal, may not be such a good deal if it needs a new roof after living there 6 months.

These are not the only things that you need to do to help ensure you get a good deal, but they are in my mind the most important. If you follow these 5 simple steps, you will be well on your way to getting that deal in which you seek. Much success in your pursuit of the often elusive, but always rewarding good deal! Happy New year! 

Dave Kimbrough
The Kimbrough Team

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