Fighting Fire with Insurance

Insurance companies are shying away from new policies in California and raising rates on existing customers after years of wildfires have devastated their bottom line. How can you keep your current plan or find a new policy that fits your budget?

CHIC (Pearl)

If your insurance company tells you they’re not renewing your policy, don’t panic! You’re entitled to 45 days notice before the policy expires, which gives you time to shop around for a replacement policy or renegotiate with your current provider. If you don’t receive proper notice, don’t hesitate! Call the California Department of Insurance (DOI) at 1-800-927-HELP or go online to insurance.ca.gov and check to see if your policy has a guaranteed renewal provision. And if you think you’re out of options, you’re not. Call the California FAIR Plan at 1-800-339-4099. FAIR warning: This policy can be expensive, and it only covers certain losses, so you may need to buy Differences in Conditions (DIC) insurance too.

GEEK (Kevin)

Who wants to spend all day and night and part of the weekend filling out forms and running themself ragged with research? Okay, some of us love this kind of stuff. But for the rest of us, I recommend getting an insurance agent. The DOI website offers a tool to help you find an agent or broker near you, as well as other resources. Before you decide on an agent, check to see if they work exclusively with one insurance company or have access to multiple carriers so you know you’re getting the best deal. And come prepared with questions for your agent such as: What is covered and what is not? Can I get the full cost to rebuild if disaster strikes? Does it cover demo or debris removal? Is there a coverage limit?

The True Costs of Moving

Selling your first home and purchasing your next one can seem like an insurmountable process when you’re in the thick of it. That’s why it’s important to plan ahead before the madness begins. The first step is understanding the costs beyond the listing price.

CHIC (Pearl)

Before you commit to listing your current home, it’s a good idea to ask your agent for an estimate of all the closing costs involved. A roll call of the usual suspects includes real estate commissions, advertising, legal and professional fees, excise taxes, capital gains taxes, prorated property taxes and HOA fees, and typically surveys, inspections, etc. You’ll need to put a number to all of these items to get a full picture of your options for buying a new home, which comes with its own set of peripheral expenses.

GEEK (Kevin)

So what are some of the costs you need to consider as a buyer? To name just a few: down payment, lending fees, title fees, insurance, inspections (if the seller isn’t paying), professional cleaning, repairs and cosmetic upgrades, utility deposits, and more. We also suggest getting pre-approved for a new home loan before you do anything else, and while you’re at it, make sure to include the costs for any renovations you may want to make. Oh, and did we mention moving expenses? It adds up quick!

Should it stay or should it go?

Remember when you remodeled your kitchen and installed that high-end stove and oven you use every day to cook fabulous meals for your family? If you sell the home, you probably think you can take it with you. Not so fast! The buyer may have other ideas.

CHIC (Pearl)

Generally speaking, anything that’s permanently installed or custom built — like light fixtures, built-in shelving, and major appliances — stays with the home. Decorative items like rugs, artwork, and non-custom curtains are typically fair game if they can be removed without causing damage to the property. But if you find it’s hard to say goodbye to that special something that really pulled your home together, it’s important to avoid misunderstandings and make your plans clear to buyers in advance.

GEEK (Kevin)

Pearl’s absolutely right here. You have to set expectations up front. If you don’t plan on leaving your appliances or other hardware in the house, it’s wise to replace them before you start showing the house or disclose that info before you enter into contract. Even something as simple as those custom cabinet handles you’re planning to take with you could be the one thing that makes a buyer commit. Don’t lead them on. If you’re ever confused about what stays and what goes, ask your agent!

California Dreaming

The Dream For All Shared Appreciation Loan is a down payment assistance program for first-time homebuyers from the California Housing Finance Agency (CALHFA). When you sell or transfer, you repay the original down payment, plus a share of the appreciation in the value of the home. So how can you find your California dream?

CHIC (Pearl)

In order to qualify for the Dream For All program, you need to be a first-time homebuyer, which is defined as someone who has not owned and occupied their own home in the last three years. You also need to occupy the property as a primary residence and complete two levels of homebuyer education. Oh, and your household income can’t exceed $300K.

GEEK (Kevin)

State legislators allocated $300M to this program in the form of 30-year fixed-rate loans starting at 6% with a 1.45% fee. Unfortunately, while we were writing this blog, CALHFA announced that all of the program funds have been claimed as of April 7. Hopefully, additional funding will be allocated in the next state budget. In the meantime, get educated and get ready.

Contingency, continued...

Last week, we explored the ins and outs of title contingency. Now, let’s talk about loan contingency and what it means for buyers — and sellers.

CHIC (Pearl)

Loan contingency is a clause that allows a buyer to cancel their home purchase contract without penalty and receive a refund of their earnest money deposit in the event they're unable to secure a mortgage. Like any contingency, this clause could make an offer less desirable to a seller entertaining multiple offers. But it may be necessary to avoid serious financial risk up to and including legal action or being forced to buy the property.

GEEK (Kevin)

Sounds like a catchy clause, and it may not be all that necessary. Our job as realtors is to provide you with a choice of high-quality lenders who will do their homework and ensure that your loan will be approved before it’s sent to underwriters. At the end of the day, it benefits the lender to ensure that you’re in a strong, lendable financial position headed into the offer process. We’ll explore this more under appraisal contingency in a future post.