So, you’ve finally decided on your dream home. And if you have your ducks in a row, you may have your mortgage already squared away. However, if this is your first experience with purchasing a house, it may surprise you to learn that your job isn’t done once you’ve signed the dotted line. Here are our top recommended tips we feel every new homeowner should know.
Homeowners Insurance: Be In The Know
Be sure to shop around for homeowner’s insurance. Prices can vary drastically and some companies offer discounts when you carry multiple policies with them. For example, if you have auto, personal property or life insurance, check with that company to see what options they have for homeowners insurance.
And once you do decide on a company, be sure to give them your mortgage company’s information right away. Typically, your mortgage company puts a portion of your monthly payment into an escrow account for this exact purpose. So, it’s important to ensure your insurance company sends your yearly bill to the right place. However, some may elect to pay their homeowner’s insurance themselves instead of using an escrow account. In this case, you will need to notify your mortgage company so they can make the appropriate changes to your monthly payment (if you didn’t do so before final closing).
It’s recommended to find an insurance policy that has a high deductible. And be sure to let your insurance company know about safety features such as fire/carbon monoxide detectors and security systems. Finally, inform your insurance company about any significant changes you make to your home, such as renovations and add-ons, as this will change the value of the house (and therefore the costs to cover it).
Property Taxes: Take Advantage And Don’t Get Swindled
An assessor will determine the property value of your home and then base your property taxes off of that amount. And like your homeowners insurance, your escrow account can also pay for these taxes. However, before too much time passes, you will want to see if there are any exemptions you qualify for to help lower how much you end up paying. Some examples include homestead, disabled veterans, and exemptions for homes for the elderly.
Additionally, in some cases, you can claim deductions on your tax return from your property taxes. How much you can deduct depends on factors such as whether you pay through your escrow or not.
Also, it’s important that any renovations or upgrades you do will affect the property taxes of your home. Anything that will increase the value of your home will also increase its taxes as well. Contacting your local tax agency will help you get a ballpark figure of how much more it will rise based on your project.
Furthermore, it would be good to keep an eye on the market value of your house. Recent trends have increased the selling prices of homes, meaning the property taxes of that neighborhood will likely be impacted. This will prevent you from being blindsided by sudden unexpected tax increases.
Finally, talk with your neighbors, find out what they pay in taxes. If it turns out they are paying less, it would be good to find out why. Does your home have better curb appeal? Is there some sort of exemption you weren’t previously aware of? And remember, you have every right to appeal your property taxes if you feel something is amiss.
Refinancing: Is it Too Soon?
It may sound crazy, but there are circumstances when refinancing can actually be a potentially smart move. One good example of this is to decrease your interest rate. Typically, you’d want to wait 12 months before applying for refinancing. In many cases, the difference in interest rates after that first year may not be worth the extra fees and costs to refinance. But if there is a significant difference (such as going from 3.875% to 2.375%), it may be a good opportunity to jump on.
It would make sense to first check with your current mortgage company to see what their rates are. Some companies are good about proactively letting you know if an interest rate decrease is available to you. If not, you can always shop around and see if other companies offer competitive rates.
If you do decide to refinance, a streamline refinancing is a great way to go. It requires far less time and paperwork as a traditional refinance loan and doesn’t require an appraisal or a formal credit check. VA and FHA loans are excellent types for this option. Some requirements include forgoing any cash-out options and providing proof of your ability to repay the loan (bank statements, pay stubs, etc.).
And if you’re interested in learning more about refinance options, visit our site today and speak with one of our experts!