How to Save Money on Your Home Insurance

(This is a guest article by Bailey Harris*)

Millions of people overpay for home insurance each year. If you think you may be among them or if you are just looking for a few ways to cut costs, the following tips may help you save money on your home insurance premium.

Lower Your Deductible

If you make a claim, you will have to pay what is known as a deductible before your insurance company will agree to pay their part. A low deductible results in a higher annual premium. A high deductible, on the other hand, will provide you with a lower annual premium. You may be able to save 20 percent or more by raising your deductible from $250 to $1,000. A really high deductible--$5,000 or more--could save you as much as 40 percent.

Combine Coverage

Purchasing more than one type of insurance, such as auto and home or umbrella and home, from a single company can help you save a bundle on all of your insurance coverage at the same time. Nearly every insurer offers a multi-policy discount. However, the percentage of the discount can range from company to company, so it is always a good idea to ask exactly how much you can save by combining policies.

Insure Your House Not the Land

Many people pay a higher premium than they need to because they make the mistake of insuring to buy versus insuring to rebuild. You do not need to buy an insurance policy that is equal to the price you paid for your home. All you need is a policy that will cover the cost to rebuild your home and replace the contents within.

Improve Home Security

Some insurers offer special discounts to homeowners who have taken steps to improve home security. Items that frequently result in a discount include fire alarms, carbon monoxide detectors, deadbolts, burglar alarms, and sprinkler systems. Check with your insurer to see if a discount is available and how much you may be able to save by installing one or more of these items.

Disaster-Proof Your Home

Making your home more resistant to fire and water damage or natural disasters, such as windstorms, hurricanes, and earthquakes, may also net you a discount on your home insurance. Some of the improvements that commonly lead to savings include updated heat or electrical systems, reinforced roofing, and shutters.

Maintain Good Credit

Many insurance companies use an "insurance score" to help determine how much customers should be charged for coverage. Your insurance score is based on your credit score, credit history, and other metrics. If you have good credit, you will be charged less for insurance than someone with bad credit.

Seek Out Additional Discounts

There may be other home insurance discounts that you are eligible for, such as a renewal or loyalty discount, a senior or mature policyholder discount, a non-smoker discount, a group discount, or a professional discount. Ask your insurance company for a list of potential discounts as well as eligibility requirements.

Shop Around

Comparison shopping is the best way to save money on your home insurance. The cost of coverage can vary considerably from company to company. You may be able to save hundreds of dollars simply by switching providers. Quotes from various insurance companies are available from free online services. You can also get quotes by calling individual agents in your neighborhood.


*About the author: This is a guest post from Bailey Harris, who writes about homeowners insurance for www.homeownersinsurance.org.

*Image Credit: Photograph by renjith krishnan [via http://www.freedigitalphotos.net/]

Got Guts? Become a Student Landlord!

(This is a guest article by Kyle Chezum*)

If you're a student, chances are you pay rent to live somewhere. Real estate is a commodity. You're always connected to it, regardless of where you are. Real estate is the ground beneath your feet. And it's not free.

You may think you have to pay rent, that it's a necessity. I'll let you in on a secret. You don't. At least, you don't have to pay it to anyone but yourself. How do you do this? Simple. Buy a house.

Crazy? Not so much. You may have read my earlier article on how to prepare yourself for home ownership, while you are still a student. Today I am here to tell you that if you are diligent, you don't even have to wait until you graduate to make your home ownership dreams come true. Buying a house now makes a great deal of sense if you have access to some capital, want to build wealth, gain experience, and have nerves of steel. If you own a home and rent it out, you can save yourself some rent money and develop a real estate portfolio at the same time. It's better than working part-time at the cafeteria, that's for sure.

Here are a few pointers to get you thinking.

1. You'll be investing your own rent. This is probably the best part. If you're "paying yourself rent" because you own the home, then that money is paying off your mortgage. A mortgage is like a savings account. The money you pay sticks around in the form of home equity. You're not just spending money. You're giving it back to yourself. This is much better than paying rent to someone else, which essentially means you're paying someone else's mortgage.



2. It's good for your resume. Employers like to see that candidates are self-starters. Imagine walking into that job interview after you graduate and describing your past work experience. "I'm a residential property manager and investor." Wow. This is good stuff.



3. Buy early. Most young professionals who purchase a home live there alone or with a single partner. This is a waste of space. Honestly. If you plan to purchase a home when you graduate anyway, why not buy it while you're still a student and rent out the extra space? Make some money for a change.



4. Research property values. All of these ideas are great, but if you buy the wrong house, you're asking for trouble. Just look at the financial mess around us! Some neighborhoods are set to decrease in value in the future, and you don't want that. And you don't want to borrow more than what you can afford to pay. Do some homework before you make a purchase. Actually, do a ton of homework before you even consider making a purchase.



5. Ask your parents to pay for it. This isn't a joke. Many parents purchase homes when their children leave for college with the expectation that their children, and their children's friends, will become tenants. If your parents are willing to buy the house in your name or provide money for the down payment, you'll be able to start your real estate career in no time.



6. Use student loans to make part of the down payment. Check with your lender first. Most student loan originators will likely allow this, because student loans can be used to pay for living expenses. Purchasing a house is definitely a living expense. Don't, however, try to use student money to pay your whole mortgage. This may not work well, unless you plan to stay in school for the next thirty years.



7. Rent to your friends. Managing the maintenance needs of a residential property will be much easier if you're working with your friends. Try to get your friends interested first, before you put an ad in the paper. It will be a much more comfortable experience for you.



8. Document everything legally. This will kill you, but it has to be done. Make your tenants sign contracts. Big contracts. Huge contracts. Outline everything that your tenants are entitled to as tenants, and outline everything that you are obligated to do for them. Make sure everyone signs everything.



9. Prepare to be stressed. You're a property manager. Do you know what this means? This means everything from fixing a broken washing machine to killing a spider in the backyard to telling the neighbors, again, to keep their dog off your tenants' front lawn. You will get phone calls, all the time, demanding that you take care of any number of issues that may arise. If you can't handle your classes and your part-time job as it is, don't kid yourself. You're not ready for home ownership. But if you're active, energetic, and passionate about challenges, consider investing in a home and becoming a student landlord.

It'll beat working at the cafeteria. Guaranteed.


*About the author: This guest post was provided by Kyle, a content specialist at Lender411.com. Lender411.com helps homebuyers compare mortgage rates, find local lenders, and locate the best mortgage packages available.

*Image Credit: Photograph by origamidon [via Flickr Creative Commons]

If you like this article you may also like

• The American Dream of Home Ownership: 10 Things You Can Do as a Student


• Rent Vs. Own: A Look at Our Expenditure Then, and Our Expenditure Now


• Campaign Against Financial Myths: Part 4 - Mortgage & Home Ownership


• Ah... The Joys of Home Ownership


• Selective Amnesia: 5 Things to Consider Before You Buy a New Home

The American Dream of Home Ownership: 10 Things You Can Do as a Student

(This is a guest article by Kyle Chezum*)

College students often take home ownership as a fact of adult life — as something inevitable that will happen when it happens. But homeownership requires real effort, commitment, and responsibility, many college students aren't sure what steps to take to meet these requirements. The following ideas will help get you started on homeownership before you graduate.

1. Put some thought into it. Are sure you want a home? Is it part of your future plans? If so, make it a goal. Work toward it. If you're not intentional about getting there someday, you won't. Simple as that.


2. Get a job. This is much easier said than done, of course, but do what you can to earn an income. You need money to buy a house, but you also need a steady employment history. Start building up your resume as soon as possible.


3. Build up your credit score. Get a credit card or two—no more than that, though—and charge small transactions now and then. Pay off the balance monthly—never let a credit card charge carry over from one month to the next. Maintain tight control over your accounts. Don't use the cards to build up debt—that's the opposite of what you want. Using of the cards over time will provide you with a healthy credit score, which is critical if you plan to purchase a home.


4. Avoid student loans if possible. Paying back student loans can help build your credit as well, but the monthly payments that will come due when you graduate will cripple your home buying ability for several years at least. Borrow the smallest amount you can in student loans. Don't use your loan money to buy a laptop or a new phone. Keep yourself financially lightweight.


5. Buy used books. You know the drill. Used books can cost hundreds of dollars less—especially online—than the shiny new ones in the bookstore. A few hundred dollars in savings every semester can reduce the amount of student debt you take on.


6. Drive a clunker. This one is controversial. Older cars come with higher repair costs than new cars, but new cars are just plain expensive. You'll have to weigh the financial pros and cons of this one yourself, but whatever you do, don't use debt to finance a car. You can get by without the Mustang or the Sebring convertible. You'll save on insurance, too.


7. Skip spring break. Sorry, but spring break vacations are often extremely expensive. A spring break adventure in Cancun will likely cost you between $1,000 and $1,500, and that's if you're on a budget. If you were able to save $1,500 each year for four years, you would have $6,000 of cash on hand—which is equivalent to the average closing cost of a mortgage.


8. Learn basic maintenance. One of the costs associated with homeownership is maintenance. If you can learn how to make minor home repairs yourself, you can save a hefty amount of money as a homeowner, which will lower your monthly ownership costs and allow you to devote more of your income to your mortgage. You can paint the entire exterior of your home for just a few hundred dollars instead of the two or three thousand it would cost to have it done professionally. Learn these skills as soon as you can.


9. Learn about real estate. Buying a home and taking out a mortgage are not simple things. There's a lot to learn. What neighborhood should you purchase in? How long should you keep the house before you sell it? Are property values increasing or decreasing in your area? Learn how to understand these things. Stay up to date on the industry. Compare home prices, compare mortgage rates, and keep your eyes open for opportunities. Read a book or two on the subject. Talk to a local broker. It will help you immensely down the road.


10. Save money. Save, save, save. Save every penny you get your hands on. Put it away. Don't think about it. Open a savings account and fill it full. You don't need to eat out three times a week, and you can skip out on movies now and then. Your friends will understand. Tell them you're buying a house—it'll make for good conversation, if nothing else.

*About the author: This guest post was provided by Kyle, a content specialist at Lender411.com. This site helps homebuyers compare mortgage rates, find local lenders, and locate the best mortgage packages available.

*Image Credit: Photograph by Aditya Grandhi [via Flickr Creative Commons]

This article has been featured in the Carnival of Personal Finance #271.

Selective Amnesia: 5 Things to Consider Before You Buy a New Home

(This is a guest article by Donald Farber*)

The picture is so vivid in your mind you might as well be watching it on glorious high definition television. Stretched out on your private deck soaking in a beautiful sunset while sipping wine with your loved one thinking how lucky you were to find this gem. In fact, you’re so wrapped up in your daydream you just nod politely when the realtor tells you that the reason for the low price is the high-rise slated for development across the street. It’s selective amnesia and it’s more common for homeowners than you might expect.

"You simply can’t persuade some people even if you know their decision isn’t in their best interest; it really just boils down to emotions," says 20 year veteran realtor Tony Swanson. "It’s usually not price, or size of style but usually something more personal."

For instance, he says, a recently divorced father of two who wanted a place that would be great for his kids decided to move them into the city where he grew up. "It was because he wanted the best for his kids that he moved back to his old neighborhood."

Unfortunately in the 30 years since he had lived there, things had went downhill in that area. "You can’t blame him because he was seeing everything through a veil of his happy childhood". It was two months later before he realized what a poor decision it had been and something Swanson says was avoidable.

So how do you let cooler heads prevail and balance those emotions with reason? Here are 5 tips that can help you see a potential home in a more complete light.

1. Talk to the neighbors. This is such a fundamental one, but oftentimes people neglect it. Sure it’s friendly, but it can also let you know if you’ll be buying a house amongst a sea of college aged renters. Find out if they have an association or newsletters. These are usually a good indicator that the community you are moving into also cares about it. This makes them more likely to look out for your home or kids, which can be great for your peace of mind.



2. Get a Home Inspection. This is incredibly important as it can save you substantial headaches down the line. Ask for referrals from your friends or from an independent agency. The important thing is to find out if the home inspector offers any guarantees or liability if they miss anything. Be careful about taking the realtor’s recommendation. Chances are that 99% of the time they will refer you to a legitimate inspector but always remember there may be a conflict of interest. Being aware of the financial consequences of having your inspector miss something crucial is reason enough to find your own inspector.



3. Obtain any records about renovations done on the house. A qualified inspection can only tell you so much. Be on the lookout for anything that raises alarm bells when it comes to the quality of materials used in any improvements. Being a detective means scouring any receipts for clues. Finding out the water heater was replaced two years ago despite the house only being 4 years old is a great example. Seemingly innocuous clues such as these could mean a flooded basement, which means you will want to be extra sure no mold is lurking in the drywall. Don’t be afraid to quiz the current homeowner. It’s not an interrogation, but can help you learn about other unique features of the home.



4. Think big picture when it comes to the add-ons. Sure a hot tub seems like a great idea, but what about the upkeep of chemicals and maintenance. The same thing can be said about the pool, or large beautiful yard and garden. Being realistic can save you significant time and money in the future. If gardening is your passion or you can afford the landscaper then by all means - but, often potential buyers seem swayed by the bells and whistles only to realize their annual hot tub dip is costing them $400 dollars on electricity and chemicals.



5. Don’t forget the house is in a community. Exploring the surrounding area can be a deal breaker on a great house. Finding out your house is a couple blocks from a fire station or hospital means the chances of 3AM siren wake up calls all the more likely. Expect similar problems with nearby airports, railroad track or even agriculture areas. Having the constant smell of manure may put a damper on your summer backyard BBQ. On the flip side, a less than perfect home may become more appealing when you realize how close it is to the elementary school, local park, or shopping centre. It might also save you a lot of money. The important thing is to do your research before you buy and make sure you’ve made the right choice.

*About the author: This guest post was contributed by Donald Farber, who writes extensively about first time home buyers and life insurance for LifeCover.ca

*Image Credit: Photograph by mamamusings [via Flickr Creative Commons]

Cheaper Housing Options For The Mortgage-Battered

(This article is part of a weekly guest column by Claire Moylan*)

Housing used to be a solid investment, but it has become less so over the years. Now, we don’t know with any certainty when housing will recover enough to be worth looking at it as an investment again. Of course, the American Dream is all about owning your own home, and this has plenty of emotional payback, but if you want to just buy a home as an investment, you might want to compare several choices: renting an apartment or home, co-housing, and buying a smaller home.

How Housing Has Changed
There were red-hot areas in the United States that were seeing double digit appreciation on homes. Now, these same areas might be experiencing thousands of dollars in devaluation. Until the inventory in housing starts to lessen, the odds of getting a home that will retain or gain in value is an iffy proposition in some markets. Even if you find a home you want to buy, it has also become much more difficult to qualify for a mortgage because even lenders have gotten scared. Gone are the days of no down payment. Now, you will be expected to have at least 10% available for a down payment. Your credit score will also be very important. Your income will be scrutinized much more severely to make sure that you can make the payments on the home. If after all this, you qualify, you still might find your lender has collapsed and the deal has been canceled. If you do not qualify for the home, you still have an option to rent until the market changes or your financial situation improves.

Why Renting Can Be Good
Renting can be a positive experience, when compared to owning a home you can’t afford. You won’t be responsible for maintaining the structure of the apartment or home that you rent. In a market where the housing prices are dropping, people who own housing may try to meet their financial obligations by renting it out instead of selling it. This can lower the price of rentals. You can get all of the emotional benefits of being in a house without feeling the pain of having a mortgage over your head. You won’t get any tax write-offs, however.

If you don’t mind being in an apartment community, you can also wait for the housing prices to bottom out in a more luxurious setting. Apartment complexes do many things to attract renters, adding pools, clubhouses, and sometimes even on-site gyms. Any money you save when renting can be put aside for your down payment, when you see the housing prices start to recover slightly.

Co-Housing To Share Expenses
Some people get tired of buying a house with everything in it and instead opt for co-housing communities. These communities can offer a very neighborly feel and they share many resources too. You probably won’t save money on a price per square foot basis, but the homes are also built in these ecological-friendly communities to be smaller and more energy efficient than today’s standard McMansions. People who live in these communities are usually more involved in sustainable living and are apt to share anything from tools, to kid’s toys, and everything in between. Often, such communities have childcare options for the people living within the community that can be a substantial savings for family with children. Many offer community meals that can help save on food and preparation costs. The common areas are maintained and held in common ownership by all the members of the co-housing community. This means that you probably will have to give some of your time back to the community on a monthly basis.

Living Within Your Means
Sounds old-fashioned and boring, but it’s also the best way to have a sound financial footing when buying a home. It also means that if prices drop, your loss is less too. Most experts agree that drops in housing prices are temporary and if you plan on living in a home more than five years, you probably can ride out some if not all of the damage. In the meantime, you can get a smaller home that you can afford with your income. This will give you a tax write-off and the capacity to build some equity. This is good for people starting out buying their first home or for those who wish to downsize. By buying a smaller home, you save money on the mortgage, on the utilities, and on maintenance too. Plus, you won’t be tempted to buy a lot of extra stuff you don’t need to fill the house up. While it may not be the house of your dreams, it can be a very wise step towards your final goal of getting into another home that does meet the standard for being the home of your dreams.

About the author: Claire Moylan is a freelance writer specializing in ebooks and custom-tailored articles for niche websites. You can view her portfolio online or check out her constant content page for more information about her writing assignments.

*Image Credit: cumortgageservice.com

DIY Projects for Frugal Home Owners: Carpet Cleaning Basics

This article is a part of the series “DIY Projects for Frugal Home Owners”, an attempt to get me (and hopefully a few readers) more interested in handling simple DIY projects around the house and saving some money along the way.


No matter who you are, there is a good chance that your home will get dirty from time to time. This holds true even if you clean your home each and every day. The most common area for dirt and grime are the carpets since it gets the most wear and tear. Carpets are what people walk on every day and are always coming in contact with dirty shoes, grease, dust, pets etc. The good thing is that you do not have to live with this type of dirt in your home. You can clean your own carpets very easily in order to present a better home.

Some homeowners think that they need to hire a professional to clean their carpets, but nothing could be further from the truth. Do it yourself projects, such as cleaning carpets is quite easy to complete. Sure, you are going to have to put a bit of time and sweat into these projects, but in the end you will be glad that you did this on your own. A job well done is a reward in itself – if that isn’t good enough there is all the money you can save by doing things yourself :)

Cleaning the carpets is all about getting the deep down dirt. The first step however is to start with vacuum cleaning to get rid of the surface dirt. I would highly recommend investing in a good vacuum cleaner. I have been drooling over a Dyson for a while, but we decided to settle for a Bissell (that was available on sale). The problem with such run of the mill vacuum cleaners is that after a few uses, they seem to lose the suction or worse, start to kick up dust. By the time we have kids, it will probably be time to retire this vacuum cleaner anyway, and maybe then we will buy a Dyson.

A neat trick I learnt from the time that we called maid service is to use a carpet cleaning and deodorizing powder. I think she used the “Resolve” brand and I really liked how fresh it made the room feel. It is supposed to contain absorbent granules that attract the tiny dirt particles in the carpet to attach to it. And since the granules are heavy and not “stuck in” they can be vacuumed right off. Leave it in for a few minutes and then vacuum, to get a clean fresh smelling carpet.

If you have set-in stains, you may need to spray a stain remover and scrub the area first before using a vacuum cleaner. Personally, we have a bit of an obsessive compulsive streak and we keep a can of carpet stain remover handy. Anytime there is a spill we immediately spray the foam and scrub it with the brush attached to the canister and then mop it up with a towel or paper napkin. Since we do not usually allow a stain to set in, I do not have much experience with removing set-in stains, but here is an index for removing pretty much any stain that you can think of from your carpet.

When regularly used, good vacuum cleaners can be quite effective in removing surface dirt and preventing it from settling in. However, if you prefer a more deeper cleaning, then it is time to get a heavy duty rug scrubber. You have two options here. You can either buy a rug scrubber so that you can use it whenever you want in the future, or you can rent one. If you anticipate deep-cleaning your carpets on a regular basis (got toddlers?), you might want to consider buying one. But in most cases, I suspect renting is going to work out just fine.

Rug scrubbers are available for rent in most big chain grocery stores as well as home improvement stores like Home Depot, Sears, Lowes etc. For a 24-hour period rental, they cost anywhere from $19.99 to $29.99 depending on the type of equipment you choose. You can choose to buy a deep cleaning solution or use warm water and soap (or a mild shampoo). The rug scrubber (“Rug Doctor”, “White track” etc) often comes with instructions about how to use it. If the instructions require you to stay off of the area for 12 to 24 hours make sure you plan your cleaning schedule accordingly.

Cleaning carpets is part of being a homeowner. Dirt will get into the house no matter how careful you are. But if you do what it takes to rid of it, you can reap some great benefits while trying to sell your stain-free house some day. Even though prevention is the preferred choice, the cure is not all that hard. The only thing that it needs is a bit of elbow grease :)