Four Steps to Take Before Buying a Home

Did you know that one in seven Americans has at least 10 credit cards? It's true. However, the average is four, according to a report from Experian.

If you are considering buying a home, there are four crucial elements you must have in place before taking the first steps toward homeownership. Whether you are a first-time home buyer or moving up to a new home, plan for your move by preparing for the following:

1. Create a budget. Home buyers need to have enough money to cover monthly mortgage payments comfortably. "Properly budgeting your monthly finances is a must before taking any of the first steps towards finding and moving into a new home," Lawrence Finn, Jr., CEO Owner/Broker of Coach Realtor. Though seemingly an obvious preparation, many foreclosures occur because buyers don't carefully examine their income and expenses ahead of time and fail to plan for monthly mortgage payments. "Talk to mortgage professional within our firm's mortgage partner Residential Mortgage Division or a Coach Realtors sales associate to see if you can afford a monthly mortgage. The more financial planning you do in advance, the less likely you'll be in for any surprises," says Mr. Finn.

2. Plan for taxes and insurance. On the topic of affordability, be sure your income will cover any property taxes and homeowner's insurance payments. Buyers need to make sure their monthly income covers these extra expenses. While planning your finances, include these two items in your budget. Make sure to have other spending money and extra cash available as well. You never know when something will break down or need replacing.

3. Factor in maintenance. Buyers must also have the ability to properly maintain the home. "Maintaining the home is important. If the home isn't in good condition, you will lose value on what is most likely your largest investment and set the stage for a potential loss when it comes time to sell," says Finn. Don't ignore problems that need attention.

4. Review your credit standing. Lastly, a home buyer must have good credit – especially in today's lending environment. If you have late payments, a bankruptcy or unpaid debts, it will be difficulty to lock in a mortgage. If you do land a mortgage deal, the interest rate will be higher if your credit score isn't up to par. A good line of credit will ensure the best rates possible. Pay off those debts before trying for a mortgage.

With the right funds, maintenance resources and a good line of credit, you will be well on your way to jump starting the home buying process.

Your Homeowners' Insurance

In today's economy, homeowners are looking to save money wherever they can ... even on something as important as their homeowners' insurance. But buyer beware: lowering your coverage and/or raising your deductibles could result in higher bills if you become the victim of weather-related damage, says Lawrence Finn, Jr., CEO Owner/Broker of Coach Real Estate Associates .

"These days, it's understandable that many homeowners would want to shift to higher deductibles and want to pay less for their homeowners' insurance," says Mr.Finn. "However, if disaster strikes, they could very well be in a worse position than if they'd been paying a higher premium all along. To prepare before a situation occurs, homeowners should really look at their options - from price to coverage - and see what is available to them."

For starters, Mr. Finn, suggests shopping your homeowners' policy around -- "By doing this, you may be able to save hundreds of dollars a year."

Mr. Finn also recommends looking into some additional money-saving ideas from the Federal Citizen Information Center (www.consumeraction.gov):

* Ask your insurance agent about discounts. You may be able to get a lower premium if your home has safety features, such as dead-bolt locks, smoke detectors, an alarm system, storm shutters or fire-retardant roofing material. Long-term customers and those over age 55 may also be offered discounts.

* Insure your house, not the land under it. After all, your land will still be there even if your home is damaged. If you don't subtract the value of the land when deciding how much homeowner's insurance to buy, you will pay more than you should.

* Don't wait until you have a loss to find out if you have the right type and amount of insurance. Discuss with your insurance agent exactly what types of damage are covered, including natural "acts of God." Many homeowners are caught off-guard by this loophole.

* Purchase enough coverage to replace what is insured. "Replacement" coverage gives you the money to rebuild your home and replace its contents. An "Actual Cash Value" policy is cheaper but pays only what your property is worth at the time of loss - your cost, minus depreciation for age and wear.

* Consider any special coverage you may need for valuable and/or unique items, such as computers, cameras, jewelry, art, antiques, musical instruments, stamp collections, etc.

* Remember that flood damage may not be covered by a standard homeowners' policy. If you live in an area prone to flooding, take advantage of the National Flood Insurance Program.

"Regardless of what coverage you decide on, be sure it's what's right for you and your family," says Mr. Finn, "And remember to always work with an insurance agent who is experienced and trustworthy - he or she will be able to help you make the right decision."

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