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Friday, November 18, 2011

Is Your Home Protected?



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Car insurance - got it. Health insurance – yep, have that, too.  Home owners – of course. Life insurance – I think so.  Disability insurance – Maybe not.  Mortgage protection life insurance– now it’s getting confusing?

Before I go too far, let’s take just a moment to review what insurance is.  My favorite definition of insurance is: The substitution of a small known cost for a large uncertain cost

The small know cost is, of course, your insurance premium.  A large uncertain cost is usually the result of some unexpected, unfortunate event such as a health issue, a car crash, a house fire, death or disability.  To mitigate the financial impact of these events, we buy insurance.

For most people, buying a home is the biggest transaction and financial commitment they will ever make.  Meeting that commitment is usually possible on a long-term basis because of our income producing abilities. However, should the wage-earner no longer be able to work because of illness, injury or death, the family could lose their home.  This is an unacceptable consequence that, in most cases must be covered with insurance.

Let’s look at the kinds of insurance you may want to consider.

Mortgage Protection Life Insurance

If you have recently bought a new home or refinanced, chances are your mailbox has been flooded with offers to insure your home. Before you decide to buy it or not, let’s find out what it exactly is. Mortgage life insurance is insurance that is typically bought through the financial institution that has your mortgage (like your bank). The amount of coverage that is purchased is the amount of your loan where if something happened to you the bank would be the beneficiary and pay off the loan. In most cases, the policy benefit decreases as the outstanding loan amount although the premium you pay stays the same.

In most cases, Mortgage Protection Life Insurance is easier to get than traditional life insurance.  However, because of the convenience and relaxed underwriting practices, it tends to be more expensive.  If convenience and speed are your top priorities, consider mortgage life insurance policies along with other simplified issue policies. If other things like price, company quality, and so on are more important to you, another life insurance option might work better. We’re all different – there’s no one right answer for everyone.

Individually Owned Life Insurance

There are many different types of life insurance available to individuals.  They differ from Mortgage Protection Life Insurance in a number of important ways.

1. The beneficiary can be your spouse, your kids or other heirs rather than the bank.
2. The amount can exceed the amount owed on the house.  This extra money can provide for other needs such as living expenses, college tuition for the children and savings for retirement.
3. In some cases, it can be structured so that it never expires or that you get your premiums back in the event that you do not die during the term.
4. Flexibility – as the owner of a life policy, you can change beneficiaries (often necessary after a divorce, for example), you can direct the funds to a trust for minor children, you can reduce the face amount and corresponding premiums and you can eliminate riders that are no longer needed.

A good agent should be able to help you think through the options.

Disability Income Insurance

Disability Income Insurance (DI) is designed to give you cash to replace part of your income in the event you become unable to work because of sickness or injury.  These policies typically have many “moving parts” and are not often well understood.  The amount of coverage one can get is limited by, among other thing, their current income.  When buying a DI policy, you must make a number of important decisions.  A good understanding of the contracts and how they work is extremely important.  Different companies define “disabled” differently.   This is important because you must meet their definition before they will pay a benefit.  Some companies use a definition something like “because of illness or injury, unable to perform the substantial duties of your job”.  Others may use “completely incapacitated”. To my mind, the latter is virtually useless.  A good broker will:

Understand the various contracts
Know which companies offer products that work well with your profession
Know how mental & nervous disorders are covered
Understand how the various companies will (or will not) penalize you for any given health condition.
Help you understand how much coverage you need for your situation
These are complex policies and should be bought only with professional guidance.

To learn more about disability insurance go to http://www.halfapaycheck.com/an824na/Default.aspx.

Written by:

Andrew Nance
Great Falls Financial, LLC
andrew@greatfallsfinancial.com
703.463.0983

Friday, November 4, 2011

"D.O.M." Your Way to better Value When Buying a Home!



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Generally speaking, the longer a home is on the market, the more willing a seller is to negotiate. And that means you might be able to get a good deal!

However, notice that I said “generally speaking.” I put in that disclaimer because there are several reasons a home might be on the market for a long time.


One is that it might simply be overpriced. If that’s the case, then you’re in an excellent position to negotiate since the sellers may be anxious to sell the home.

A second reason may be someone has already put an offer on the property, but their financing, credit rating, etc. hasn’t met the requirements of the deal. In short, there was something wrong with the buyers, and nothing wrong with the home. Again, there may be an opportunity for you in this situation.

A third reason is that someone made a simple mistake in the 
Multiple Listing Service (MLS)! Perhaps the home got listed in the wrong ZIP code or the wrong neighborhood, or the price was simply wrong and listed too high. Now, normally, MLS is very accurate, but, as always, it’s dependent on humans entering information into the system, so mistakes happen!

Fourth, the house may have stayed on the market for so long because the owners simply refuse to negotiate! A real estate agent can help you identify these individuals for you so you don’t waste time and energy on a sale that will never happen.

Finally, a home may stay on the market for a long time because there is something wrong with it either structurally or cosmetically or both!

Depending on the situation, this can also be an opportunity for you as a buyer! You can use it as a bargaining tool; that is, either the home seller fixes the defects or lowers the price to account for the cost of repairing those defects.


However, you should always, always get a home inspection done on such houses! (Or on any house you’re considering, for that matter!). It prevents you from buying a “money pit,” in which you have to throw a small fortune in order to get defects repaired.

Here’s the short and long of it: DOM can sometimes get you a great value in a home; however, you need the expertise and guidance of an experienced real estate agent to pinpoint such values! I can provide you with that expertise. Contact me today!