Just because you have Scottsdale homeowners insurance doesn't mean it's a smart move to file a claim when something happens. Whether it's a water heater that leaks and causes some damage to your drywall, or a toilet that leaks and causes damage to your wood flooring, filing a claim on your Scottsdale homeowners insurance is not always a smart thing to do.
Before you file your claim, you need to consider your past claim history and what this new claim might mean to your future relationship with your insurance company. Even though insurance companies exist to protect you from loss, they also need to make a profit. So they look for ways to minimize what they pay out.
That means dropping people they see as bad or low-profit—risks. Whether or not they drop you depends on a number of factors that may have nothing to do with your loss in the scenarios above, including your credit rating, where your house is located and whether or not you've filed any (or many) claims before.
Scottsdale Homeowners Insurance Claims Can Cost You Big Time
One of the best ways to wind up in the company's cross-hairs is to file a number of minor claims with a low deductible policy. Even worse, moisture-related claims are put in a central database that all insurers can access. Once one insurer drops you, it becomes much more difficult and expensive to find coverage from another company. That could be a much bigger problem for you than paying for a new water heater and drywall now, or replacing some hardwood flooring.
Read your Scottsdale homeowners insurance policy carefully. Pay particular attention to what the policy says about water damage. Failure of a water heater is usually a "covered peril," but you should also look to see if the policy covers the mold and fungus damage that often results from waterlogged drywall. Bear in mind that even if the policy does cover mold, the very word is a red flag to many insurers because so many homeowners filed claims for mold damage after a rash of storms a few years ago.
Talk to your insurance agent. If you've filed claims in the past, ask how this new claim would affect your premiums and policy renewal. You may not get a completely candid answer or one that will still be in effect when renewal time rolls around, since insurance companies often change their guidelines, but it will give you some insight.
Consider raising the deductible on your Scottsdale homeowners insurance policy to the highest level you can afford. That will eliminate the potential problems that come with making small claims, and will lower your annual premiums as well. The money you save on premiums may be enough to cover any small claims you might otherwise think about filing.
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If you're looking to buy Scottsdale real estate in the next year, you might want to do so before higher interest rates make financing such big-ticket purchases a lot more expensive. The Federal Reserve, which controls the supply of U.S. dollars and short-term interest rates, has indicated that it could start raising rates as soon as June.
Mortgage rates for those buying Scottsdale real estate have been so low for so long that people might have forgotten what it's like to pay "normal" mortgage rates of 6 percent to 8 percent for a home mortgage. But if rates rise, the impact will be felt by nearly everyone trying to buy Scottsdale real estate and even those trying to sell their home as well.
How Scottsdale Real Estate Will Cost More
When applying for a mortgage, lenders will assess your ability to pay back the loan based on your income and the monthly mortgage payment. The higher your income, the larger the allowed payment, but interest rates play a big role in how large the payment will be. Even a slight rise in historically low interest rates could make it a lot more expensive.
A 1-percentage-point increase in mortgage rates from 4 percent to 5 percent on a 30-year mortgage results in a 13 percent jump in monthly payments. A 2-percentage-point increase results in an incredible 26 percent increase in monthly payments.
The reason those higher payments are important is that they play into how much borrowing power you have. A lender is trying to figure out how much it can loan you and still expect you to pay it back on time, but the lender doesn't necessarily care how big the loan is. What it really cares about is whether you can make the monthly payment.
Why Scottsdale Real Estate Could Suffer
Mortgage rates and borrowing power could have a profound impact on the Scottsdale real estate market that's still recovering from the recession.
It's no secret that wages haven't risen much at all recently, so recently the improving Scottsdale real estate market has been driven by the borrowing power that low interest rates have provided rather than extra income from higher wages. If interest rates rise, even slightly, they could actually send home prices — and home values — lower, simply by reducing the ability of new buyers to pay for a home.
If you buy any Scottsdale real estate with 20 percent down and then sell it a few years later but can only get 90% percent of the price you paid, your loss is half of your down payment. That's a big loss on an asset that people don't usually expect to lose money on.
It's not a question of IF higher mortgage rates are coming, it's a matter of when. And no one really knows the answer to that question. With the economy and unemployment improving, the market is currently betting that the second half of 2015 will start to see higher mortgage rates, and consumers should know how it could impact them.
Higher mortgage rates mean lower borrowing power, so whether you're thinking about buying or selling Scottsdale real estate, you might want to start thinking about how those changes will impact you in the future.
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As the weather warms up, so does the Scottsdale real estate market, and experts say this year's spring selling season is shaping up to be an active one. Beth Braverman with The Fiscal Times penned an article recently that points out the trends to watch in 2015, whether you're buying or selling.
2015 Scottsdale Real Estate Trends
1: Scottsdale real estate prices are rising, even hitting record levels in some places. Home prices nationwide rose by 5.7 percent in January, compared to a year ago, according to CoreLogic.
2: Mortgage rates are still low — for now. At less than 3.7 percent, mortgage rates haven't been this favorable to consumers since 2013. Rates are expected to rise as the year progresses, for now these rates are really at very low levels. To be safe, once you've got a closing date, consider locking in your mortgage at today's rock-bottom rates.
3: It's still a seller's market. Total housing inventory at the end of February increased 1.6 percent to 1.89 million existing homes for sale, but that's still 0.5 percent less than a year ago. Unsold inventory is at a 4.6-month supply, giving sellers a slight advantage in today's market. (A six-month supply is considered a healthy market.)
4: Buyers want turnkey properties. Even with tight inventory, buyers are looking for properties that are move-in ready and won't require much more than a coat of paint.
5: Foreclosures are no longer a factor. After peaking in August 2006 just before the housing bubble burst, foreclosures are on pace to return to historic norms this year, according to RealtyTrac. Foreclosure filings fells 4 percent in February to their lowest level since 2006.
6: Investors are backing off. Ordinary buyers in recent years often found themselves competing with investors. Today's houses are getting less desirable for investors because price points are going higher, so it doesn't pencil out as much. The share of homes going to institutional investors or all-cash buyers dropped in 2014 to the lowest level in four years.
7: In most places it's much cheaper to buy than to rent. Soaring rents in recent years have made buying Scottsdale real estate much more affordable for those who want to stay put than renting it. Nationally, U.S. renters spend an average of 30 percent of their income on rent, versus just 15 percent of income on mortgage payments, according to Zillow.
8: Credit is getting looser. Fannie Mae and Freddie Mac have introduced new lending programs that allow borrowers to put just 3.5 percent down on a home – although this comes with risk, of course. The Federal Housing Finance Agency recently reduced the cost of mortgage insurance by half a percentage point, which will save home buyers an average of $900 per year. All of this makes it a little bit easier for first-time buyers to qualify for a home loan.
9: New homes are smaller and greener. The average new home in 2015 was expected to be about 2,200 square feet, or 10 percent smaller than the average new home five years ago, according to the National Association of Home Builders. Millennial buyers and downsizing boomers want a smaller carbon footprint and a more eco-friendly home with energy-efficient windows and plumbing.
You can read the full article here.
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Attention potential sellers sitting on the fence: It could be time to make a move to sell your Scottsdale home now.
Mid-March to mid-April is typically the best time to hang the for sale sign on your Scottsdale home. With homes selling 15% faster and for 2% more than the average sale, according to Zillow, the window tends to be a little earlier for sellers in warmer climates and a little later in colder climates.
"It's still predominately a seller's market, but less so than the last year or two," according to Stan Humphries, Zillow's chief economist. "Some advantages are moving back to buyers; but largely and broadly … it's still favoring the sellers."
Here are four reasons you might want to list your Scottsdale home for sale NOW:
The level of unsold homes was 4.6 months in February, according to the National Association of Realtors. That means it would take a little less than five months for all available inventory to sell. In a normal market, a five-to-seven month supply is considered balanced, said Danielle Hale, director of housing statistics at the NAR.
Tight inventory tends to prop up Scottsdale home prices and can result in multiple offers and spur bidding wars.
But at the same time, low supply is also keeping some sellers in their homes. "They aren't typically going to sell and then rent," explained Hale. If sellers aren't comfortable that they will be able to find a new home, it can keep them off the market. "There needs to be more construction in the market to ease the pressure," she said.
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With nine out of 10 home buyers now using the Internet at some point during their search, it's no wonder that "Web Appeal" has been called the new curb appeal for helping you sell your Scottsdale house. That puts a premium on the photos that you use in your online property listing.
3 Ways to Get the Best Shots to Sell Your Scottsdale House:
Use the Right Camera – You might think your smart phone takes great pictures, but online home buyers aren't likely to agree. An advanced camera is best for real estate photography because its larger sensor takes clear pictures even in low-light home interiors. That can pay big dividends. In a December 2013 study by online real estate brokerage Redfin, homes listed between $200,000 and $1 million that were shot with DSLR cameras sold for $3,400 to $11,200 more than those photographed with basic point-and-shoot cameras.
Tell the Whole Story - Buyers pay more attention to photos than the actual property description in the listing, so it's important to provide every visual detail. Include photos of each room, as well as the exterior and yard. And take close-ups of interesting features, such as a stone fireplace or high-end appliance. Natural light is always best, so you may need several days to capture every shot when getting the best photos to help sell your Scottsdale house.
Time it Right – It's best to debut a listing on Thursday or Friday, ahead of the weekend open houses. Make sure you have all of the pieces in place before going live because listings get 4.5 times more traffic in the first week than they do a month later. Some sellers (and agents, too) make the mistake of debuting a listing without the photos, thinking they'll upload them later. By that time, many would-be buyers will have moved on.
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