Smart homeowners looking for savings this year may have netted the $ 8,000 tax credit, but trends show they won’t be nearly as wise to insurance discounts that could cut their home insurance rates- this year and next. And those discounts are surviving even the toughest of times, despite rising costs across the insurance industry.
Industry & Consumer Trends: Survey shows many homeowners aren’t accessing eligible discounts
Unfortunately, homeowners living on the tightest of budgets could benefit the most from insurance discounts but they aren’t maximizing discounts. And many of these homeowners aren’t aware that discounts exist. In fact, a recent survey found that “nearly 38% of respondents with a household income of less than $ 25,000 said they weren’t taking advantage of all possible homeowners discounts or said they didn’t know” that discounts can be used to reduce their overall home and car insurance costs.
The 2009 national survey, reported by industry association Trusted Choice, also found that 53 million household respondents “admitted they are probably not taking advantage of all homeowners insurance discounts or said that they simply didn’t know” about policyholder discounts they likely qualify for.
While nickels and dimes make good cents for homeowners, the survey numbers just don’t make sense in today’s economy where every penny counts. There’s a range of insurance discounts available — even for coastal policyholders — and these can mean savings on rates ranging from 15 percent to as much as 30 percent.
So why don’t homeowners take advantage of insurance savings?
Many homeowners just don’t know much about their insurance, and discounts, or don’t act on all discounts that they do know, whether it’s a new policy on the first-time buyer’s starter home…or the fellow who needs extended coverage on a $ 3 million beachfront luxury. Survey statistics support this finding:
“The survey also found that the largest percentage of respondents, about 26%, estimated they save 6-10% on their insurance premiums by using discounts. In reality, many consumers could be saving significantly more – as much as 30%.” — Trusted Choice
Shopping for competitive rates and the resulting discounts is a learning process, one that takes time and awareness. It starts with a review of the home insurance policy and the carrier discounts and should extend to the condition of the home, as well as the situation of the homeowners. Policyholders should also explore home insurance options, competitive rates and seek discounts available across the range of providers or home insurance carriers.
But the process and language can confuse homeowners — especially those who are inexperienced or shop without the help of an insurance agent. After all, the industry jargon of your homeowner policy isn’t written for pleasure reading and agents accustomed to the policy process can help make sense of the lingo, as well as make recommendations on discounts, criteria and savings.
An independent insurance agent is a good learning guide for any policyholder, but new homebuyers and homeowners usually benefit the most. Their awareness is limited by experience, and they’re often unfamiliar with insurance terms, the extent or limitations of coverage. Many new policyholders aren’t even aware of how much the home insurance actually costs from year to year.
Moreover, new homeowners in newly built homes may have found the smart savings of the super $ 8,000 tax credit. But many are missing out on extended savings — the insurance discounts applicable to new wiring, smoke alarms…even credit score and marital status can net lower rates on home insurance costs.
Likewise, the inexperienced often believe that home insurance rates are standard or standardly managed by their mortgage company. They’re not aware that there’s industry competition or that they can change carriers if they choose.
FYI: Competition in the industry can also evolve discounts, even for homeowners ‘at-risk.’
Currently, there are fewer choices for coastal homeowners, yet new carriers have moved into some geographic markets opened since the withdrawal of big insurance carriers–these carriers cancelled policies because they no longer want to cover homes vulnerable to weather risk. So even the most experienced home insurance policyholders — perhaps living in their retirement dream homes — may find choices after all, along with lower rates and discounts.
While there’s a lot that homeowners don’t know about their home insurance, competition and industry trends, the best way to get educated is to ask — for guidance and for recommendations on discounts that lead to savings, plus the tips for capturing those savings year after year.
Lessons to Learn
Get smart — know your home insurance policy and ask for expert guidance if needed.
Explore options with a wise insurance guide — Independent insurance agents can help homeowners explore all the options – these agents aren’t attached to one company, and can shop quotes across the industry range.
Request home insurance quotes – be sure to cover all competitive rates and sources.
Compare rates sensibly – make sure the comparison is apples to apples, and includes a review of coverage and discounts. Ensure coverage is also aligned with the mortgage requirements.
Apply discounts… leverage savings.
Article by DallasHome Loan
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Article by Dealfor Loans
There is some good news for home loan borrowers, with the State Bank of India increasing loan tenures by 10 more years. Other banks are expected to follow suit.
Banks normally keep the equated monthly instalment on home loans intact and extend tenure to pass on the rate increase. SBI has allowed stretching the loan repayment tenure to a maximum of 30 years as interest rates have risen by 250-300 basis points in the past year and a half. Typically, a 25 basis points hike in interest rates increase the EMI for a 20-year loan by Rs 17 for every Rs 100,000 borrowed. The loan tenure on average extends by three to four months if rates rise by 25 basis points.
Typically, banks give home loans for a maximum period of 20 years and may extend the tenure for another five years on request. But with a dozen rate hikes in 18 months, the EMIs have shot up substantially. “We have extended tenures for retail borrowers to up to 30 years after the recent rate hikes,” said a senior SBI official. “We are allowing extension up to the age of 70 years and also take into account the individual’s pension income,” said the official.
The official said there had not been many defaults in the retail segment but the bank would like to exercise caution till interest rates stabilised. “Loan tenures can be revised as and when interest rates stabilise or even start easing, going ahead,” said the official.
SBI’s decision comes after the government asked public sector banks to expand tenures instead of hiking the instalment amount in order to pass on the rise in cost. Some other public sector banks are also likely to follow suit.
M Narendra, chairman and managing director of Indian Overseas Bank (IOB), said if the customer had a higher service period, the bank extended the EMI tenure. “We are looking if we can increase the tenure by 10 years, as it is permitted by the Reserve Bank of India” he said.
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“We are looking at cash flows and depending on that we are extending the loan repayment period to provide some comfort to the customers,” said J P Dua, chairman and managing director of Allahabad Bank. The Kolkata-based bank, however, is increasing the tenure on a case-to-case basis after taking into account the customer’s repayment capacity.
The Reserve Bank of India has hiked policy rates by 325 basis points since March 2010, following which most banks have hiked lending rates by up to 250 basis points making loans dearer for borrowers. The central bank, which meets next Tuesday to review its policy stance, is expected to raise rates by another 25 basis points.
Article by Sam Gooch
An expert has said there is often a big difference between how much sellers and buyers believe a property is worth.People seeking competitive mortgages and mortgage deals and residential property prices often value houses at much less than the seller they are looking to purchase from, an expert has said.
According to Selwyn Lim, director of online resource Mouseprice, there is currently a “huge disparity” between the asking prices for many homes and the number of buyers in the UK market.
This unrealistic pricing structure has subsequently caused a dip in the amount of transactions going through in recent times, Mr Lim added, because those looking for a home credit package such as a tracker mortgage are eager not to pay over the odds for a property due to the effects of the global economic downturn.
The Mouseprice official went on to say that this trend is largely due to the fact that retailers are “usually quite aware” of what their properties were worth in 2007, which therefore makes them “very reluctant” to put them on the market for anything less than that value, despite being fully conscious that “the market has not performed well”.
Mr Lim’s comments came after the publication of data yesterday (October 18th) by Rightmove, which found that asking prices for homes have gone up by an average of 3.1 per cent so far this month, which represents a continuation of the trend seen over the last year.
This is in contrast to research conducted by Halifax earlier in the month (October 7th) – which showed that house prices declined by 0.9 per cent over the duration of the last quarter and by 3.6 per cent in September alone – but also stated that these costs have gone up by 2.6 per cent in the previous 12 months.
And Mr Lim feels that this trend is likely to continue, with large price changes unlikely in the coming months.
Article by Dealfor Loans
Banks and housing finance companies are seeing a slackening in demand for home loans. Prospective buyers are postponing decisions on expectation that the high property prices will cool off. Further, the gradually rising interest rates are also acting as a demand dampener, say market players.
Though numbers are not forthcoming from lenders, officials from three credit information bureaus Business Line spoke to have traced a clear trend of receiving fewer home loan applications for verification from banks and HFCs (housing finance companies) in the last few months.
The slackening trend in demand for home loans is more pronounced in metros such as Mumbai and Delhi where property prices have touched unrealistic peaks, said experts.
The demand for home loans has declined in the past three months, said Mr Anil Kothuri, Executive Vice-President, Edelweiss, who heads the Retail Finance division of the company.
Although the runaway increase in property prices has taken a breather, it has not declined. Hence, home buyers probably feel that it is worth waiting to make up their mind about buying houses,? Mr Kothuri said. Edelweiss home finance currently has operations only in Mumbai.
RBI data
Data released by the RBI, until February, does not show any slowdown in month-on-month growth in the home loan portfolio, said Ms Vibha Batra, Co-Head – Financial Sector Ratings, ICRA Ltd.
However, fewer home loan enquiries may be an early indicator of a slowdown in demand for home loans; with demand slowing because of high property prices and increasing interest rates. This may get translated in RBI data by May-June as new sanctions get converted into disbursals in 30-45 days and the RBI data come with one month lag, she added.
Mr S. S. Mundra, Executive Director, Union Bank of India, agreed that there has been some slowdown in home loan demand due to high property prices. ?The slowdown is seen more in regions like Mumbai and Delhi than in South India. People are preferring to wait for some more time in the metros before they take a decision to purchase a house,? he said.
According to Mr Monish Shah, Director, Deolitte, India housing finance companies and banks are seeing a slowdown in demand for housing loans.
?Usually the two main reasons for a slowing of demand for housing loans are property prices and interest rates. But I feel this is more to do with prices. Over the past few years realty levels have increased so much that the monthly payment is not as big a challenge as the initial capital for home buyers,? he said