Homeowners insurance includes many myths and preconceived notions that can make the home buying process confusing and intimidating for first-timers. However, demystifying homeowners insurance may be easier than you think. Take these five common home insurance myths into consideration before buying your first home to help ensure a smooth process.

Myth #1: The surrounding neighborhood doesn’t affect the price of home insurance.

Contrary to popular belief, the cost of a home’s insurance premium is influenced by its surrounding area. Each neighborhood has a record of multiple factors that insurance companies take note of, including prior insurance claims and crime rates in the area.

Based on statistics provided by the FBI, the state, and other departments, each community is given a grade by insurance companies. The frequency of crimes, like burglaries and vandalism, within a community is compared against the city’s population. Neighborhoods with lower grades are considered higher risk, and homes within these areas will often have higher premiums.

Myth #2: External home fixtures don’t affect the price of insurance.

The physical structure of a home isn’t the only factor involved in home insurance. When it comes to calculating premiums, insurance companies consider every potential risk on the property. Homes with trampolines and swimming pools carry a higher risk of claims due to injury or property damage and are subject to higher premiums.

Dog owners may also be surprised to learn that they could face higher premiums. Although many domesticated dogs are friendly, insurance companies pay close attention to the risk of bites and other injuries.

Myth #3: Older, cheaper homes will have lower insurance premiums.

Though an older home may have a lower sale price, it may have a much higher insurance rate. Older homes are considered high risk to insurance companies for many reasons. Homes built in the ’80s and before may have outdated plumbing, and water damage and leaks are among the most common home insurance claims.

Another concern with older homes is the wiring system. Older homes may have aluminum wiring installed, which is susceptible to fire. Outdated wiring systems also may not be up to current state code, which can further drive up the price of a premium.

Myth #4: Homes within the same neighborhood will have the same premium.

Though the neighborhood a home is located does influence its premium, many factors could cause one house to pay a vastly different amount than even the one next door. For example, brick houses are at lower risk of fire damage than homes with wooden frames. However, homes with fiber-cement siding are fire resistant and have an added benefit of being termite proof.

It’s important to note that homes within earthquake-prone zones are evaluated differently. Brick houses are more prone to damage from earthquakes and will pay higher premiums than homes made of other materials within these areas.

Myth #5: Once a premium is calculated, the price is fixed and can’t be changed.

A homeowner has plenty of options to reduce the cost of their home insurance premium. Updating the roof to hail-resistant shingles, for example, will impress an insurance company. Additionally, installing security features such as a fence or alarm system will decrease both the risk of claims and the cost of your premium. Installing a sprinkler system to reduce the risk of fire damage is another way to make an insurance company happy, and they’ll reward you 鈥� by lowering your premium.

Now that you are armed with insider knowledge about the way homeowners insurance works, you can begin the hunt for your first home with confidence. If you have questions about homeowners insurance or are interested in quotes, an independent insurance agent can help you. Visit to get matched up with an independent insurance agent today, so they can help you get started on your journey.

Paul Martin, CPCU, is an insurance professional for听听with over 30 years鈥� experience. Throughout his career, Paul鈥檚 mission has been to further his knowledge and education in the field, so he can help homeowners better understand their insurance options.

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The real estate world is full of myths. Myths that prevent people from making smart decisions when buying and selling and keep people from maximizing their real estate returns.

Let鈥檚 count down the top five biggest real estate myths. And debunk听each one!

Myth #5. You shouldn鈥檛 buy right now because interest rates are rising.

Rising interest rates are a great reason to buy right now!

Historically speaking, interest rates are still exceptionally low. Throughout the 70s, interest rates ranged between seven and 12 percent. The 80s saw double-digits, reaching over 18 percent at one point. The 90s were more in the seven to nine percent range.

Today, you can still get a mortgage loan under five percent with good credit. If you plan to buy, do it now before rates rise!

Myth #4. You need a 20% down payment to buy a house.

This myth is a relic of previous generations, when you really did need a 20 percent down payment to get a mortgage and buy a house. That was when homes prices were $100,000, so 20 percent down was a large but manageable $20,000. Now that home prices in some major metro areas top $400,000, lenders have come up with different financing arrangements for all of us who couldn鈥檛 possibly come up with an $80,000 down payment.

One of the most popular options for low down payments is an FHA (Federal Housing Administration) loan. Not only do FHA loans provide a route to home ownership with as little as 3.5 percent down (just $14,000 on a $400,000 home), but they can also work with less-than-stellar credit.

Don’t dismiss buying a home because of the down payment, talk to a lender and explore your options.

Myth #3. Real estate investing is just for the rich.

It鈥檚 easy to see where this myth comes from: real estate typically requires a substantial investment, so people assume it鈥檚 only for investors who have money to spare.

But there are so many ways for the 99 percent to start investing in real estate! Instead of buying a single-family home, buy a duplex or triplex. You can live in one unit while you make money renting out the other units. You can also take advantage of low down payment programs or find investment partners and pool your money to purchase your first investment property.

Myth #2. You need to leave yourself room to negotiate when deciding on a list price or offer.

Sophisticated buyers and sellers don鈥檛 have time for games.

If you over-price your house to 鈥渓eave room to negotiate鈥�, buyers will assume you鈥檙e unreasonable and will steer clear. And sellers will dismiss low-ball offers from buyers just as easily.

If you鈥檙e serious about buying or selling, stick with real, reasonable numbers from the very beginning.

Myth #1. Going for sale-by-owner will save you money.

It鈥檚 tempting to cut real estate agents out of a real estate transaction to avoid paying the commission. But it can actually cost you money.

First, your home will sell for less. You don鈥檛 have the connections or marketing reach of a real estate professional and buyers who only look at for sale-by-owner are typically looking for a steal, so they offer less.

Second, you鈥檒l spend your own time and energy on the transaction, and your home will sit on the market longer. Time is money!

Third, what if something goes wrong? Are you prepared to navigate the unusual legal and financial issues real estate agents deal with routinely? A single missed clause in the contract could potentially cost you thousands.

Don鈥檛 fall for this myth. To protect your financial interests, hire a professional to represent you in your real estate transactions.

This post is intended for informational purposes only and should not be taken as professional advice. The point of view and opinions expressed in this post are those of the author and do not necessarily reflect the position of 皇冠体育app International. This post was written by Michelle Clardie.听Michelle is a professional real estate blogger, specializing in ghostwriting Realtor庐 blogs. Her engaging content helps real estate agents become more visible online, generate more qualified leads, and increase their revenues. You can learn more at听www.michelleclardie.com

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