Tip 10. Insure Your Home
Nobody likes to spend money for insurance; however, if your home burns to the ground and it is not insured you could be out hundreds of thousands of dollars. There are some other problems that insurance should cover that we are going to discuss. Before you purchase your dream home, you have to buy homeowners insurance and title insurance.
Homeowners insurance should include three items: coverage for the cost of rebuilding, lawsuit protection, and personal property protection. If your home is destroyed, your insurance policy should pay for the cost of rebuilding. Get a policy that includes a guaranteed replacement cost provision, which means that the insurance company will rebuild the home even if the cost of construction is more than the policy coverage. Lawsuit protection protects you against lawsuits arising from accidents or injuries that happen to others while they are on your property and it is recommended that you set it at two times the value of your assets. Personal property protection, which covers property such as furniture, jewelry, and cars, is usually set at about 50 to 75 percent of the amount of dwelling coverage.
Another type of insurance necessary before a home purchase is title insurance. Title insurance assures mortgage lenders and homeowners that the property has a valid title, with no unpaid tax liens or judgments recorded against it. In some parts of the country the buyer pays for title insurance, in other areas the seller may pay for it, or seller and buyer split the cost 50-50.
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