Unemployment rates have reached record highs. Businesses close from coast to coast. But there is one aspect of 2020 that we can be thankful for: the real estate market.
Mortgage rates have literally never been lower. Recorded for almost 50 years Freddie MacUntil 2020, interest rates never fell below the 3% mark. In response, homeowners and buyers are demanding a good deal, whether it be refinancing their current mortgage or buying their first home. Even during the fall and winter months, when sales are typically low, the property market was full of activity.
Policygenius can help you find the best homeowner insurance possible based on your needs
In their rush to reap high interest rates, consumers may overlook other important financial factors to consider when refinancing or buying a new home. Interest has decreased and sales have increased, but there are many details a homeowner or buyer should evaluate before participating in the 2020 home construction phenomenon – one of which is homeowner insurance.
Free Fall Interest Rates
According to Freddie MacPrimary Mortgage Market Survey, The 30-year fixed-rate mortgage rates have gone down every month this year. The prices aren’t all low, however. They are the lowest they have ever been.
For the context The average interest rate on a 30-year fixed-rate mortgage, which includes records from 1971 to the present, is around 8%.. In November 2016, interest rates fell to an all-time low of 3.31% – but four years later, 2020 exceeded them.
The year started with an already impressive rate: 3.72%. Then the coronavirus hit the American shores and changed everything we once considered “normal” – including interest rates. Fast forward to November 25th, 2020; The average rate on a 30-year fixed-rate mortgage has dropped a whole percentage point to 2.72%.
The interest rates on 15 year loans were equally impressiveDiving from 3.16% in January to 2.26% in December; and as economists look to 2021, they expect little to change.
Increase in home sales
Interest rates are sure to break records in 2020, but they’re not the only ones.
Low interest rates have paved the way for homeowners hoping to cut their monthly payments as well as first-time buyers looking to get a good deal. Home sales rose to a seasonally adjusted annual rate of 6 million units in August 2020 – the highest since December 2006. But that’s not all.
Fall and winter are historically boring seasons for home sales, but not in 2020, of course. National Association of Realtors® (NAR), Existing property sales rose for the fifth time in a row in October. Compared to the previous month, sales rose by 4.3% to 6.85 million units; However, compared to the same time in 2019, sales were up 26.6%.
“Given the many uncertainties in 2020 The real estate industry was able to satisfy the surprisingly strong demand for home purchases and contributed to our country’s economic recovery“Said NAR President Charlie Oppler.
Real estate prices rise
Thanks to exceptional interest rates, the real estate market was very active in 2020, drawing the attention and action of sellers and buyers across the country – but there is only so much to do.
The last time America saw such a dramatic surge in home sales was in 2006. However, at that point the number was down The real estate available was more than twice what it is today. As the demand for living space increases, the supply decreases. and when stocks go down, prices go up.
In your Report on the property price index for the third quarter of 2020, the Federal Office for Housing Finance (FHFA) reported a 7.8% increase in US home prices from the third quarter of 2019 to the third quarter of 2020. According to Dr. Lynn Fisher, associate director of research and statistics at FHFA, this increase in house prices rose significantly to the
“Strongest quarterly profit in FHFA HPI buy-only series history. ”
These higher prices impact a number of crucial costs associated with selling a home, including your monthly payment, down payment, and property taxes. While homeowners and buyers alike have struggled to get a great new price, the deal at the end of the day may not be as sweet as they suspect.
“While homebuyers’ appetites remain robust, the shortage of inventory has effectively limited how much higher sales can grow,” said Sam Khater. Freddie MacChief economist. “Unfortunately that means a record low supply when there is high demand House prices are escalating quickly, undermining the benefits of the low mortgage rate environment. ”
Does Market Value Affect Homeowners Insurance Costs?
As property prices continue to skyrocket in 2020, you may be wondering, “How does this affect my homeowner insurance?”
Homeowner insurance protects your home – as in your physical home, personal property and other assets – from damage and theft. Once you’ve determined what should be covered specifically for you, insurance companies will consider a number of factors to determine your monthly premium, including your replacement cost estimate. This number, usually provided by a certified appraiser, is the price to pay to rebuild your home from scratch.
Fortunately, the replacement cost estimate is Not the same as the current market value of your home. Instead, this number is based on the cost of construction and the price of the building materials. Consequently, While your home may increase in value, it shouldn’t affect your insurance.
Whether you’re refinancing your mortgage or buying your first home, now is a good time to check out your homeowner’s insurance policy and look into alternatives to save money. Check out the tips below on how to lower your insurance premium and compare offers from top providers so you get the best policy at the best price!
Bundling
One of the best ways to reduce coverage costs is with Bundling. Many insurers offer a lot more than just cover for your home. If you buy more than one form of insurance from the same provider – if you “bundle” – you get a considerable discount. For example, Policy genius Customers who bundle their home and car insurance save an average of 30%!
Lower your deductible
Another factor to consider is your deductible. In short, higher deductibles = lower premiums. So if you want to pay less per month for coverage, you can opt for a higher deductible. Just be ready to pay a lot more out of pocket when filing a claim!
Understand how much coverage you need
The desired coverage also increases or decreases your monthly premium. Start with standard homeowner insurance – including home insurance, liability insurance, and personal property insurance – and build that up from there if you want additional protection for rare collectibles, family heirlooms, and more.
Check out discounts
Depending on the insurance company you choose, you may receive a number of discounts. For exampleBy installing a monitored home security system, you can save up to 20% on your homeowner’s insurance, according to SafeWise. As you browse the deals, ask insurers for a comprehensive list of discounts available to make sure you get the best deal!
How to Find Affordable Homeowner Insurance
To get a home loan, most lenders require homeowner insurance. Indeed after the Insurance information instituteamong the 63.9% of condominiums in the United States, 95% have homeowners insurance.
When preparing to buy a new home or refinance your current home, use an independent resource like Policy genius Compare providers and offers. Once you’ve answered some basic questions about your home and finances, Policy genius presents you with a list of the top providers and personalized offers – all in a few minutes!
The young Alfred is another great place to compare deals, especially when you want to find the best deal fast. The young Alfred works with 40+ different insurers and acts a bit like a personal assistant throughout the process … but one that works for free.
You may know them for their auto insurance commercials, however Allstate is also an established provider of homeowner insurance. Allstate has been around for almost a century and it’s easy to see why. For one, they have deals and discounts on the Wazoo, and their local agents are quick to mention them!
If you are looking to partner with an insurance company with a “big heart,” check this out lemonade. In contrast to the average insurer lemonadeThe wage structure cannot be overlooked for the world. A flat fee of 20% of your premium pays for operating costs, salaries, etc., the rest goes to the insured. But here’s the kicker: with lemonadeget the money you need and what is left will be donated to causes that matter to you.
Summary
If you are one of the millions of Americans struggling for a record rate by refinancing or buying a home, reassessing your homeowners insurance can help you maximize savings too!
While homeowner insurance rates shouldn’t be affected by today’s exceptional market values, now is a good time to inquire about policy discounts and consider alternative providers.
Insurance is a competitive place and there are great deals out there for those who want it. This year, take some time to compare homeowner insurance deals and ask about the discounts available!
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