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Essential Home Buying Tips: Utilities, HOA, and Mortgage Insurance Explained · Earn Your Leisure

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  Speaker 1: pushing your vision forward. So let's talk about some of
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  Speaker 1: these other fees, right, because we know about the mortgage.
• 1:55
  Speaker 1: Some people know about the property tax, we know about
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  Speaker 1: homeowners insurance. But there's some other fees that wait.
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  Speaker 2: But before we go to other slots, So because we didn't,
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  Speaker 2: we didn't. I just want to make sure people get
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  Speaker 2: that the whole thing. So can we go back to that.
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  Speaker 2: Can we go back to the slot?
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  Speaker 3: Ye?
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  Speaker 2: So utilities is a big one because this is why
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  Speaker 2: a lot of people using you know, different type of
• 2:18
  Speaker 2: energy efficient things for their homes and that that that
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  Speaker 2: can save a lot of money, right and even setting
• 2:24
  Speaker 2: up utility a lot of times as a process, water, gas,
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  Speaker 2: all that type of stuff. And then of course the
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  Speaker 2: homeowner's insurance. But the homeowners insurance is vitally important now,
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  Speaker 2: especially you look at California fires, you look at Florida,
• 2:37
  Speaker 2: you look at floods. So, okay, the taxes we we
• 2:43
  Speaker 2: just talked about that, that's important. The mortgage is pretty
• 2:46
  Speaker 2: going to be straightforward as far as on the bank side,
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  Speaker 2: you shouldn't understand those terms. But this homeowner's insurance and
• 2:53
  Speaker 2: the utilities can you can you talk about that because
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  Speaker 2: that's that's something that people need to really have an
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  Speaker 2: understanding of what they're getting themselves into before they actually
• 3:02
  Speaker 2: get the home.
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  Speaker 3: Absolutely, so let's jump into utilities. If you're looking for
• 3:08
  Speaker 3: a single family home, it would be ideal and I
• 3:11
  Speaker 3: want you to write this down. Oftentimes agents don't do this.
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  Speaker 3: Ask the previous homeowners to provide you with a statement
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  Speaker 3: of what their utility bills are, like, what are they're
• 3:21
  Speaker 3: paying on average for their light bill? What are they
• 3:23
  Speaker 3: paying on average for their gas bill? Those are two
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  Speaker 3: controllable expenses that you don't really consider when you're buying
• 3:29
  Speaker 3: a home. Why is this important. Let's just say you're
• 3:32
  Speaker 3: buying a five thousand square foot home on a basement
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  Speaker 3: and you're coming from a two bedroom apartment that's maybe
• 3:40
  Speaker 3: thirteen hundred square feet. The difference in the amount of
• 3:44
  Speaker 3: heat that's required to heat that space, the amount of
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  Speaker 3: HVAC that's required to cool that space, it could be
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  Speaker 3: almost the cost of it could really be thousands of dollars.
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  Speaker 3: So while you're out here assessing what your expenses should be,
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  Speaker 3: ensure that you get that information from the current homeowner
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  Speaker 3: before making your purchase. So utilities are such a big deal.
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  Speaker 3: And then when we talk about homeowners homeowners association fees,
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  Speaker 3: So you guys are in New York, so a lot
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  Speaker 3: of times you guys are buy not y'all, you know,
• 4:14
  Speaker 3: you deserve to be rich, but a lot of people
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  Speaker 3: are buying condos, townhouses, things like that, and there are
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  Speaker 3: a lot of times those fees are included. So you
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  Speaker 3: get into an HOA, they'll say, here's an additional I
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  Speaker 3: saw a condo here in Atlanta where the hoafee is
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  Speaker 3: fourteen hundred dollars a month, but it includes the utilities,
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  Speaker 3: and then it includes amenities so it includes so it
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  Speaker 3: kind of offsets, but you have to understand how that
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  Speaker 3: will affect your monthly payment. So hoafees is a huge deal.
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  Speaker 3: I think we get a big bad rep. I don't
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  Speaker 3: want a house in the HOA. It's good to it
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  Speaker 3: and it's not so good. The good parts of it
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  Speaker 3: HOA is if you are in a neighborhood, a single
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  Speaker 3: family neighborhood, and everybody has to maintain the exterior a
• 4:57
  Speaker 3: certain way. Everybody has to maintain the grass their a
• 5:00
  Speaker 3: certain way. It actually helps with your value appreciation. You're
• 5:03
  Speaker 3: gonna hear me say value appreciation a lot because I
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  Speaker 3: want you to understand that is the number one reason
• 5:10
  Speaker 3: for getting into real estate and owning a property is
• 5:13
  Speaker 3: value appreciation and ownership. That's it. So of course HOA
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  Speaker 3: fees is something you need to consider and see what
• 5:20
  Speaker 3: they're what's included in that, And then routine maintenance. I
• 5:24
  Speaker 3: most recently was consulting with someone and they have to
• 5:27
  Speaker 3: get an entire new HVAC system. They got a quote
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  Speaker 3: for twenty thousand dollars. Like, you can't call the landlord.
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  Speaker 3: You are the landlord. You are in charge of those
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  Speaker 3: fee of that maintenance. So getting routine maintenance on your
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  Speaker 3: property and accounting for those additional expenses. I hate to
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  Speaker 3: scare people. Everybody has this scare tactic. I'm gonna tell you,
• 5:51
  Speaker 3: and this is not even like. Look into any type
• 5:55
  Speaker 3: of home warranty companies that offer complete protection. So when
• 5:59
  Speaker 3: you get a home warn company that helps you with
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  Speaker 3: the room team maintenance. So instead of you being responsible
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  Speaker 3: for that twenty thousand dollars fee to replace the system,
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  Speaker 3: if you were paying a monthly fee into a home
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  Speaker 3: warranty company, then you could call them the same way
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  Speaker 3: you would call your landlord. Why do I want to
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  Speaker 3: say this because I'm sick of people try to scare
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  Speaker 3: people into not owning a home, saying my landlord can
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  Speaker 3: pay for that. Well, if you were paying a fifty
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  Speaker 3: dollars fee per month and your HVAC system went out tomorrow,
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  Speaker 3: you would be able to call your home warranty company
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  Speaker 3: to cover it. So don't allow these expenses to scare you.
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  Speaker 3: But be very aware that these expenses are there. So
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  Speaker 3: your job is to protect yourself. So again, unexpected expenses
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  Speaker 3: are going to happen. You're going to have to get
• 6:39
  Speaker 3: your gutters cleaned every year. You're going to have to
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  Speaker 3: get your extere of your property pressure washed every year.
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  Speaker 3: Some people do it every quarter. You have to consider
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  Speaker 3: that you want a home inspector to come inspect your
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  Speaker 3: property every single year, not just when you buy the home.
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  Speaker 3: When you initially buy the home, you do get a
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  Speaker 3: home inspection because you're negotiating with the seller for any
• 6:58
  Speaker 3: defects in the property and you don't want to purchase
• 7:00
  Speaker 3: a property with the defect. But what happens when you
• 7:03
  Speaker 3: live in a home. There could be underground links that
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  Speaker 3: you are not aware of that continue to happen. Your
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  Speaker 3: HVAC could be at the bottom of like at the
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  Speaker 3: end of its lifespan. So you get a home inspection
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  Speaker 3: every single year. That's about five or six hundred dollars.
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  Speaker 3: But what it does is preventative maintenance. That preventative maintenance
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  Speaker 3: now you can call your home warranty and your handyman
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  Speaker 3: to address issues before they become too expensive. No one
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  Speaker 3: talks about that type of maintenance, but that's what it
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  Speaker 3: requires to maintain a home. So outside of that, you
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  Speaker 3: have the utilities, you have the just maintaining the integrity
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  Speaker 3: of your property. But then you also got to account
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  Speaker 3: for certain things. And I'm going to focus on single
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  Speaker 3: family homes because it's completely different maintenance than having a condo.
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  Speaker 3: A single family home, you may want to take into
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  Speaker 3: your budget, at what point do I have to replace
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  Speaker 3: the roof? And an average roof span is fifteen to
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  Speaker 3: twenty five years, so you have to think about that.
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  Speaker 3: At what point do I have to replace the hvac system?
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  Speaker 3: They keep changing the free on and the diferent things
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  Speaker 3: in the HVAC system. That's typically five to ten years.
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  Speaker 3: Some of them are saying twenty years. So what you
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  Speaker 3: want to do is budget that get and I will
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  Speaker 3: not stress this enough, get a home warranty. Get a
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  Speaker 3: home warranty, and then make sure when you purchase your
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  Speaker 3: property you're getting scheduled and consistent maintenance of your home that.
• 8:20
  Speaker 1: Is not There's a part here, like we talked about
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  Speaker 1: the homeowners insurance, but most people don't know about mortgage insurance.
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  Speaker 1: And I'm assuming if a lot of people are doing
• 8:29
  Speaker 1: being first time home owners and they don't have the
• 8:32
  Speaker 1: twenty five percent down payment or twenty percent down payment,
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  Speaker 1: they're going to flow in this category. So talk about
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  Speaker 1: what that is and kind of give it like an
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  Speaker 1: explanation of what mortgage insurance actually entails.
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  Speaker 3: Yeah, so mortgage insurance covers the lender. Mortgage insurance does
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  Speaker 3: not cover your property. It covers the lender in case
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  Speaker 3: you default on the loan. So when you're paying mortgage insurance,
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  Speaker 3: a lot of people are like, do I have to
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  Speaker 3: pay it? Yes, you have to pay mortgage insurance unless
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  Speaker 3: you're putting twenty percent down. If you're putting less than
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  Speaker 3: twenty percent down. At some point, though, what does happen?
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  Speaker 3: You do pay the private mortgage insurance. But at some
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  Speaker 3: point when you have invested more than twenty percent towards
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  Speaker 3: the principle of your mortgage, you can actually call your
• 9:15
  Speaker 3: mortgage lender and say, hey, I have invested this much.
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  Speaker 3: I want the mortgage insurance to come off. The mortgage
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  Speaker 3: insurance will not cover your house if it's damaged. The
• 9:24
  Speaker 3: mortgage surance insurance doesn't cover your house, God forbid, if
• 9:27
  Speaker 3: there's a fire. It only covers the lender because the
• 9:31
  Speaker 3: lender is taking a chance on you because you don't
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  Speaker 3: have enough skin in the game. You have enough skin
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  Speaker 3: in the game for them to say, hey, we're going
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  Speaker 3: to give you this mortgage, but you're putting less than
• 9:42
  Speaker 3: twenty percent down, So we need insurance on top of
• 9:45
  Speaker 3: what on top of what we're giving you, just in
• 9:48
  Speaker 3: case you default and you cannot satisfy the loan. That
• 9:51
  Speaker 3: is what mortgage insurance is, and you can't get around it.
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  Speaker 2: So what's some best practices as far as for the
• 9:57
  Speaker 2: homeowners insurance?
• 9:58
  Speaker 3: Right?
• 9:58
  Speaker 2: For the homeowner insurance, what's best practice that people should
• 10:01
  Speaker 2: be aware of getting homeowner insurance policy?
• 10:05
  Speaker 3: You get what you pay for cheaper is not always better.
• 10:09
  Speaker 3: And I feel like oftentimes when you're shopping with different
• 10:12
  Speaker 3: home insurance companies, and I have great relationships with homeowners
• 10:15
  Speaker 3: insurance companies, you're just thinking this is going to affect
• 10:18
  Speaker 3: my monthly payment. It is. They take the calculation of
• 10:22
  Speaker 3: what it will cost you for twelve months and then
• 10:24
  Speaker 3: you're paying on it every single month as a part
• 10:26
  Speaker 3: of your ES growth. Your ES grows include your insurance
• 10:29
  Speaker 3: and your taxes. Right, So when you're thinking about, okay,
• 10:32
  Speaker 3: I have to pay this amount, I would say shop
• 10:36
  Speaker 3: and tell them the truth. If you have three Rolex
• 10:39
  Speaker 3: rotches in the house, right, and you just did an
• 10:42
  Speaker 3: upgrade in your kitchen and did soft clothed cabinets and
• 10:45
  Speaker 3: Wolf appliances. You need to tell your insurance company about this,
• 10:49
  Speaker 3: because what happens is you're getting insured that the house
• 10:51
  Speaker 3: will say you buy a house with you know ge appliances.
• 10:54
  Speaker 3: You're just happy to own a home. You read the
• 10:57
  Speaker 3: book I Deserve to Be Rich. You do a stock
• 11:01
  Speaker 3: option play, and now you want to renovate your kitchen
• 11:03
  Speaker 3: now and you go and do this whole renovation. It's
• 11:06
  Speaker 3: one hundred thousand dollars renovation, and you don't report it
• 11:09
  Speaker 3: to your homeowners insurance company. What happens in the interim
• 11:12
  Speaker 3: if your house catches on fire, like I said, like
• 11:14
  Speaker 3: what happened in La and things like that, if you
• 11:16
  Speaker 3: never paid the difference in that cost, it's not covered.
• 11:19
  Speaker 3: So that's why keeping up with your homeowner's insurance and
• 11:22
  Speaker 3: making sure that you tell your preferred insurance agency the
• 11:26
  Speaker 3: truth about your assets. They can understand how much it
• 11:30
  Speaker 3: would cost to actually rebuild the property. Because there's different
• 11:34
  Speaker 3: levels to insurance, cheaper is never better. I will always say,
• 11:37
  Speaker 3: be educated about the level of insurance that you receive
• 11:40
  Speaker 3: so in case something happens, because that is what insurance
• 11:43
  Speaker 3: is for your cover.
• 11:45
  Speaker 2: And then also it's important because they had a study
• 11:48
  Speaker 2: that like I think thirty percent of homeowners actually they're
• 11:50
  Speaker 2: paying more money and all the ancillary stuff than the
• 11:53
  Speaker 2: actual mortgage. So you got to have a budget. You
• 11:57
  Speaker 2: got to have an idea of how much money you're
• 11:59
  Speaker 2: going to spend because if not, if your budget is
• 12:02
  Speaker 2: like twenty five hundred and your mortgage is two thousand,
• 12:04
  Speaker 2: you think that I got a five hundred dollars surplus.
• 12:07
  Speaker 2: But then when you add all these utilities and the taxes,
• 12:10
  Speaker 2: and then the insurance and then you know maintenance upkeep,
• 12:15
  Speaker 2: and the budget is actually your two thousand dollars a
• 12:18
  Speaker 2: month mortgage actually turns into forty five hundred dollars a
• 12:21
  Speaker 2: month that you actually end up spending. That causes a
• 12:25
  Speaker 2: lot of problems.
• 12:26
  Speaker 1: Yeah, and one of those taxes that I don't even
• 12:28
  Speaker 1: see in there is school tax. Right, Like everybody wants
• 12:31
  Speaker 1: to live in a great neighborhood and go to the
• 12:33
  Speaker 1: great school. Well that cost and so that that's something
• 12:36
  Speaker 1: that's getting paid semi annuary or sometimes quarterly. So just
• 12:41
  Speaker 1: keep that in mind, like when you want to move
• 12:42
  Speaker 1: to that great neighborhood, because it's preceded school. The people
• 12:45
  Speaker 1: that own property there, they're paying school taxes, which is
• 12:48
  Speaker 1: another amount that you're gonna have to put into that
• 12:50
  Speaker 1: that budget that you apparently thought you had when you
• 12:53
  Speaker 1: were starting to buying process.
• 12:55
  Speaker 3: Oh and this is one thing I want to tell
• 12:57
  Speaker 3: you guys that I'm a I'm a professional, right, so
• 12:59
  Speaker 3: this should that happened to me, But it happened to
• 13:01
  Speaker 3: me too. With homeowners insurance one of my investment properties.
• 13:05
  Speaker 3: I'm just like, why is this monthly note so high?
• 13:08
  Speaker 3: What happened? Right? I did put down twenty percent, so
• 13:11
  Speaker 3: I just pay yearly. I pay annually. And it slipped
• 13:15
  Speaker 3: my mind to renegotiate the terms of my homeowner's insurance policy.
• 13:20
  Speaker 3: So they increased my homeowner's insurance policy beyond the limit
• 13:24
  Speaker 3: that I wanted, was comfortable with. So always remember you
• 13:27
  Speaker 3: have to advocate for yourself and every year when it's
• 13:30
  Speaker 3: time to renew that policy. You do know, you don't
• 13:33
  Speaker 3: have to be stuck with who you started with. You
• 13:35
  Speaker 3: can actually shop around. Let them know you're shopping around,
• 13:38
  Speaker 3: Shop three different people. Tell them you're shopping. Get the
• 13:42
  Speaker 3: lowest rate, and then every but get the lowest rate
• 13:44
  Speaker 3: that has the highest coverage. Let me say that one
• 13:46
  Speaker 3: more time. Get the lowest rate, that has the highest coverage,
• 13:50
  Speaker 3: and that will help with controlling your overhead expenses.
• 13:54
  Speaker 1: Timely importantly important.
• 13:55
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