Dallas Home Appraisals News and Information

Attended a networking meeting yesterday with an interesting presentation from a State Farm agent (dandantheinsuranceman.com) that I've been very impressed with.  He really seems to be all about the client, both from the way he presents his products as well as feedback from people who have either used him or worked with him.  Dan is quick to say that State Farm does not always have the cheapest rates, but he is happy to talk with anyone about what he can offer through State Farm with no pressure and understanding if you choose to go elsewhere. 

The presentation was on Long-Term Care insurance.  This is a relatively new type of coverage (maybe 10 or so years old) that is intended to pay for long- term care (LTC) should you become disabled or incapacitated due to accident, old age or any other chronic (or even temporary) condition.  Some important points were:  1) 42% of people receiving LTC are between the ages of 18-64; 2) LTC includes not only care in a residential facility but also in-home care and assistance; 3) all LTC policies are not created equal and due diligence is essential; 4) a LTC policy can keep you and your family from going bankrupt to pay for long-term care and offer you choice and dignity in the type of care you receive; and 5) the younger (and healthier) you are when you purchase a LTC policy the less your premiums are likely to be, and premium increases are figured at the age you were when you purchased your policy as opposed to your age at the time of any increase - and apparently increases can be fairly frequent regardless of who you buy from.

Long-Term Care Policy premiums are not inexpensive.  For a good policy with adequate benefits and inflation protection you could well pay $100 per month.  For a couple, make it $200.  Add this to what you are paying in life insurance, auto insurance, homeowner or renter insurance, and health and disability insurance if you are self-employed, and you could be paying - conservatively for a family of 4 - $2000 per month in insurance premiums, give or take.

And this is what led to the connection between Long-Term Care insurance and your mortgage.  Especially with many first-time buyers scrambling to close on a house before December 1 in order to receive the $8000 tax credit, it is important to consider all of your costs when you think about how much mortgage you can afford.  You should not take on more mortgage (including PMI if necessary, annual property tax escrow or payments, homeowners insurance and maintenance) than you can afford while still paying for the coverages you need to keep you and your family safe, healthy and out of bankruptcy should the unexpected occur.

When you think about your mortgage payment, add in PMI, 1/12 or your annual property taxes, 1/12 of your home insurance, and 1/12 of annual maintenance costs (including larger repairs and minor upkeep like lawn, landscaping, cleaning) to come up with what you will need monthly to own the home.  Then, if you find the number is too high, think hard before you sacrifice Long-Term Care Insurance or Life Insurance or other important coverage in order to fit your home costs into your budget.  If you can't find other ways to cut the budget without eliminating insurance coverages, you might want to consider buying less house.  As we've said often, just because the calculator says you can afford a certain price doesn't mean you should!

Dan's information certainly made us think long and hard about how we're making our own financial compromises and the danger of "robbing Peter to pay Paul."  We are among those who have thought that we have plenty of time to think about Long-Term Care, but after hearing the facts we are now exploring our LTC insurance options.

For more information about LTC Insurance, click here or contact Dan by clicking on his web-link above.  For information about the current market value of a property you are considering buying or selling, or for a referral to one of our trusted brokers or lenders, please contact us at Blue Star Appraisals Inc.!