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If you are a first-time homebuyer in Alabama, congratulations! You probably learned how cheap renters insurance can actually help you save for your first home purchase and now you are starting out on an exciting journey. The home buying process can be a bit overwhelming, but we can help take some of the stress away with good information. Let’s look at what you should know as a first-time homebuyer — from looking for your first home to getting home insurance in Alabama.

Should a First-Time Homebuyer Learn About Mortgages Before House Shopping?

Yes. It will be important as a first-time homebuyer to learn about different types of mortgages as well as have your personal finance ducks in a row. Start by collecting information regarding your current earnings, assets that you own (e.g., savings accounts, 401k, etc.), any debt that you owe, and your credit report (each person has one of these — if you are shopping as a couple, check both).

Learn what your current credit score is and how to keep it as high as possible. Your credit score is a three-digit number from one of the three national credit bureaus (Equifax, Experian, and TransUnion) that is a snapshot of how likely you are to pay off your debts in a timely manner (i.e., how good of a credit risk you are).

Information like what credit cards you have, how much of your available credit you currently use, what is the age of your oldest credit (i.e., how many years have you had experience managing your credit), and whether you have ever made late payments are factored into that number. Federal law gives you the right to get a free copy of your credit report every 12 months from each of the three credit bureaus.

Educate yourself about mortgages and do your homework ahead of time. You will be better prepared to buy your home when the time comes.

Should a First-Time Homebuyer in Alabama Get a House Inspected?

Yes. Once you have made an offer on a house and it has been accepted, make sure to get a reputable house inspector to go over everything from the basement to the roof and provide you with a detailed written report with photos. You will have to pay for the inspection, but if there is anything wrong with the house, you can renegotiate the price down to absorb the costs of needed repairs. Inspections aren’t just for first-time homebuyers, they’re for everyone.

When Do First-Time Homebuyers Need to Get Home Insurance?

Your house will need to be covered by a policy to close on the sale, so it is best to start shopping for home insurance about 30 days in advance of closing. This will give you time to research what is available and find affordable homeowners insurance in Alabama. Especially as a first-time homebuyer, you don’t want to create additional stress by waiting until the last minute.

What Do I Need to Know About Homeowners Insurance in Alabama?

You will need to understand what the homeowners insurance policy covers, that the coverage is sufficient for your needs, how much the deductible will be, how much the premium will be, and that the policy is a good deal for your money. There is a lot to unpack from this statement, so let’s take a closer look at three (3) important home insurance policy facts.

1. What Does a Homeowners Insurance Policy Cover?

Homeowners insurance provides coverage to repair or replace your home and its contents in the event of damage. Just like with your renters insurance policy, this can include damage from things like fire, smoke, wind or hail, as well as theft or vandalism. You are also typically covered for expenses like a hotel while your home is being rebuilt or repaired and reimbursement for medical expenses and legal fees if a guest in your home is injured on the property.

It’s important to understand the difference between replacement value and actual cash value with respect to homeowners insurance. Replacement value means the cost to replace everything. Actual cash value would give you only the current market value of what was lost (which could be significantly less than the cost to buy the same item new).

It’s also important as a first-time homebuyer to understand what your policy doesn’t cover. For example, things like mold damage, roof leaks, and water damage are covered by some policies but not others. So before you buy a homeowners insurance policy, make sure you know exactly what you are buying and exactly how it will protect you.

2. How Much Should the Deductible on a Homeowners Insurance Policy Be?

The deductible is the amount of money that you would have to pay toward any repairs before your home insurance policy starts paying. For example, if you have a $1,000 deductible and have $10,000 worth of damage from a fire, you will pay $1,000 and the insurance company would pay $9,000. Choosing a higher deductible can reduce the cost of your insurance premium, but as a first-time homebuyer, you need to make sure that you will be okay in the event of an emergency and can come up with that higher deductible if necessary.

3. How Do I Know If I Am Getting a Good Rate on Homeowners Insurance in Alabama?

Always get more than one quote and ask a trusted homeowner for advice. Make sure that you sign up with a reputable insurance company that has a good track record. First-time homebuyers should ask questions, including how long they have been in business, how long have they been available in Alabama, and whether they have local offices with local agents you can meet with face to face.

It’s always a good idea to shop around and compare quotes, just make sure you are comparing apples to apples. In other words, make a list so that all of your possibilities are quoting you a policy for the same things.

When Should I Make a Claim on My Homeowners Insurance in Alabama?

Homeowners insurance is for big-ticket items. If you have damage to your home that you believe would be covered by your home insurance policy, do your best to figure out how expensive it will be. Be aware that after you make an insurance claim your insurance premium will more than likely increase as a result. If you need a new roof because of a hailstorm, make a claim. If you have a $1,000 deductible and $1,200 worth of damage, it’s probably not worth it.

Still Saving for That Big Purchase? Find Affordable Renters Insurance in Alabama For Now

At USAgencies, our agents are skilled at helping renters find the right renters insurance for them and their budget while they are saving up for their first home purchase. You can get a quick online renters insurance quote, call us at (800) 420-3712, or visit the USAgencies location closest to you in Alabama and Louisiana!