Imagine starting the new year with the unexpected news that your homeowner’s insurance premium has gone up. This scenario is all too common and can prompt homeowners to search for more affordable options. While finding a cheaper policy may seem like a relief to your budget, it’s a decision that shouldn’t be made hastily.  

The allure of lower premiums can often overshadow the critical evaluation of what the new policy actually covers compared to your existing one. It’s essential to scrutinize the details of the new policy to ensure that in the pursuit of saving money now, you’re not setting yourself up for unwelcome surprises later. This article will guide you through the importance of comparing new policy coverage with your current one, emphasizing why cheaper isn’t always better when it comes to protecting your home. 

Homeowner Considerations: Low Premiums vs. Adequate Coverage 

A low premium is often the result of reduced coverage limits, higher deductibles, or exclusions of certain types of damage. While the initial savings can be appealing, it’s crucial to assess whether the policy fully meets your needs. 

Consider a scenario where a homeowner chooses a homeowner’s insurance policy with a significantly lower premium, attracted by the immediate savings. The lower premium, however, is the result of a much higher deductible – the amount the homeowner must pay out of pocket before insurance coverage kicks in. 

For instance, if the policy has a $5,000 deductible instead of a more typical $1,000 to $1,500 deductible, it means that in the event of a claim, such as storm damage to the roof, the homeowner is responsible for the first $5,000 of repair costs. This can be a substantial financial burden, especially if the homeowner is not prepared for such out-of-pocket expenses. 

In this case, the initial savings on the premium could be quickly offset by just a single incident, making the policy less beneficial in the long run.  While having a higher deductible could be a good option for lowering the premium, it only works if the homeowner has enough emergency funds to cover the deductible.  Therefore, it is important to carefully consider the trade-off between lower premiums and higher deductibles when choosing homeowner’s insurance. 

Key Coverage to Consider

When evaluating a homeowner’s insurance policy, there are several key coverages that are essential to ensure comprehensive protection for your property and financial security. Below are five important coverages to consider. 

Dwelling Coverage

This is the cornerstone of a homeowner’s insurance policy, providing protection for the physical structure of your home against damage from covered perils such as fire, windstorms, hail, and other natural disasters. It’s crucial to ensure the coverage amount accurately reflects the cost of rebuilding your home, not just its market value. 

Personal Property Coverage

This coverage protects the contents of your home, including furniture, electronics, and personal belongings, against theft, loss, or damage. It’s important to understand whether your policy offers actual cash value (the item’s depreciated value) or replacement cost coverage (the cost to replace the item without deduction for depreciation).

Liability Protection

Liability coverage is essential for protecting yourself financially if someone is injured on your property or if you’re responsible for damage to someone else’s property. It covers legal fees, medical bills, and damages, providing a critical safety net against claims that could otherwise be financially devastating.

Additional Living Expenses (ALE)

Also known as Loss of Use coverage, ALE pays for your temporary living expenses if your home becomes uninhabitable due to a covered loss. This can include hotel bills, meals, and other living expenses while your home is being repaired or rebuilt.

Medical Payments Coverage

This coverage pays for medical expenses if someone gets injured on your property, regardless of fault. It’s designed to cover smaller claims and can help prevent larger liability claims. 

Making an Informed Decision: 5 Tips for Choosing Homeowner’s Insurance 

When comparing policies, consider the long-term implications of your coverage choices. It’s advisable to work with an insurance agent who can clarify the nuances of different policies and help you make an informed decision. 

1. Assess Your Needs: Consider the specific risks your home faces, such as natural disasters, and ensure your policy addresses those risks. 
2. Understand Policy Details: Know the difference between replacement cost and actual cash value coverage, and choose what’s best for your situation. 
3. Look for Discounts: Many insurers offer discounts for home security systems, smoke detectors, and more. These can lower your premium without compromising coverage.
4. Read Reviews and Ratings: Research potential insurers’ customer service and claims response records to choose a company that stands by its policyholders.
5. Consult with an Insurance Agent: A professional can help navigate the complexities of homeowner’s insurance, ensuring you get the best coverage for your needs.

The temptation to cut costs with lower premiums is understandable, yet the true value of a homeowner’s insurance policy lies beyond just the price tag. It’s crucial to delve into the specifics of what each policy covers and, perhaps more importantly, what it doesn’t. A comprehensive approach to selecting your homeowner’s insurance—factoring in your unique coverage needs alongside policy details—enables you to secure not just a cost-effective option, but one that genuinely safeguards your home. This thorough comparison ensures that you’re investing in robust protection for your property, offering not only financial savings but also invaluable peace of mind. 

At The Callaway Bank, we understand the challenges of being a homeowner. From buying a property to refinancing, our knowledgable bankers and lenders are here to simplify the process. Reach out today for personalized assistance!

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What Homeowners Need to Know About Reducing Mortgage Mail Fraud

Whether you’re closing on a home or purchased it decades ago, receiving regular updates from your lender is expected throughout the duration of the mortgage. Unfortunately, third-party companies have begun targeting this relationship and sending out large amounts of home loan-based junk mail. These postcards and letters often appear to be from your mortgage lender or another official organization, which can cause confusion and even put you at risk for fraud. Here’s a closer look at who’s sending these documents and how to stop it.

Read More: How to Reduce Mortgage Junk Mail

Where Are These Mortgage Postcards & Letters Coming From?

Some of the companies behind the junk mail are legally legitimate businesses, such as financial lenders and warranty companies. However, they often utilize deceptive practices to get the attention of homeowners across Boone and Callaway counties, such as printing the originating bank’s name on the postcard and adding an account number. Fraudsters also follow the same strategy but operate completely illegally. For example, they may pose as the bank itself.

 The goal of these documents is usually always financial, but they go about it in a few different ways.

The goal of these documents is usually always financial, but they go about it in a few different ways. They may suggest important documents need filing or a payment is due or past due, requesting that you call them as soon as possible. Offering help to prevent foreclosure is another common tactic, along with mortgage modifications, like promise of a lower interest rate.

In most cases, they present just enough detail to lure the homeowner into contacting them in order to convince the homeowner to sign up for an unnecessary service or refinance with their company, which is usually accompanied by substantial fees. If there’s not a legitimate business behind it, the fraudsters may request a wire transfer or pre-emptive payment to steal funds directly.

How Do They Get Homeowner Information?

Applying for a mortgage involves providing an incredible amount of personal detail. At The Callaway Bank, we keep all these details private and protected, never sharing or distributing the data to non-affiliates. However, the purchase becomes public record at closing. As a result, elements included in the deed transfer are easily obtainable through the state or local recorder’s office, including name and location of property. Third parties can pull the information and sell it to other companies or use it themselves for mailers.

New loans, like a mortgage, are also reported to the main credit bureaus: Experian, TransUnion, Equifax, and Innovis. Unfortunately, these credit bureaus often sell personal data to third parties. As such, other companies can pay to access your details, like age, property information, and lender name, and use it for their own gain.

How to Identify Third-Party Loan Mailers in Mid-Missouri

A major challenge with mortgage junk mail is that the third-party companies replicate the look of official documents. Luckily, there are a few common signs that indicate potential spam or fraudulent materials.

Bright Colors

Typically, banking documents are printed on white or neutral backgrounds. Third-party mailers, on the other hand, may utilize bright colors to catch your attention. Approach red, yellow, and other abnormal shades with caution.

Incorrect Account Information

It’s also common for these documents to list an account number, which makes them appear official. However, it’s seldom the same as the actual home loan account. As such, always be sure to check the number before taking any further steps.

 For that reason, prominent words on the postcard or envelope are likely to evoke panic, like “important”, “urgent”, “time sensitive”, and “final notice”.

Alarming Terms

These home loan mailers are designed to prompt the reader to action. For that reason, prominent words on the postcard or envelope are likely to evoke panic, like “important”, “urgent”, “time sensitive”, and “final notice”. Such terms may be bolded and in larger font than the rest of the text to catch the reader’s attention.

Disclaimer

It’s illegal for these non-affiliate companies to pose as the mortgage lender. Yet, they often mention the name of the bank to confuse readers into thinking they’re directly associated with the financial institution. To prevent such tactics from getting them into legal trouble, they may place a disclaimer on the mailer. Typically, it’s in small print and overshadowed by other elements, so complete a thorough document inspection to identify if such a statement is present.

How to Protect Your Information

While it may not be possible to avoid unsolicited mailings altogether, there are a few methods that can reduce unwanted contacts.

Sign Up Online

Consumers have the option to opt-out of pre-screening offers based on credit report information through OptOutPrescreen.com – the official website used by the top four credit bureaus in the U.S. The service allows users to request a temporary five-year ban on data release directly through their website. Simply fill out their online form and provide personal details, like name, address, date of birth, and Social Security number. This step can also help reduce unwanted phone calls.

Permanent Removal

The service also offers a permanent removal option. To opt-out out of their pre-screening offers forever, download the paperwork and mail it in. Once completed, it’s possible to go back and opt-in again through the website.

Reduce Junk Mail

The Direct Marketing Association also allows registrants to specify what – if any – types of marketing-based mail they want to receive, including catalogs. While the junk-mail-suppression service promises 10 years of relief, it requires a sign-up fee. It also isn’t likely to impact any fraudulent senders.

How Your Local Bank Can Help

At The Callaway Bank, we take extensive steps to protect our customers’ data. For example, our fraud prevention system monitors and flags unusual banking patterns to stop fraudsters in their tracks. Our local bank’s Digital Banking solutions also add an extra layer of protection by requiring a secure access code when logging in on-top of utilizing unique username and password details.

Additionally, if you do receive any strange or suspected spam mail, our dedicated bankers are available to check the document’s validity to provide you with peace of mind.

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The best partnerships are the ones that support you from beginning to end. Building your forever home is no small feat. It will take some effort, but at the finish line you will be able to step foot inside the home you’ve always envisioned – and that feeling is priceless.

Whether renovating your current home or building from the ground up, navigating the finances of homeownership can be daunting. But rest assured, we are with you every step of the way. As your community bank, we want to help our neighbors navigate the home construction loan process or work with you to get the best possible mortgage quote. We provide a judgment-free zone and believe no question should go unanswered. We are dedicated to investing all the time in the world into your process, making sure you feel comfortable and secure in your buying or building process. We are here to help in any way we can. Your perfect home doesn’t need to be a dream, you deserve to make it a reality.

The first step to bringing your forever home to life is planning. By partnering with The Callaway Bank, we can assist you in preparing your financial needs for the big build or purchase. As experts with home construction loans and mortgage quotes, we are ready to break down all the numbers and figures to help you where you are wanting to go.

Tips on Crafting Your Forever Home – The First Time

Few things are forever, but your home can be one of them. It is important when creating your dream home to avoid planning around what’s trendy right now, but focus on what will still be fashionable 10, 20, or 30 years from today. The point of a forever home is for it to be constructed inside and out, in a way that the homeowner will always love the space. We’ve helped many individuals and families secure a home construction loan or receive a favorable mortgage quote that has enabled them to finally have the home of their dreams. Throughout the years, we’ve been able to take a few notes and highlight some home design areas to be conscious of when renovating or building your home.

Your Family’s Life Cycle

Homes need to be flexible and adaptable to the needs of a family. If you have kids running around the house and dogs chasing after tennis balls, it might be best to consider emphasizing open living spaces. Large living rooms and finished basements offer kids and pets plenty of room to play and enjoy the inside of your home. Later in life, your body may have issues climbing stairs – which can become both an inconvenience and a hazard. Keep this in mind and design the main floor of your home to fit your needs as you age.

The Perfect Kitchen

Outside of the bedroom, the kitchen is often the section of the home that people spend the most time in. From socializing to cooking, the kitchen plays an important role in the functionality and livelihood of a home. A few things to consider when crafting a kitchen are to ensure that enough lighting is available: both natural and artificial. Always build more counter space than you think you’ll need – because you will definitely need it. It’s also affordable these days to upgrade from laminate countertops. Stone and solid surface options are more widely used and appealing for your forever home. Additionally, cabinets can make or break the aesthetic of a kitchen, so use your best judgment and design with coloring that will remain timeless.

Think Green, Be Green

We all care about the world we live in, and we all care about our bills. Consider making your dream home as environmentally friendly as possible – lowering your carbon footprint and reducing high costing utility bills. As technology and homebuilding improve over the decades, homes will grow more efficient in how they use energy. Therefore, designing your forever home with the most up-to-date “green technology” today will limit your need to make improvements in the future. Installing energy-saving windows, adding a solar panel or two to your roof, and insulating ductwork will all pay dividends down the road.

The Right Floors For Your Feet

Flooring is a big decision. It is one of the main components of a home’s look and feel. Carpeting is affordable and soft to the touch – great for kids! However, they attract messes and stains and are often difficult to clean. Hardwood floors are loved for their beauty and longevity but often run pretty pricey per square foot. If you do decide to go the hardwood route, pick a harder wood like maple or bamboo in order to protect it from years of wear and tear.

Ultimately, you’ll need to ask, what fits your budget. Depending on the size of your home, flooring costs can eat up a significant portion of your money. Therefore, be mindful of what aligns with your costs right now – flooring can always be updated at a later date.

Windows – Your Soul Needs Them

Natural sunlight is proven to be essential to your physical and mental health. Homes that prioritize the use of natural light, bring the outdoors – inside. These homes also see a reduction in electric costs. Incorporating well-staged windows in the home’s most trafficked areas like the living room and kitchen are important to the livability of these areas. When laying out your dream home, don’t overlook the need to include enough natural lighting.

Ready To Build Your Dream Home? We’re Here For You

By now you probably have a picture of your dream home in your head. You may have even a few 3D sketches drawn up. If so, that’s great! Your forever home does not have to be a fantasy. With a partner like The Callaway Bank, you can make it a reality. We can help with the home construction loan process and guide you on common hurdles. We’re one of a few banks in the area that specialize in home construction loans. Or if your dream home already exists and you just need the right financing package, we can work with you to find a mortgage quote that makes it possible.

By working closely with you and your budget, we can help craft a plan that makes your dollars and cents work toward completing your dream home. We’re here for you and the moments that matter. Let’s build it together.

Click here for more information and helpful tips on using a construction loan to build your dream home.

When looking for mortgage rates in Columbia, MO, most people want to know about how to get the best rates for their new homes or condos. As home buyers, we all want to find a good deal with favorable financing and with a loan partner we can trust. When looking for a mortgage quote in Columbia, MO home seekers should consider the following list of tips for finding the best financing option.

First, meet with a Mortgage Lender early in the process. It’s important to understand your financial records and credit reports before you start looking for a house. Mortgage quotes are largely calculated based on your current financial standing and past credit history. Therefore, if work needs to be done to repair or improve your finances, it is best to know as soon as possible. A good lender will be able to help suggest ways to improve your financial situation and enhance your application when it comes time to apply for a mortgage quote.

Little things that frequently come up that harm an individual’s credit include:

• A store credit card that has a past due balance on it
• A small amount that went to collections
• Somebody else’s credit incident that has appeared on your credit record

By working with a mortgage lender like The Callaway Bank, you can gain guidance in clearing these things up before you apply for a loan, which can help to avoid a higher interest rate — ultimately saving you money.

Working with a lender months before you need a mortgage is also a great way to set expectations about what you can afford and what different mortgage rates can do to your monthly payment. A lender can run through different scenarios about the lengths of the loan and the kinds of interest rates that can be applied to mortgages.

Another advantage is that you can understand what the current mortgage rates are and how they might fluctuate over the next few months. Using this information to time your purchase can easily change how much you wind up paying.

The Right Mortgage Lender in Columbia, MO

The Callaway Bank is ready to help you with your mortgage quote, and hopefully get you approved to purchase the home you deserve. Our expert lending team works with individuals and families throughout the Columbia area. As your neighbors, we want to continue seeing our community grow and develop — and homeownership is a key piece to the puzzle. We help people secure mortgage quotes every week that help them start the next chapter of their lives.

Contact a Mortgage Lender today to start your mortgage quote journey. As the oldest independent community bank in Missouri, The Callaway Bank combines old-fashioned values like fairness, integrity, honesty, and respect with modern banking products and services. Our customers have been our greatest assets since 1857.

The Callaway Bank is an equal housing lender.

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When the houses on the market don’t measure up to what you’re looking for in a home, building your own can be a great option. With a New Home Construction Loan from The Callaway Bank, you can design your own unique space that’s perfectly suited to your wants and needs.

The opportunity to build your own home to match your specific taste and functional needs is exciting! It’s actually a dream come true for most! So when it comes time to finance this project, our expert Mortgage Lenders are ready to make your home construction journey a breeze. We work to simplify the process as much as possible and provide you with the best lending options to get your new home built and ready for you to move in.

While we can’t say if you should go with brass, silver, or gold fixtures, we can help make your Home Construction Loan process as pain-free as possible.

Understanding a New Home Construction Loan

Many people don’t realize that getting financing for new construction requires two loans: first the construction loan itself, and then the mortgage for the completed house. A construction loan is a short-term, interim loan used for new home construction, and once the house is completed, you work out permanent financing.

Having two loans means double the closing costs, which include the origination fee, appraisal, title work, etc. However, on the permanent loan, we do reduce some of those fees because some of the work is done with the initial construction loan.

For instance, the origination fee is 50 percent of the normal charge the second time around. If completion is within 12 months of construction, we may not have to do a full appraisal and can do a completion certification at a reduced rate. Those things help make the process a little easier for borrowers.

Down payment requirements for New Home Construction Loans are also different from other home loans. We typically lend up to 80 percent of the appraised value on a construction loan, whereas on a purchase of an existing home, we can lend up to 100 percent on some loan types.

The down payment for a construction loan can be difficult for some borrowers unless they have equity in the property they are building on, or have cash in hand. They can also build up “sweat” equity by building the house themselves and saving on labor costs they would otherwise incur as construction labor. This financial hurdle is a large reason some choose to avoid home construction loans and opt for a home loan on an existing home — giving them more financing flexibility. 

How to Know If You’re a Good Candidate for a New Home Construction Loan

When you apply for a loan, the most important things we’ll look at are your credit and debt-to-income ratio. It also helps if you have money set aside in savings, because it’s likely you’ll need to put some of your own funds into the completion of the project.

It makes it easier if a borrower has either been given the land or bought it several years before and paid it off or down quite a bit to build up equity. This can essentially be your down payment instead of cash. Keep in mind that job changes or big financial changes like starting a business during construction are not a good idea, as these can cause problems with the final loan. 

In general, the 28 percent rule exists as a yard marker for individuals looking to obtain a home loan. The rule advises that your monthly mortgage payment should not exceed 28 percent of your gross monthly income. Sitting down and talking with your financial advisor, spouse, or friend, is helpful in mapping out what kind of budget makes the most sense for you, your financial obligations, and your lifestyle. From there, you can then make an informed decision when seeking a construction loan from a lender.

If, after reading this, you think you’re in good shape, you can start the process of applying for a New Home Construction Loan!

Taking Those First Steps

The first step is submitting an application for a Fast Mortgage Quote so we can check on your credit and your debt-to-income ratio. At the application stage or soon after, we will request bids, plans, or estimates for the new home and from the contractors involved. You can’t plan for everything (and borrowers will often make changes during construction), but we try to limit complications by getting all this information ahead of time.

Once you submit an application, you can look at acquiring the land if you do not already own it, and then start on the house plans, bids, and estimates from contractors. Do thorough research and get several bids to be sure you are getting what you expect at an appropriate price. Be sure to find a builder you not only trust but can also communicate with well.

A good relationship can save you from serious problems popping up in the middle of construction. You want to be on the same page with your builder before you break ground. Construction is generally a short-term, interim process and a large investment for the borrower. There can be cost overages, and everyone needs to be prepared for if and when something comes in higher than expected.

As your New Home Construction Loan is approved and the building begins, keep a realistic time frame in mind. Some customers tell us they’ll be done with the house in five months, and it ends up taking an entire year. Finishing a house in even six months is not only an incredibly rigorous timeline, but extremely rare for almost any builder. Things come up with builders, supplies take longer to arrive than expected, weather impacts timelines, and surprises can happen to anyone, so be prepared for setbacks and plan accordingly. 

Real estate is still considered one of the best and safest investments to make. During the pandemic home values across the nation have skyrocketed, and people are just as eager to build new homes as many Americans are currently seeking New Home Construction Loans.

Whether you decide to build a house, or you find a perfect home on the market, we want to help make the process as smooth as possible. Please reach out to one of our Mortgage Lenders or visit our Mortgage Resources Page if you have any other home buying questions. We’re here to help your home-owning dreams come true!

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Buying your first home can feel like a daunting task. However, if you know what to look for and what to avoid, you can bring a level of confidence to a process that seems overwhelming.

¹Subject to credit review and loan approval. Offer applies to any active or honorably discharged member of the United States Army, Navy, Air Force, Marines, Coast Guard and National Guard. Available on first lien on primary residence only for properties located in contiguous counties of or within Boone or Callaway counties in Missouri. Appraisal fee up to $1,000 will be waived. Offer made by The Callaway Bank and does not imply that any loan will be made by the VA or US Government. This offer is subject to end without advance notice.