Tuesday, April 5, 2011

Bargain Hunting: Mortgage and Insurance Edition

I wrote in the previous blog that we've had a lot of issues with our L.O. and in getting a number pinned down for what we'll owe at closing. When we did finally get that number, it was $2000 more than we had expected and only by being anal-retentive did we avoid disaster (a small lesson there: over-save. You can never have too much money). However, through some bargain-hunting, we managed to get us back down to about only (only, pft) $1000 more than we had expected. While still mildly panic inducing, it's a whole lot better than $2000 more.

When you go to close, there's always going to be a list of items that the bank is charging that they don't actually need to charge for. For example: application fee, credit check fee, etc. All of those "administrative" fees are a way for the bank to pad their figures. They make more than enough money that they can waive those fees, and generally will if you request them to be waived. We saved $240 here, but sometimes these fees can be around $500-$1000. It just depends on the bank and the type of loan. With an FHA, a lot of these fees are already removed and, in fact, prohibited.

With our title company, we had the option to save another $500 by removing title insurance, which is insurance that covers us in case Uncle Joe Blow appears out of nowhere with a slip of paper written by drunk grandpa at a poker game who lost and signed over the house. This rarely ever happens, but because you can lose your 100k+ investment overnight because of something like this, it was worth the $500 to us. We may look at negotiating this price down though.

We DID get a discount though because of a lack of professionalism, and one we didn't have to fight for either. Our title company was recommended to us by the buyer's agent and when we called the woman was busy and accidentally misplaced our email address. When she realized she had lost it, it was three days (a weekend had passed) after we talked to her and to make up for not getting back to us when she said she would, we got $200 off. Just like that! Good, quality customer service is awesome.

When it came to insurance, this is where we, personally, saved almost $400. It would have been about $500, but I'm a strong believer in over-insuring. Could be my degree in homeland security and emergency management, could be I'm paranoid, but whatever. We paid extra for drainage back-up insurance (and after hearing horror stories from one of my friends about this problem, I'm quite happy with paying the extra $80). Insurance is one of those things that people don't realize they can get good deals, but it's easy to drastically reduce the price of coverage, especially given how many "big name" companies exist now-a-days.

However, it is time consuming. To get our $400 less insurance, we talked to about 9 companies -- and I do mean talked. While online quote generators are great for a base-line to get accurate, cut-rate quotes you have to call. We talked to Nationwide (I'll admit--it's just because their commercials are so superior to other insurance commercials), Geico (who we currently use for car insurance), Progressive (who we have our renter's insurance through), Erie, Liberty Mutual, and used the quote generators for All-State, Farmers, State Farm and a couple of others that at this point escape me. For Steven and me, we have two criteria: price and customer service. Chalk it up to a combined 10 years in retail, but I would much, much, a thousand times much rather pay $20 more for insurance and have a good experience on the phone than pay super cheap and hate the people we're talking to. Actually, this is how we feel about pretty much everything -- customer service really determines how we like a place.

So, we were able to knock out a few contenders right away with the online quote generator. As a general rule, home insurance isn't a huge addition to your monthly payments unless you live in a high risk area for natural/man-made disasters, such as Florida, but the cheapest price, without sacrificing quality, is always best. Once we narrowed down who we thought were the best contenders, we called them. On top of looking at home insurance, we're also switching our cars to MD insurance finally (or were, until we found out just how expensive it is to insure in MD -- thank god for my student status that lets us insure in MD), so we went through the process for two quotes, which was fine because that means multi-policy discounts. We also asked our friends and friends' parents that live in MD and own a house/pay car insurance for recommendations and many sent us their agent's information. Thanks guys! Once again though, our buyer's agent recommendation proved to be the one that saved us the most money.

I'd like to say, up until yesterday, I loved Geico. But Geico was knocked out immediately. While it costs us well under 1000/6 months to insure our cars in VA with Geico, just by moving 60 miles into the wilds of Baltimore, our premium bumped up to over 5000/6 months!!!!! Can you believe that? We couldn't (all of the sarcastic "!" marks should have been a clue) and laughed when they told us. Then when we realized they weren't joking and weren't willing to come down, we ended that conversation. I can't even remember if we got a homeowners insurance quote.

A note to MD residents looking for insurance: Geico apparently (and I say "apparently" because I do not have verification from Geico themselves) hates paying covenant fees to insure in MD and will drastically inflate their prices to discourage customers from using them to insure.

Nationwide hung in for a while. The guy was super polite and came up with a quote of $74 a month for HO insurance and 3800/6 months for car insurance. Still, way too much, but he apologized a million times for how high it was and worked diligently to get it down. He eventually did reduce the premium, but at over $450/month it was still too much for car insurance. Way too much. I was kind of sad. The guy tried really hard and I really love their commercials. Side note: I tried to find my favorite commercial to post on here, but youtube doesn't have it.

We called the Liberty Mutual agent that our buyer's agent recommended and while car insurance was still high, at 330 a month it was the cheapest anyone had quoted thus far and we didn't lose any coverage from switching from Geico to get that price. However, they really blew us out of the water with the homeowner's insurance: only $52 a month! At $627 a year, and the coverage/deductible being exactly the same as previous companies, we went for it. Definitely a no-brainer.

Here's a round-up of tips for people looking for insurance:

  • A burglar alarm is a good investment for safety and peace of mind, and gets you a discount on your home owner's insurance. Make sure to pay for reporting to the police station/fire department. An alarm does you no good if it doesn't alert authorities.

  • Even if it seems silly, let the insurance agent know every little thing that's been done to the house. A new roof, new electrical system, replacing the pipes in the bathroom, etc all lead to discounts.

  • Don't be afraid to haggle. Tell them it's not low enough. Tell them Geico quoted less. We looked at 10 large companies and there are thousands of small ones we didn't look at, at all, and other customers do that too. If the company wants your business, they'll go out of their way to make it happen.

  • Always call to get accurate discounts. The online system doesn't cover everything.

  • Car insurance is absurd in MD, and the higher premiums prove what we've been saying for years: Maryland drivers are awful and Virginians are far superior.

  • I think the biggest take-away is just that you should never settle in the home buying process for the sticker price. 90% of what you're looking at/dealing with is an inflated price that people are willing to come down on to secure your business. Always ask if a fee can be waived, and if it can't be, have them explain its purpose. I'd draw an analogy to a commercial about saving money, but the TV references are getting to be too much -- I can't wait to be able to exercise again.

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