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This article has been reviewed by licensed insurance industry expert, Moshe Fishman on 9/27/2024.
If you’ve recently rented a car, you’ve undoubtedly seen the option to rent a car from a car-sharing service like Turo or Zipcar. Maybe you’ve already rented a car using one of these sites. For car owners who don’t use their cars often, renting your car on a car-sharing website can be an effortless way to make extra money.
Believe it or not, the idea of car sharing has been around for a while. Recently it has become more popular in part due to the pandemic and increasing demand for more flexible options when renting a car. Using a car-sharing service provides more convenience, flexibility, and accessibility than using traditional car rentals.
Car sharing is a type of rental car service where one vehicle is used by multiple people for multiple purposes. Called “peer-to-peer rentals,” these rentals between private parties are facilitated by third parties. Some popular car-sharing websites include Turo, Getaround, Zipcar, and JustShareIt although it’s estimated there are two dozen different car-sharing programs in the U.S.
The concept of car sharing is ideal for those who don’t own cars as well as for car owners who want to earn income from vehicles they don’t use often. For example, someone who telecommutes or who only needs to drive to the office a couple of times per week can earn money as they work remotely. Sharing your car becomes a side hustle to generate passive income.
Car sharing programs are different from ridesharing apps such as Uber and Lyft, as these provide rides in vehicles driven by car owners who are paid to pick up passengers. On the other hand, car sharing is renting your car out to a stranger who will drive the vehicle themselves. You may need to deliver the car to your renter, or they may pick up and drop off the car themselves.
You’re probably wondering, how much money could I make by renting my car out? Is the additional cash flow worth the potential risks and headaches? What kind of car insurance do I need to make sure I’m covered? Read on to discover the pros and cons of renting your car out through a car-sharing service.
Unfortunately, your personal auto insurance policy will not cover your car when you rent it out to third parties. This is because car insurance policies prohibit the use of personal vehicles for commercial use or profit.
The commercial use of your vehicle is different than letting a friend or family member borrow your car. Commercial use means making a profit through the use of your personal vehicle by using your car for delivery services, car-sharing programs, or other business uses. In essence, you have become a car rental company.
However, car-sharing services provide insurance that protects not only the owner, but the person renting your car, and everyone involved in the rental process. The insurance coverage offered by the car-sharing companies typically includes:
When signing up with a car-sharing service, car owners should take the time to read the fine print and be aware of the limitations of the insurance provided. For example, car-sharing companies can get out of paying claims by declaring a vehicle “not fit” if the owner hasn’t had the car properly serviced.
Prospective owners thinking of renting their cars out might not want to rely solely on the coverage provided by the car share company. Consider purchasing a commercial insurance policy to properly ensure that both you and your car will be protected in the event of theft, vandalism, or accidents.
Renting your car through a car-sharing company can be an easy way to generate income for those who don’t use their cars often. But car owners should do their due diligence before signing up to ensure they’ll be properly covered against loss.
This article has been reviewed by licensed insurance industry expert, Moshe Fishman on 9/10/2024.
With soaring gas prices and increasing talk of inflation, it is more important than ever to find ways to minimize car depreciation and retain the value of your car.
While ultimately unavoidable, there are many ways to retain your vehicle's value as much as possible. This article will provide some of the best ways to minimize a car's depreciation before and after buying a car.
Choose the make and model wisely
The make and model you choose play a key role. If you want to minimize the depreciation value of your car, it is wise to opt for a make and model that are known to retain value. As a rule of thumb, the top qualities you want to look for are:
It is helpful to research previous sales prices of earlier models of the car you are interested in purchasing. Doing this will help you forecast what a car may be worth in the future. You want to make an informed decision to help you purchase a vehicle with the best chances of retaining its value.
A great place to start is the Kelley Blue Book. You can find out what a car is currently worth and what it has sold for in the past. Additionally, you can research how much similar models have sold for to get an idea of what to expect in terms of depreciation.
Standard and popular colors have a better chance of retaining value. These include colors such as white, black, gray, and silver. Conversely, choosing bold and less common colors will likely reduce the car's value.
Considering the car's manufacturer warranty can also help minimize your car's potential for depreciation.
When buying a car, the best-case scenario is to buy a make and model that offers a warranty that will transfer to the new owner when sold (known as a transferrable warranty).
The depreciation of a vehicle's value has less impact when bought used. A brand new car will decrease in value by 10-20 percent the moment it is driven off of the lot.
A used car, on the other hand, will have already undergone its most significant initial depreciation. Therefore, you can avoid a considerable loss in value by opting for a used vehicle instead of a new one. If you are currently in the market for a car, this is a significant point to consider to get the most value for your money.
Another option to minimize the depreciation of a car's value is to opt into leasing one. The price of an auto lease includes the amount of depreciation, and if the resale value is higher than the buyout price by the time your lease is up, you will likely save a significant amount of money by getting a great deal.
If you have already purchased a car and are interested in finding out how to reduce car depreciation, there are still steps you can take to retain your car's value as much as possible.
It is important to keep your car in good condition if you want to minimize its rate of depreciation. This means regularly washing and waxing the exterior, as well as cleaning and vacuuming the interior. You should also get any dents, scratches, or other damage repaired as soon as possible.
Additionally, you should keep up with all of the car's scheduled maintenance. This includes things like oil changes, tune-ups, and tire rotations. Keeping your car well-maintained will help it retain its value better than if it was not taken care of.
Driving safely will help keep your car in good condition by minimizing the risk of getting involved in an accident. Accidents can cause extensive damage to your car, which will lead to a decrease in its value.
Modifying your car can actually decrease its value. This is because modifications can make it more difficult to sell the car, as not all potential buyers will be interested in them. Additionally, some modifications may void the car's warranty.
If you do choose to modify your car, be sure to do research beforehand. This way, you can avoid making changes that will decrease its value.
One of the main factors that determines a car's value is the number of miles it has been driven. The more miles a car has, the less it is worth. This is because cars that have been driven more tend to have more wear and tear, and will likely need more repairs.
There are two critical elements to consider when you decide to sell your car: timing and the buyer.
Many car owners make the mistake of not taking into consideration when they are selling their car and how it might impact its value. The conditions and circumstances of the auto market when you plan on selling your car may affect the resale value of your vehicle.
For example, selling your gas-guzzling SUV during a hike in gas prices likely won't get you as much money as if you were to sell it when gas prices are stable.
Certain types of cars also sell better during different times of the year; it is a bad idea to sell a convertible in the winter. Consider the kind of car you are selling and research the demand.
Selling your car to an independent buyer rather than to a dealership is your best bet for receiving the most money for your vehicle. While using a dealership as a middle man is often the quickest way to get your car sold, such convenience comes at a price.
When you sell your car to a dealership, they will typically offer you less money than what the car is actually worth. This is because the dealership needs to make a profit when they resell your car.
Knowing how to reduce car depreciation can go a long way in protecting your auto investment. Whether you currently own a car, are in the market for a vehicle, or are planning on selling a car, there are specific actions you can take to secure the value of your investment.
If you already own a car and have no plans to sell it soon, car depreciation is nothing to lose sleep over. Car depreciation is unavoidable, but following the suggestions in this article can mitigate its severity and ensure that you get the most money for your vehicle if you decide to sell it in the future.
This article has been reviewed by licensed insurance industry expert, Moshe Fishman on 9/9/2024.
It's no secret that car accidents are a leading cause of death in the United States. However, what may come as a surprise is that many of these fatalities could be prevented by installing a safe driving monitoring program in your vehicle. Safe driving programs work by tracking your driving habits and providing feedback to help you become a safer driver. This article will discuss how they work and why you should consider using one.
Safe driving monitoring trackers are devices that attach to your car and monitor your driving habits. They track things like how often you brake, how fast you drive, and how often you take corners. The data is then analyzed to create a driving score.
This score is used to identify areas where you need to improve and provides feedback on how to do so. Insurance companies use these trackers to reward safe drivers with lower premiums. Employers can also monitor employees who use company cars or parents who allow their children to borrow the family car. Parents can make sure their children are using good driving habits, and they can see areas where there’s improvement needed.
Most safe driving monitoring programs work by communicating with a smartphone app. The app collects data from the tracker and sends it to the program's server. A software program that creates a driving score analyzes the data collected by a safe driving monitoring tracker. This score is based on the following factors:
This data is then used to create a driving profile for you. This profile will show your strengths and weaknesses as a driver. For example, if you often brake too soon, the program will provide feedback on how to brake later. Conversely, if you drive too fast, the program will provide feedback on going slower.
There are several reasons you should consider using a safe driving monitoring tracker. Some of the benefits include:
Insurance companies use data from safe driving monitoring trackers to reward safe drivers with lower premiums. They do this by creating a driving profile for each driver. This profile shows your driving habits and the risk you pose to the insurance company. As a result, you will likely qualify for a lower premium if you have a good driving score.
Parents can use safe driving monitoring programs to monitor their children's driving habits. It allows parents to teach their children how to drive safely and gives them peace of mind knowing that their children are driving safely. It can also monitor when and where a teenager is driving.
Safe driving monitoring programs help promote road safety by teaching drivers how to drive more safely. It reduces the number of car accidents and fatalities on the road. In addition, these programs can provide feedback on driving habits that may lead to an accident so that drivers can learn to avoid those behaviors in the future.
Insurance companies can use safe driving monitoring programs to improve their safety statistics. This data can help them identify dangerous intersections and develop new safety programs. In addition, individuals can use these statistics to make informed decisions about their driving habits and where they choose to drive.
Most insurance companies do not require safe driving monitors. However, more and more insurance companies are starting to offer discounts to drivers who use them. As a result, it is becoming more and more common for drivers to use safe driving monitors.
In addition, more and more drivers are using safe driving monitors to prove their driving skills to insurance companies. Therefore, if you are looking to reduce your car insurance, you should consider using a safe driving monitor.
However, if you opt-in for usage-based insurance (UBI), your insurance company may require you to use a safe driving monitoring tracker. UBI is a type of car insurance where your premium price is based on how well and how often you drive. If you opt for this type of insurance, you will likely be required to use a safe driving monitor.
In addition to reducing your car insurance and monitoring your children's driving habits, there are several other benefits to using a safe driving monitor. Some of these benefits include:
These benefits help improve your driving skills and make you a safer driver. As a result, using a safe driving monitor can save you money and keep you and your loved ones safe on the road.
Many safe driving monitoring programs are available on the market if you don't want to get one through your insurance company. It is crucial to choose one that fits your needs. Some of the factors you should consider include:
It is also essential to read reviews of different safe driving monitoring programs before choosing one. This will help you find a program that fits your needs and budget.
Safe driving monitoring programs are becoming more and more common. They offer several benefits, including better car insurance premiums, parental controls, and road safety.
Insurance companies are starting to offer discounts to drivers who use these monitors, so it is becoming increasingly common for drivers to use them. If you are looking for a way to reduce your car insurance, you should consider using a safe driving monitor.
This article has been reviewed by licensed insurance industry expert, Moshe Fishman on 9/6/2024.
Maintaining your car is an essential part of owning a vehicle. Routine maintenance is not only crucial to your car’s safety and reliability, but it’ll also save you money in the long run by preventing issues before they happen.
Basic maintenance can save you as much as $1,000 per year on gas. If that’s not enough of an incentive, if you plan to resell or trade-in your car someday, keeping it maintained will protect your investment and ensure you get top value for it.
For people who don’t know much about cars and are dependent on someone for routine maintenance, this can be difficult to answer. If you asked the service department at your car dealership, a chain repair shop, and an independent auto repair shop, you’d get three different opinions.
The best way to find out exactly how much maintenance your car needs is by reading your car’s owner’s manual, to see what the manufacturer recommends. The people who manufactured your car are naturally the experts on what it needs. If you don’t have an owner’s manual, you can easily find one online by Googling the make, model, and year of your vehicle. In it, you will find the vehicle service or vehicle maintenance schedule.
Recommended maintenance for vehicles falls into two main categories depending on how many miles your drive annually, type of driving, conditions of driving, and how you use your vehicle.
Normal or standard car maintenance is best for vehicles that aren’t subjected to demanding or extreme driving conditions. This regular schedule of maintenance is ideal for those who commute less than 12,000 miles per year and don’t incur many stops and starts in their commute.
Severe maintenance is recommended for vehicles that are subjected to demanding or extreme driving conditions such as long-distance driving, heavy towing or hauling, constant stop-and-go traffic, or off-roading. Vehicles subject to these conditions will require more frequent routine maintenance checks.
When to schedule routine car maintenance will vary depending on how you drive your car and its year, make, and model. Oil changes and oil filter replacement is a regular service that should be done more often than other car maintenance services. The number of miles driven in between each oil and filter change will depend on the car you drive and is typically stated by the vehicle manufacturer in the owner’s manual.
During routine inspections, specific parts and areas of the vehicle are checked and inspected to be sure it is running optimally and safely. These include parts and items that sustain wear and tear and need periodic replacement or have been damaged. Fluids will need to be replaced as well on a regular basis. The parts and items inspected include:
There’s a good reason why there’s a sticker on your windshield reminding you when it’s time to have your car’s motor oil changed. Getting your engine oil changed regularly is very important to your vehicle’s health.
Automobile manufacturers agree that changing motor oil regularly is one of the most important preventive maintenance steps you should take.
It will keep your engine running smoothly. Consult a trusted mechanic to find out exactly how often your car’s oil should be changed. Here is the general rule:
A simple step you can take to mitigate repairs down the road is to make sure your tires are properly inflated. Tires with low air pressure may lead to excessive wear, lower gas mileage, and poor handling. Correct tire pressure can be found in the owner’s manual or on the doorjamb sticker.
Brakes will need to be replaced somewhere between the 25K and 70K mile mark. Why such a wide range? It varies depending on how you drive your car. Brakes will wear out sooner under frequent stop-and-go driving conditions and with repeated hard braking.
Front brakes usually need to be replaced before the rear brakes because the front brakes provide most of the stopping power. Splurge on high-quality brake parts to reduce the frequency that brakes need to be repaired or replaced and for a smoother driving experience.
Spark plugs aren’t usually replaced until the 100K mile mark. Be sure to get the exact type recommended by your car’s manufacturer. Inferior or incorrect spark plugs can cause engine damage and lower your fuel economy.
For cars that have timing belts, the usual replacement mark for a timing belt is 60K-100K miles. Timing belt replacement can be expensive, especially if it is a serpentine belt. But delaying or skipping it entirely may result in major engine damage if the belt breaks. The water pump, belt tensioners, and pulleys may need to be replaced at the same time.
Shock absorbers and struts absorb road bumps and potholes and are usually replaced after the 80K mile mark. The life span of shocks and struts depends on how well the roads are maintained where you drive. Aggressive driving and rough, uneven roads contribute to faster wear and tear. High-quality replacement parts that meet manufacturer specifications will last longer than cheap parts.
Just like shocks and brakes, your commute and how you drive will affect how soon your battery needs to be replaced. Batteries are usually replaced at the three to five year mark. Short commutes and driving distances mean the battery will not fully recharge, contributing to a shorter lifespan. Hot weather, letting the vehicle sit unused for extended periods, and missing or loose hold-downs will also shorten its lifespan.
Most auto manufacturers utilize a 30K/60K/90K maintenance schedule. This schedule refers to the number of miles driven. At these designated intervals, it’s likely that certain items will need to be inspected and replaced once the car has been driven 30,000, 60,000, and 90,000 miles.
Maintenance is usually limited to regular oil changes, brake inspections, tire rotations, and new wiper blades. Save money by replacing items such as wiper blades on your own.
Air filters should be changed at 15k to 30K miles. The fuel filter should be changed as early as 30K miles. Air and fuel filters help your engine run smoothly by keeping it free of dust and debris.
In addition to regular maintenance, new tires are likely to be needed. Brake pads and rotors should also be inspected and replaced if needed. Brake, transmission, and coolant fluids as well as battery inspection and timing belt will need replacement.
Once you hit 90,000 additional areas will need inspection and replacement including suspension parts such as shock absorbers and struts. Spark plugs and coolant hoses will also need replacement. Other items that will take place during maintenance will include flushing or replacing fluids, drive belts and timing belts inspection/replacement, tire alignment, and cleaning and adjusting brakes.
Following your car’s recommended maintenance will not only protect your investment, but it’ll also keep your car in tip-top shape, ensuring a smooth and safe driving experience. According to Kelly Blue Book, proper mechanical maintenance is needed to prevent potential problems by identifying issues before they happen. Avoiding problems with preventive maintenance is better for your vehicle and your wallet. The alternative is having to pay for unplanned repair services.
This article has been reviewed by licensed insurance industry expert, Moshe Fishman on August 27, 2024.
If you’ve ever thought about buying a sports car, there’s something you should know—sports cars have a bad rap with insurance companies. Designed for speed and maneuverability, the things that make sports coupes and convertibles fun to drive are the same things that make them expensive to insure.
Depending on the car, sports car insurance can be twice as much as the premium on a regular car. This, however, doesn’t necessarily mean you should give up the idea of owning a sports car. Learn about these cars and why auto insurance companies put a price tag on performance before deciding if a sports car is right for you.
First-time sports car buyers are aware of the expenses associated with buying a sports car. But many people don’t consider how their shiny new toy will affect their insurance for as long as they own the car.
A sports car is defined as a vehicle that has a high horsepower engine, two seats, and a smaller frame. Although insurance companies will differ in their exact definition of a sports car, they usually consider three factors: make and model, number of cylinders, and body height and weight. Let’s look more closely at the factors that insurance companies consider when defining if a car is a sports car.
There are certain car brands that automatically qualify a car as a sports car such as Ferrari, Lamborghini, Porsche, and Bugatti. This is because sports cars are the only type of car they make. However, some luxury car manufacturers like Aston Martin make a variety of vehicles ranging from luxury sedans to James Bond-worthy GTs.
There are also certain car manufacturers that make “everyday” cars such as SUVs and sedans that also make sports cars. These include Chevy, Ford, Dodge, BMW, Mitsubishi, and Tesla. Here’s where the car model comes into play and where the definition becomes trickier to pinpoint.
Obviously, a Ford Mustang is a sports car, but what about a Mini Cooper, a Nissan Maxima, or a Dodge Dart? How about a Honda Civic? Now, you might be smiling, but the hot Civic Type-R certainly qualifies.
A car that goes very fast in a short period of time is more likely to be in an accident. Accidents that occur at high speeds will also cause more damage not only to the car, but more injury to the occupants. Therefore, a car’s horsepower is a significant factor in deciding insurance rates.
The more cylinders a car has, the faster power can be generated, and the more expensive it will be to insure. Insurance companies will look closely at all the vehicle’s specs when determining the insurance premium.
Insurance companies will also evaluate the body height and weight of the vehicle. Sports and GT cars tend to be lighter, smaller, and have a lower profile compared to other cars. It’s their weight and size that allow them to be so fast and highly maneuverable.
When speed and maneuverability increase, so does the risk of accidents. The body of such cars tends to be lighter and less durable, which means an accident will cause more damage and cost more to repair. It costs insurance companies a lot to replace a totaled sports car.
These specialized insurance policies cover the same things a standard policy covers for a non-sports car:
Additional insurance may be added to minimize out-of-pocket expenses after an accident.
These additions include:
These cars carry a higher risk for insurers than non-sports cars because of associated risks such as:
Fast acceleration, quick stops, and high-speed turns mean that accidents are more likely. Owners of sports cars may drive recklessly which leads to an increased risk of speeding tickets and accidents. Of course, even a flagship sedan like a Mercedes Benz S Class can be driven recklessly, but that's another story.
Sports cars are notoriously expensive to repair. Both parts and labor tend to be more expensive, especially for classic and rare cars.
Flashy sports cars are highly appealing not only to car thieves but to vandals as well. Sports cars that have been abandoned by thieves are usually found with a significant amount of damage and missing parts. Comprehensive coverage will cover both theft and vandalism but will come at a high cost.
The younger the driver, the more they’ll pay for sports car insurance. Young, inexperienced drivers are already more likely to get into accidents. When you add the high performance of a sports car, the cost to insure a young motorist can be astronomical. Auto insurance premiums for sports car owners who are under age 25 can cost up to $3,000 annually for liability only and up to $12,000 for full coverage.
For any type of insurance, it’s always a good idea to get multiple quotes. This is especially true for sports cars where one insurance company may charge much more than another. Bundling your sports car insurance with other types of insurance can also result in a lower rate.
Having these safety features may result in rate discount:
Taking a defensive driving class can also help lower auto insurance rates, often by around 10%. A safe driving record and credit score will help lower auto insurance rates, no matter what type of car you drive.
Sports car insurance premiums drop significantly after age 25 when most insurers consider drivers to be less risky.
If your sports car is the car you intend to use for your daily commuter, expect a higher insurance premium. But if you only drive it a few times a month and keep the mileage low, you’ll get a discount. You can also save money by storing your car in a locked garage when not in use.
The Bottom Line
If you can afford to buy a sports car, you can probably afford the expensive sports car insurance premium. Consider the cost of insurance when factoring in all the costs of owning a sports car.
This article has been reviewed by licensed insurance industry expert, Moshe Fishman on August 12, 2024.
Buying a home can be an overwhelming, stressful experience. For new homeowners, the language and terminology of homeownership can get complicated and confusing. This article discusses the difference between homeowners insurance and mortgage insurance. In a nutshell, homeowners insurance protects your property, and mortgage insurance protects the lender.
Homeowners insurance also called home insurance, is a type of property insurance that protects your home and personal belongings from damage caused by unforeseen events, known in the insurance world as “perils.” Homeowners insurance also provides financial protection from lawsuits if someone gets injured on your property. Although you can legally own a home without having a homeowners insurance policy, your lender, mortgage company, or home equity loan holder may require you to carry a homeowners insurance policy.
Private mortgage insurance (PMI) protects your lender if you’re unable to repay your mortgage and stop making your payments on a conventional loan. If you put down at least a 20% down payment, you will generally avoid PMI.
However, typically a lender requires PMI for home loans that lack a 20% down payment. This is because mortgage lenders perceive loans without the 20% down payment as potentially risky investments. PMI is a monthly expense that is factored in with the total mortgage payment and will increase the expense of owning a home.
The components of a monthly mortgage payment usually consist of principal, interest, taxes, and insurance premium (PITI).
Principal: This is the amount you borrowed and need to pay back. Every time you make a mortgage payment, a part of it goes to paying off the principal.
Interest: The amount the lender charges on the loan.
Taxes: Property taxes paid to your local government, can be paid upfront for the year or monthly.
Insurance: This includes standard homeowners insurance and private mortgage insurance.
Just like other types of insurance, PMI is based on insurance rates that can fluctuate. PMI typically costs between 0.58% to 1.86% of your loan amount per year. For example, if you purchase a home for $500,000, your PMI will range from $2900 to $9300 per year.
PMI is arranged by your lender and is paid as part of a monthly mortgage premium, but some lenders will allow the option of paying upfront in one lump sum during closing. A combination of an upfront payment and monthly premiums is another option. Your specific PMI terms will be listed in your loan estimate and closing disclosure documents.
Your lender considers these factors when determining how much PMI you’ll need to pay.
The amount of money you put down on your home determines how much you pay in PMI. The lender will consider a small down payment to be a higher risk. A small down payment will cause your regular mortgage payment to be higher, which means it’ll take longer for your PMI to be removed, which puts you at a higher risk of missing a payment.
Your lender will check your credit history to determine if you have a history of being a responsible or an irresponsible borrower. By paying your bills on time, avoiding maxing out credit limits, and paying more than the minimum payment, you’ll show your lender that you are a responsible borrower.
A credit bureau will generally put you in a more favorable FICO score range if you have used credit responsibly. This can result in the lender charging less in PMI premiums. But, if you have a low credit score, this can be a red flag for the lender and as a result, you may have higher PMI premiums.
Having a fixed-rate loan, typically of 30 years, versus an adjustable-rate mortgage (ARM) will influence how much you’ll pay in PMI. Fixed-rate loans reduce the level of risk because the mortgage amount won’t change over time. Reduced risk means you might not need to pay as much PMI.
ARMs involve increased risk because it’s impossible to predict how much your mortgage payment will be. However, there is an advantage to an adjustable-rate mortgage. By paying more toward your principal, you’ll build equity faster and be able to eliminate PMI sooner.
There are multiple options for private mortgage insurance such as:
If you are hoping to avoid paying PMI, here are a few options:
For conventional loans, once your home reaches 20% in equity, you can request PMI be removed. For FHA loans, PMI may be required for the duration of the loan.
To have PMI removed from your mortgage, do the following:
As soon as your home loan falls below the 80% mark in principal, make the request to have your PMI payments removed. You must be up to date on your payments, have a history of making payments on time, and may need to prove that there are no other mortgages or liens on your home.
Once your home’s principal balance reaches 78% of its original value (loan-to-value or LTV), your mortgage insurance servicer will automatically cancel your PMI. Again, this will happen only if you’re up to date on payments and never missed a due date.
Once you are halfway through your amortization schedule, your lender must remove PMI. For a 30-year loan, PMI would be removed after you’ve made payments for 15 years, even if you haven’t reached 78% of the original value.
Getting a new loan by refinancing your current mortgage is another way to eliminate PMI. Just be sure the balance falls below 80% of your home’s market value.
Knowing the difference between homeowners insurance and mortgage insurance is essential to being a knowledgeable homeowner and may save you money.
This article has been reviewed by licensed insurance industry expert, Moshe Fishman on July 29, 2024.
Vacation rental websites like Airbnb, and Airbnb alternatives Homeaway, Vrbo, and Booking.com have revolutionized the travel industry and it’s easy to see why. For certain travelers, the idea of staying in a house or condominium instead of a hotel while on vacation has a lot of appeal. People like the idea of staying in a “home away from home.” Especially if your home is in a vacation destination area.
A house or condominium provides amenities that hotels typically don’t provide such as a full kitchen, outdoor space, or a private pool. Vacation rentals can also be cheaper than staying in a hotel, especially when traveling with a group of friends or family. If you’ve thought about turning a property that you own into a vacation rental, read on to discover what you need to know.
One of the most popular rental sites is Airbnb, which provides an online marketplace for lodging, primarily homestays and vacation rentals. It connects homeowners who want to rent out their homes or a shared space with travelers who are looking for accommodations in specific places. Airbnb has more than 5.5 million listings in 220 countries and 100,000 cities around the world. Like its competition, the company charges service fees for every booking on its website.
You may be wondering why anyone would want to host their property on a hosting platform compared to a traditional rental. Depending on the rental market, doing so could potentially reap more profits than having potential tenants paying rent.
For example, let’s look at the Los Angeles market. The average rent for a 1-bedroom apartment is $2400. On a 12-month lease, the homeowner would make $28,800 per year.
The average Airbnb rental rate in Los Angeles is $160 per night with an average occupancy rate of 60%, which amounts to $35,500. This is a substantial increase compared to a conventional rental. However, the profits are dependent on the occupancy rate.
In New York, however, the average rent for a 1-bedroom apartment is $3800. On a 12-month lease, the homeowner would make $45,600 per year. The average Airbnb rental rate in New York in 2021 was $216 (up from $184 in 2020) per night with an average occupancy rate of 60%, which amounts to $47,304.
This is still an increase compared to a conventional rental but less than the Los Angeles market example. And again, the profits will depend largely on the occupancy rate.
Like just about anything else, there are both advantages and disadvantages to renting out your house as a vacation rental. Here are some things to consider:
Let’s face it, being a rental host is a lot of work. You’ll need to be available 24 hours a day, 7 days a week to respond to guests’ needs quickly. Or, you will need to hire a property management company, at your expense.
Just like a traditional rental, there’s always the potential for a backed-up toilet, a noisy neighbor, non-functioning Wi-Fi, or a broken appliance. A guest who’s not satisfied for any reason will let you know. And not acting quickly has the potential for the guest to leave a negative review or demand a refund.
Being a successful host requires different skills such as marketing, customer service, excellent communication, experience in property management, and using an effective rental agreement that outlines the terms and conditions of the rental. Successful listings must show well online and must look just as good in person when the guest arrives. Some property owners use the services of a professional photographer to capture the natural beauty of their property.
As a host, it's in your best interest to always maintain your rental to a high standard. Depending on the circumstances, the hosting website may tend to side with guests and will hold you accountable for reasonable guest complaints.
Most states require the owners of rental homes to charge and collect state sales and lodging taxes on the income they earn.
Sales Tax: Your city may require you to collect sales tax from guests. These taxes go by different names and may be referred to as bed tax, lodging tax, hotel tax, room tax, or occupancy tax.
Income Tax: Running a rental property makes you a small-business owner and as such, you’ll need to report your income and expenses on your federal tax return. On rentals that earn more than $600 per year, Airbnb and other such websites will send both you and the state a form 1099-K.
Tax Deductions: You might be able to claim certain deductions on expenses associated with your Airbnb rental such as the mortgage or rent on the property, property insurance, property repairs, cleaning service fees, and utilities.
The first thing you’ll need to know is if rentals are allowed in your city and in your specific community. Check with the city or town where your property is located. Some cities have specific rules in place about what type of rental is allowed if they’re allowed at all.
Some cities allow short-term rentals, for example, and some might only allow long-term rentals. A long-term or monthly rental is one that rents for a minimum of 28 days. You may need to get a license or permit before you’re legally permitted to list your rental and start accepting paying guests.
If your property is subject to a homeowners association or a co-op board, you’ll need to check to see if there are restrictions about renting your property on a short-term basis. They may not permit vacation rentals by owner. You can check your CC&Rs to find this information or inquire directly with your HOA or co-op.
When it comes to furnishing your rental, keep both comfort and aesthetics in mind. Here are some things you should consider to ensure your rental truly stands out from the competition.
Take the time to create a listing that stands out on a site like Airbnb. The more details you can provide, the better. When writing your listing, be honest about any potential flaws and don’t make claims about things that aren’t true.
Highlight what’s unique about your rental. Be sure to include numerous photos of the furnishings and the layout to give potential guests an idea of what to expect from your rental.
For property owners, being a rental host can be a lucrative and rewarding business. It’s up to you to decide if the investments of your time and money will pay off in the end.
Be sure to check with your insurance company about whether your homeowners policy will cover your rental. If you are planning to rent out your house on an ongoing basis, you will likely need rental property insurance as well as liability. You should also check with your state for any requirements for supplemental insurance. In addition, you may want to shop around for insurance to compare rates.
This article has been reviewed by licensed insurance industry expert, Moshe Fishman on July 10, 2024.
For many people, homeownership has been a part of the foundation of the American Dream. Buying a home is considered to be a good financial investment while renting a home is seen as throwing away good money. However, this is no longer the case.
For some people, buying isn’t necessarily the better choice. When considering whether to buy or rent, it’s important to consider not only your financial situation and goals but which is best suited to your lifestyle.
Purchasing a home is a great long-term investment. But the keyword here is “long-term.” Building equity in a home takes time.
If you’re buying with the expectation that home prices and values will rise sharply and quickly, don’t hold your breath. A good rule to follow is that if you don’t plan to own your home for more than 5 years, don’t buy.
When you sell your home, you’re responsible for fewer fees than you were as a buyer. The buyer usually pays for the bulk of the closing costs, and they also pay 5 to 6% of the sale price in real estate agent commissions. As you can imagine, these costs add up quickly.
Depending on the market, selling a home after five years of ownership doesn’t necessarily mean a homeowner will profit or break even. Aside from normal housing costs, factors beyond your control can cause house values to plummet such as a recession, inflation, interest rates, location, and supply and demand. Even rent vs buy calculators can't factor in all those contingencies.
In certain markets, the only affordable option may be a condominium as compared to a single-family home. Condominiums don’t appreciate at the same rate as single-family homes and because of this, mortgage lenders will set the mortgage interest rate for a fixed-rate mortgage to be slightly higher for a condominium as compared to a single-family home.
Although renters won’t reap the benefits that can come from a long-term investment such as a home, renters have the freedom to invest in other areas such as stocks, bonds, and mutual funds. They can also choose to contribute more to their retirement accounts.
There are numerous tax benefits for homeowners and virtually none for renters. As a homeowner, your biggest tax benefit is the mortgage interest deduction which allows you to deduct the interest paid on your mortgage. For married couples filing jointly, this deduction is available on loans up to $750,000 and for a single person, up to $350,000.
Other tax benefits available to homeowners include home equity loan interest, discount points, property taxes, home office expenses, mortgage insurance premiums, capital gains, and medically necessary home improvements.
The advantage to a mortgage monthly payment compared to a monthly rent payment is that a mortgage payment tends to stay the same over the course of the loan, especially for a fixed-rate loan. Mortgage applicants with a low credit score will likely pay a higher interest rate, owing to the lender's perception of increased risk.
An increase in property taxes can make a payment amount increase. Adjustable-rate mortgages (ARM) are home loans where the interest rate changes after a specific period. Depending on current interest rates, the mortgage payment will either increase or decrease.
Homebuyers can guard against fluctuating interest rates by choosing a fixed-rate loan. Buyers who put down less than 20% for a down payment may have to pay mortgage interest insurance. But this expense will eventually become unnecessary when enough equity is established.
The disadvantage to rent is that it almost always goes up and never goes down. Rental rates are dependent on the housing market and although some rentals are in areas with rent-control measures or rental-rate caps, not all renters can take advantage of these protections.
As the demand for housing continues to increase, it’s likely rents will continue to rise as well. Some exceptions to this are renters who are on good terms with their landlords and have reached agreements where the landlord doesn’t raise the rent based on market values. However, if the property owner decides to sell the rental property, the tenant will be forced to start over again.
Maintaining a home can be expensive and time-consuming. Unexpected costs can occur at any time. The general rule to follow is to assume that as a homeowner, each year you’ll pay between 1% and 4% of your home’s value for home maintenance costs.
For example, if your house is worth $300,000, you can assume you’ll spend $3K to $12K on home maintenance every year. In addition, if you have a mortgage on your home, you will almost certainly carry homeowners insurance. Aside from protecting you, it covers losses your "partner," the mortgage lender, wants to avoid.
Purchasing a home in a community with a Homeowner’s Association (HOA) usually means the HOA takes care of routine maintenance such as landscaping and potential big expenses like new roofs and painting. However, monthly HOA dues can be very steep. If a major repair is needed, and the HOA is poorly funded, a special assessment may be levied on homeowners. When purchasing a home with an HOA, ask how about the reserves and if they are well funded.
One of the biggest benefits of being a renter is that your landlord is responsible for anything that goes wrong with your home. The cost of renting includes maintenance services.
Not only are you spared the hassle of home maintenance, but you’re also spared the high expense. Although the repairs might not be done as quickly as you’d like, if anything goes wrong in your home, you won’t be responsible for what can be a considerable cost.
As a renter, you don’t have to worry about the time-consuming tasks involved with home maintenance. People who value their free time and those who work long hours or travel frequently will appreciate the freedom that comes from being a renter. However, you’re also not able to personalize your home in any way. Painting the walls, changing the flooring, planting a garden, or making any type of improvement to your home is not possible.
Once you buy a home, you’re tied to the location. If you’re transferred to an office that’s an hour away, you don’t have the ability to move closer unless you sell your home. Renters have the freedom to move if they don’t like where they live or if a lucrative job opportunity comes up in another city or state. Renting allows a level of personal freedom that will always be appealing to certain individuals.
Whether you choose to rent or buy your home is up to you. Examining your long-term goals—not just for your home but for your life—will help you make the decision that best suits your definition of the American Dream.
This article has been reviewed by licensed insurance industry expert, Moshe Fishman on 6/26/2024.
As the country transitions from a pandemic phase to an endemic phase, one thing that hasn’t changed is the demand for used cars. The automobile industry is still recovering from supply chain challenges and the demand for used cars is through the sunroof. With many companies allowing their employees to continue to telecommute, if you own a car that you’re not using much, now’s an excellent time to sell or trade your car online to ensure you get top dollar.
Anyone who rented a car in the past couple of years has experienced the sticker shock of rental car prices. Due to quarantines and workplace closures, the situation forced many auto dealerships and factories to close completely. Demand for rental cars plummeted, causing rental companies to offload inventory. Car manufacturers assumed that the demand for new cars would fall significantly and canceled their orders for microchips.
As the demand for cell phones and laptops skyrocketed, manufacturers shifted production to keep up with demand. When car manufacturers were ready to ramp up production, they couldn’t get the components they needed due to supply chain issues. With new car production stymied, the demand for used cars shot up.
As restrictions loosened, people were ready to hit the road for some much-needed vacation time. With foreign travel off the table, road trips surged in popularity along with the demand for used recreational vehicles, trucks, and SUVs. Rental companies were desperate to increase their inventory to meet demand and began buying up used cars. The demand hasn’t waned and if anything, the market is hotter than it’s ever been.
In this seller’s market, any time is a good time to sell. But if you want to get top dollar for your used car, the ideal time to sell is between the months of March and August. That’s when increased temperatures, longer days, and summer vacations fuel the demand for used cars. The worst time to sell is January and February when consumer spending usually plummets after the holiday shopping season.
While the thought of selling your vehicle on your own might seem intimidating, it’s actually a fairly simple process. Follow these steps to ensure a hassle-free sale for both you and the buyer.
There are three options when deciding who to sell to a dealership, a private party, or through an Instant Cash Offer.
The idea that a car dealership won’t pay what your car’s worth doesn’t necessarily apply in this market. Call several dealerships to compare prices. The advantage of selling to a car dealership is that the process is simple and straightforward, and you won’t have to deal with the annoyances that might accompany selling to a private party.
Also, dealers aren’t as concerned about small repairs that can be easily fixed in their service shops. Lastly, if you don’t own your car outright, a dealership is familiar with the process of paying off the loan and obtaining the title.
Sell to a private party by placing an ad on websites and apps such as Craigslist, OfferUp, eBay, and Facebook Marketplace. Although dealing with potential buyers can be a hassle, you’re most likely to get top dollar this way.
Be wary of potential scammers and use common sense when meeting with prospective buyers. Through texts and phone calls, you’ll be able to determine which buyers are legitimately interested in purchasing your vehicle. When the sale takes place provide the buyer a bill of sale, using an approved motor vehicle bill of sale form.
This no-fee option through the trusted company Kelley Blue Book is an easy, hassle-free way to sell your car. Visit the website, enter the details of your car, and get multiple offers from participating dealers. Your offer will be good for 7 days. Bring your car and the offer to the dealer and once they verify the info you entered is accurate, you’ll be good to go.
There are many tools you can use to determine the fair market value of your car. Make an honest assessment of your car’s overall condition. A website such as Kelley Blue Book’s Condition Quiz will tell you if it’s in excellent, fine, very good, good, or poor condition. Once you’ve determined the condition, use Kelley Blue Book’s valuation tools.
There are a few additional factors to consider when choosing your asking price. Do some research to see if you can find previous sales for your car’s make and model, particularly in your local market. Also, a car that’s still under warranty or that has new brakes and tires will usually warrant a bump in price.
You want your car to make a great impression on potential buyers. Have the interior and exterior of your car detailed to get it looking its absolute best. If you plan to list your car on a site such as Craigslist or OfferUp, take the time to create a listing that’ll make a positive impression on potential buyers. The more pictures you include of both the car’s interior and exterior, the better.
Also include the basic info such as make, model, and mileage, and be honest when describing your car’s condition. Be upfront about the car’s Kelley Blue Book Value and if you’re asking for more, include your justification for your price.
Once you’ve sold your car, complete the necessary paperwork to ensure the title is transferred to the new owner. While the specific rules vary from state to state, you’ll generally need to:
As the country continues to transition back to normal, demand for used cars will eventually go down. Consider if now might be the best time for you to sell.
This article has been reviewed by licensed insurance industry expert, Moshe Fishman on 6/10/2024.
“An ounce of prevention is worth a pound of cure.” These are important words to live by, especially if you own or rent a home. The Boy Scouts summed up this sentiment even more succinctly with their motto, “Be Prepared.” if you own a car that you’re not using much, now’s an excellent time to sell or trade your car online to ensure you get top dollar. By following the tips below, you can help prevent common fire, electrical, and plumbing hazards in your home.
In the event of a fire in your home, every second counts. Smoke detectors are essential for alerting your family to the hazard and giving them time to escape. However, not every home has enough working smoke detectors. When installing them in your home, a good rule of thumb to follow is to have an alarm on every level of your home, one in every bedroom, and one in every room where people sleep. Don’t place them next to vents or ceiling fans as this could reduce their effectiveness.
Evaluate your smoke alarms biannually to ensure they’re working properly and replace the batteries. A simple way to remember when it’s time to check your alarms is during daylight saving time. Also, consider investing in smart-technology options like Google Nest Protect which provides real-time monitoring of potential hazards.
Fire extinguishers are your first line of defense against keeping a fire from spreading in your home. As with smoke alarms, you should have one on each level of your house. Place them in easily accessible areas where household fires commonly start: the kitchen, near heat sources, and the garage. Know how to use a fire extinguisher and replace them every ten years.
Carbon monoxide is known as the “silent killer.” This odorless, poisonous gas isn’t usually detected until a person begins experiencing symptoms of carbon monoxide poisoning. Carbon monoxide leaks come from fuel-burning appliances and sources such as appliances, furnaces, boilers, fireplaces, wood stoves, vehicles, and more.
Unlike smoke detectors, carbon monoxide detectors should be placed on walls about five feet above the floor so they can measure the air at the height where people breathe it. Placement of CO alarms is the same as smoke alarms: on every level of the home, the garage, in each bedroom, and near fuel-burning appliances. Test them often and replace them every five to seven years.
Did you know that clothes dryers account for 90% of appliance fires? This is because lint is highly flammable. Be sure to empty the lint filter after each laundry load. Because lint tends to accumulate in areas that aren’t easily accessible such as the filter trap and in the ductwork, have your dryer vent serviced by an air duct and vent cleaning professional once a year. For homes where the dryer is used more frequently, twice a year vent cleaning is recommended. DIY vent cleaning kits can also be bought at home improvement stores.
No one wants to listen to noisy appliances when they’re relaxing at home. But it’s a good idea to only run appliances when you are home. That way, if your washing machine springs a leak or if your dryer sparks a fire, you’ll be able to mitigate these hazards before they cause excessive damage.
While most homeowners know about smoke and CO alarms, not as many know about water leak alarms. These smart-technology detectors sound an alert when water leaks are detected, lessening the impact of potential water damage whether you’re at home or away. With built-in temperature monitors, they can even detect if your pipes are about to freeze. Check out the Flo by Moen Smart Water Detector and the Proetus Aquo Wi-Fi Water Sensor which is also compatible with Amazon Alexa.
Another common cause of fires in the home is home heating equipment such as space heaters and fireplaces. In fact, home heating equipment accounts for half the number of home fires in December, January, and February. To avoid a home fire caused by a fireplace or chimney, have these inspected and cleaned annually by a professional maintenance company. Be sure to use an appropriately sized glass or metal screen with your fireplace to keep sparks from igniting a fire.
With all heating equipment, keep all flammable materials a minimum of three feet away from space heaters, furnaces, fireplaces, and wood stoves. Don’t plug more than one piece of heating equipment into a single outlet. Inspect heating sources such as space heaters regularly to ensure they’re in proper working order. And unplug space heaters when not in use and don’t leave them unattended.
Although inspecting electrical outlets can seem like a daunting item on your home maintenance checklist, it doesn’t have to be. For example, if you plug in a device and notice that it falls out easily or isn’t secure, this is a sign that your outlet contacts need to be replaced.
Another warning sign that calls for an inspection is if your outlets ever emit a spark. While the occasional blown circuit isn’t a cause for alarm, if it happens often, this is a sign that an inspection is due.
When should you call in the professionals for an electrical outlet inspection? The Electrical Safety Foundation recommends an inspection for houses that are more than 40 years old, those that have undergone renovations, and for new homeowners who’ve purchased a previously owned home.
These overlooked areas can sometimes become the places where items accumulate and clutter. As such, they have the potential to be hazardous. Be sure to keep any flammable items far away from your furnace, heater, boiler, and water heater. Keep flammable materials such as gasoline, propane, motor oil, paint, paint thinner, and turpentine tightly sealed and in their original containers. Also, keep them away from heat sources.
Should disaster strike, make sure that all family members are familiar with your family’s escape plan. Come up with an escape route for every room in your home. Choose someone to aid a family member who might need extra help in the event of an emergency.
If you have a home with upstairs bedrooms, equip each bedroom with escape ladders. Once you have a plan set up, practice it twice a year with family members.
You can never be too cautious as a homeowner. When it comes to protecting your biggest investments–your home and your family. Homeowners who adhere to the “Be Prepared” motto are best equipped to prevent common household hazards. The bonus is that you may also receive discounts from some home insurance companies for the installation of security and fire prevention systems. Be sure to check with your insurer for more information.
