Competition at distressed property auctions is starting to slip after hitting record highs in the first quarter of 2022. This trend foreshadows a continued slowdown in the larger retail market while also signaling emerging opportunities for real estate investors willing to swim against the current.

Proprietary buyer bidding data from Auction.com shows competition at distressed property auctions has started to ease after hitting all-time highs earlier in this year. The data also shows the average discount

Competition at distressed property auctions is starting to slip after hitting record highs in the first quarter of 2022. This trend foreshadows a continued slowdown in the larger retail market while also signaling emerging opportunities for real estate investors willing to swim against the current.

Proprietary buyer bidding data from Auction.com shows competition at distressed property auctions has started to ease after hitting all-time highs earlier in this year. The data also shows the average discount below estimated as-is market value rising in the second quarter of 2022, after dropping to a nearly nine-year low earlier in the pandemic. These two trends point to distressed property buyers who are starting to hedge against a price slowdown, or even correction, by shrinking their buy box and bidding more conservatively.

Easing Competition

Competition at both foreclosure auctions and bank-owned (REO) auctions hit an all-time high in first-quarter 2022 as measured by bids per property for REO auctions and online saves per property for foreclosure auctions, according to the Auction.com data. In both cases, competition pulled back from that all-time high in the second quarter.

Competition was still well above pre-pandemic levels in the second quarter, partially a function of the low supply of foreclosure and REO auctions. Properties brought to foreclosure auction during the quarter attracted an average of 24 online saves—four times the average saves per property in the first quarter of 2019. Properties brought to REO auction received an average of 11 bids, up from an average of nine bids per property in the second quarter of 2019.

The quarterly decrease in competition at foreclosure auction could in part be due to a gradually increasing supply of properties available at foreclosure auction. That number increased to a new pandemic high in the second quarter, although it was still 52% below the pre-pandemic level in second quarter 2019. But rising supply doesn’t explain the pullback in competition for REO auctions. The REO supply number decreased 12% between the first and second quarters of 2022.

Shrinking Buy Box

More likely the decrease in competition is the result of real estate investors shrinking their buy box to properties that represent a safer investment, based on factors such as location, price point, and surrounding market conditions.

“We’re transitioning from a super red-hot market and it’s cooling off a bit, mostly interest-rate driven,” said Paul Lizell, a real estate investor and coach who’s been investing since 2001. “We’re telling (our real estate investing students) to back off of some of the higher end properties and stay under $350,000. That’s a safer range.”

The foreclosure auction data broken down by value range indicates that other investors are also shrinking their buy box in terms of price range. Based on their “after-repair” market value, properties valued above $300,000 saw the biggest drop in competition from the peak in February to June, the latest month with data available. That above-$300,000 value range saw a 31% decrease in competition over the four-month period, while properties priced in the $100,000 to $300,000 range saw a 21% decrease drop in competition and properties in the under $100,000 price range saw a 12% decrease in competition.

Broken down by region of the country, the foreclosure auction competition decreased the most between February and June in the West (down 39%) and the Southeast (down 36%). Competition was down 22% in the Northeast and 16% in the Midwest. The bigger drops in the West and Southeast align with what Lizell is recommending to his students: a retreat from the heightened risk of “cyclical” markets more prone to bigger price swings and toward the relative safety of “linear” markets that tend to experience slower but steadier price growth over time.

“Some of your more cyclical markets may take a 20% hit (in prices),” said Lizell, noting that the retreat from cyclical markets like California has been in place for some time now as those markets became too pricy for many investors even before the pandemic. “A lot of our students are California people. It’s hard for them to find deals, so we teach them how to find deals in these other states: Indiana, Ohio, Kansas, Texas.”

More Conservative Bidding

Even within a smaller and safer buy box, investors are bidding more conservatively at distressed property auctions. That’s evident in the recent uptick in average purchase discount at auction relative to the estimated as-is value of the property. That as-is value is typically based on an exterior appraisal or broker price opinion, given the interiors of the homes are often not accessible. This discount represents the percentage below (or in rare cases above, in which case the discount would be expressed as a negative percentage) the estimated as-is value buyers are paying, on average.

The average purchase discount rose to 14.7% in the second quarter for foreclosure auctions, up from 11% in the first quarter and up from a nearly nine-year low of 8.9% in the first quarter of 2021. Similarly, the average purchase discount for REO auctions increased to 15.3% in the second quarter, up from a nearly nine-year low of 13.6% in the first quarter.

Lizell said he’s built in an extra 5% to 10% cushion when calculating his maximum allowable offer for distressed properties purchased at auction. Instead of starting his calculation at 75% of a property’s estimated after-repair value (ARV), he will start at 70% of ARV. Or he’ll start with 75% ARV, where the ARV is based on a 10% haircut off comparable sales.

“Just be a little more conservative,” he said of his bidding strategy. “Got to be nimble in this market. Super important. Otherwise, we’ll be out of business.”

Purchase Discounts Rising

Depending on the level and type of competition from other investors and credit strategy employed by foreclosing lenders, a more conservative bidding strategy by enough bidders could eventually raise the average purchase discounts at auction for a given market. That shift toward bigger purchase discounts is taking place in just over half (54%) of the 123 metropolitan statistical areas analyzed in the Auction.com data.

Markets with the biggest increase in average purchase discounts between 2021 and year-to-date 2022 were Buffalo, New York; Knoxville, Tennessee; Kingsport-Bristol, Tennessee; Honolulu, Hawaii; and Lansing, Michigan. Average purchase discounts increased in five of the 10 markets with the most properties brought to foreclosure auction in the first half of 2022: New York-Northern New Jersey, Atlanta, Detroit, Chicago, and St. Louis.

Among the top 10 markets, average purchase discounts decreased in the first half of 2022 in Cleveland, Ohio; Houston, Texas; Miami, Florida; Washington, D.C,; and Philadelphia, Pennsylvania. Among the larger set of 123 markets, those with the biggest decreases in average purchase discounts were Fayetteville, Arkansas; Macon, Georgia; Scranton, Pennsylvania; Greenville, South Carolina; and Hartford, Connecticut.

Deeper discounts at distressed property auctions could come if demand continues to deteriorate in the retail market, putting downward pressure on prices. Although he’s not expecting that scenario to play out in most markets, Lizell is putting aside some dry powder to ramp up acquisitions if it does.

“It’s more shifting to get cash quicker … so if it does shift, we are more in the position to take advantage of falling prices,” he said, recalling how quickly the market shifted in 2008. “We make more money in a down market than we do in a market like this.”

Richmond, Virginia-area investor Rick Starnes is already in “aggressive acquisition mode” and said he would become even more aggressive if prices fall in his market.

“If that happens again, I’ve got some money set aside. I’ll go out and buy four or five of them,” said Starnes, who has been purchasing properties at foreclosure and REO auction since 2018, while continuing to hold down a fulltime job. “If you’re holding the asset as a cash investor, the market is going to turn around. It might take years to turn around, but in the meantime, you can rent it out.

“The best thing I can see to hedge against inflation is to buy real estate,” he added.

Daren Blomquist is vice president of market economics at Auction.com. In this role, Blomquist analyzes and forecasts complex macro and microeconomic data trends within the marketplace and industry to provide value to both buyers and sellers using the Auction.com platform.

Anyone watching the real estate market during the last year knows bidding wars and above-listing sale prices have defined this tumultuous time. Homes have gone under contract for the asking price or higher on the same day they were listed. This buying frenzy has kept many investors on the sidelines, waiting for the market to cool.

Although the irrational exuberance has begun to slow a bit in Southwest Florida, the fundamentals that created it remain strong. Many of the same conditions that created

Anyone watching the real estate market during the last year knows bidding wars and above-listing sale prices have defined this tumultuous time. Homes have gone under contract for the asking price or higher on the same day they were listed. This buying frenzy has kept many investors on the sidelines, waiting for the market to cool.

Although the irrational exuberance has begun to slow a bit in Southwest Florida, the fundamentals that created it remain strong. Many of the same conditions that created last year’s sellers’ market are still in place; most importantly, supply is still way below demand. Low inventory, the arrival of new millennials moving into the buying market, and the historic slow rate of new home construction are keeping prices high. Typically, the national real estate cycle fluctuates every seven years, but the country is currently in the 11th year of an uptick in new single-family homes sold.

Southwest Florida seems to be the epicenter of the feeding frenzy for real estate sales. Prices have soared to historic rates in Lee, Charlotte, and Collier counties. As an example, a residential property in Cape Coral (Lee County) that sold for $267,000 in 2020 was valued at $366,000 in the fourth quarter of 2021—a 37% increase. By the end of 2022, that same house could be $500,000.

The total number of residential permits for Lee, Collier, and Charlotte counties totaled 25,184, a 37% increase from 2020. New residential single- and multifamily homes in Lee County saw a 28% increase, while Collier and Charlotte saw 48% and 50% increases, respectively.

Those numbers are reminiscent of the “boom” in 2005, when those counties saw 44,000 total permits. If there were to be a massive influx of residents looking for homes in Southwest Florida like we saw in 2005, the builders would simply not be able to meet the demand due to the shortage of supplies and other factors.

Homeowners have seen their home values increase dramatically, so they are opting to sell and rent, leading to an increase in multifamily properties. They’re selling out—choosing not to buy in—but renting an apartment or house instead. In other words, they’re riding it out until the market softens.

This activity has created an interesting and emerging trend for investors. The build-to-rent model seems to be a win-win for both investors and residents looking for options other than home ownership. Builders and developers clearly are seeing this trend: The number of build-to-rent homes is expected to double in 2022.

Unprecedented Growth

Florida is the second-fastest growing state in the country. Lee County, in particular, saw 23,000 people relocate to the area from July 2020 to July 2021. In Florida, the median price of sold single-family homes in January 2022 was $375,000, and Lee Country sits at $413,000. When you look at the percentage change, Southwest Florida outperformed the state in every county other than Sarasota. There is no question this area is blessed and we’re doing better than the rest of the state.

The number of existing homes sold increased by 16% in Lee County from 2020 to 2021. In 2021, Lee, Charlotte, and Collier counties all set records for single-family home sales, with Lee coming in at 19,226.

One of the factors driving booming home sales in Southwest Florida is a great migration to Florida from around the country. Florida is the most business-friendly state in the country, accounting to a new report from WalletHub. Florida solidified its standing as a national tech hub last year, adding more new companies in that sector than any other state. Goldman Sachs, Tiger Global Management, and D1 Capital Partners have all decided to make Florida their home, bringing with them wealth and jobs. The U-Haul Growth Index, a marker for migration and growth trends, reported that 10 of the top 25 U.S. growth cities are in Florida, and four of those cities are in Southwest Florida.

Inventory Is Moving Fast

It’s kind of torture to be a buyer in the Southwest Florida market. Buyers are going through multiple offers, and the national stats show that the average time on the market for a home is 19 days; normally, it’s around 80 to 90 days. What’s causing this is the lack of inventory. In Lee County, the number of single-family homes available decreased by 13% over the last year.

In February 2009, when the bubble had just burst, there were 4,220 single-family homes in Lee County under $100,000. In June 2021, there were three. Now, there are none.

In Lehigh Acres, the median sales for homes and lots have skyrocketed more than 138%.

In Cape Coral off-water lots, sales have increased by double-digit percentiles and costs have ballooned 173%. The median sales price is now $41,000 compared to $15,000 in January 2021. When it comes to waterfront property in Cape Coral, Grimes said the median asking price eclipses $1 million and, on a canal, more than $2.5 million.

When it comes to luxury homes ($1 million to $5 million), Lee County is outpacing Collier County (percentage wise) with an increase of 109% from 2020 to 2021. Lee County saw 1,169 homes sell in that range in 2021, up from 558 in 2020.

In regard to homes over $5 million, Lee saw a 208% increase from 2020 to 2021, with 37 sold in 2021 compared to 12 in 2020.

Timing Is Everything

If you are an investor, you surely know how important getting in at the right time is. That’s why now is not the time to sit on the sidelines with your capital. Yes, prices are rising and will continue to do so. Many of the same factors that have been driving sales are still in place and will remain there for the near future.

Most people see the rising prices and the rising interest rates and think it’s a bad time to get in the market. Many experts do not share this opinion, mostly because there is not just one housing market. Each market, from regional down to the neighborhood level, is unique. Southwest Florida is a standout for many of the reasons already highlighted. The region is expected to see this rate of population growth for the next several years. Even if the real estate market cools in the next year or so, home prices aren’t going to drop; they are just going to rise at a slower pace.

So, if you are on the fence about whether now is the right time to get in the game, consider the timing. There’s no “magic hour” or perfect time to buy or sell a property. As an investment, real estate trends upward, so it’s never a best practice to wait in order to beat the market. If you would like more information on market trends in Southwest Florida, download the Buyers Guide: Build To Rent Southwest Florida.

Robert Knight is the founder and CEO of White Stone Developments. He has 15 years of experience in the real estate industry as an investor, contractor, and Florida realtor. He is a local market expert in Southwest Florida, currently focused on new construction opportunities in the Cape Coral/Port Charlotte area.

White Stone is a leading investor-focused builder helping build-to-rent investors find off-market land and build single-family and multifamily homes specifically designed for long-term rentals and Airbnb investments.

A good house flipper typically takes a subpar property and turns it into a highly desirable one, essentially turning a frog into a prince. Still, house flippers must walk a fine line between improving a property enough to attract buyers and keeping costs low enough to preserve their profits.

The most effective way to maximize your profits is to track the return on investment of various home improvements and renovations, just as you would if you were projecting income from a rental. After all, if you

A good house flipper typically takes a subpar property and turns it into a highly desirable one, essentially turning a frog into a prince. Still, house flippers must walk a fine line between improving a property enough to attract buyers and keeping costs low enough to preserve their profits.

The most effective way to maximize your profits is to track the return on investment of various home improvements and renovations, just as you would if you were projecting income from a rental. After all, if you spend $20,000 putting in a swimming pool and doing so only ups the sale price of the home by $10,000, you’ve lost money. Lose too much money on an unwise renovation and you may have to unload the property to a cash buyer. On the other hand, if you spend $500 painting the interior of your home, and it increases the value by $5,000, you’re on the right track.

There are a lot of home improvements that offer a great ROI. Here are 13 renovations that will have buyers lining up to make an offer.

1. Painting

A fresh coat of paint on the walls of a house is one of the easiest and most cost-effective improvements out there. Painting your home only costs as much as a few cans of paints, some brushes, and a few dropcloths. It’s a great option if you’re relying on unconventional financing for your renovation. A good paint job makes a home look brighter, cleaner, and newer. Depending on the size of your house, paint jobs can be completed, even by amateurs, in just a handful of days.

Experts suggest going for softer, neutral colors such as light gray, beige, eggshell, or “greige.” White may seem like an obvious choice, but it can look very harsh.

2. Bathroom Remodel

Along with kitchens, bathrooms are often a decisive factor in a home’s appeal. Prospective buyers base a lot of their feelings on a home’s modernity and overall aesthetic by looking at the bathrooms and kitchen, so you want them to look as sharp as possible.

A practical bathroom remodel doesn’t mean tearing down walls and redoing the plumbing. A transformative remodel can focus on details like finishes—installing a new basin and taps, replacing a conventional showerhead with a rainfall showerhead, modernizing the lighting, and bringing the color scheme up to date.

3. Landscaping

You’ve probably heard the term “curb appeal” before. It describes the first impression your home makes on prospective buyers as they approach from the street. This first impression is crucial. Most buyers decide whether they like a home within a few seconds of laying eyes on it.

Landscaping can have a massive impact on a home’s curb appeal, especially if it’s a distressed property or one that hasn’t been maintained. You want to walk a fine line between establishing neat, clean lines while avoiding the impression your yard is “high maintenance”—which can turn buyers off. Trim grass, trees, and hedges and remove any visual obstructions blocking your home’s façade. Consider putting in strategically placed flowers to brighten up the yard.

4. Kitchen Remodel

Similar to the bathroom remodel, freshening up your kitchen can pay big dividends. An effective kitchen remodel doesn’t require a huge gut renovation. Instead, you can focus on cosmetic changes and updates—new, classy appliances (stainless steel is always admired), updated light fixtures, refinished cabinetry, and an updated color palette for the walls and counters.

5. Home Office

Since the pandemic began in March 2020, demand for home offices has exploded. As employers across the country make work-from-home policies permanent, this is going to be a top-tier home feature for the foreseeable future. Some buyers are even looking for homes with multiple home offices! Size isn’t a huge consideration, and even something like a converted walk-in closet can often make a great home office.

6. New Door

Remember when we said curb appeal is a huge factor in what kind of impression your home makes on a buyer and that most buyers make up their minds about a home within seconds? A new front door is one of the most effective ways to boost a home’s sale prospects.

According to experts, a classy, understated black or charcoal gray front door provides the largest boost to resale value. On the other hand, bright, eye-catching colors like turquoise, yellow, and pink are the most effective in selling a contemporary home. Make sure you match the style of your new door to the style of the rest of the home.

7. Deck or Patio Addition

Adding outdoor space or enhancing outdoor space with features like a patio or deck is a no-brainer. Adding these features expands the amount of usable space that comes with the home, just as if you were adding a bedroom—and it will provide a big boost to the home’s value.

8. Basement Finish/Renovation

A fully finished basement is a huge selling point, as it can be used as an extra bedroom, a home office, or a recreation room. Like other items on this list, you’re adding more livable, usable space to the home, which adds to the property’s value and appeal.

9. New Windows

When it comes to enhancing a home’s curb appeal, new windows are right up there with a new front door and fresh landscaping. Gleaming new windows are aesthetically pleasing. And insulated, energy-efficient windows convey that a home is up-to-date and won’t cost the next owner unnecessary money on utilities.

10. Refinished Hardwood Floors

Freshly refinished hardwood floors can make a home look newer and classier—and make a buyer more willing to pony up for a high price. If you have wall-to-wall carpeting, ripping it out and redoing the wood floors can dramatically increase a home’s value. Like painting the walls, you can do this yourself in a relatively short time.

11. Attic Bedroom Conversion

Adding an entire new bedroom to your house has obvious appeal, especially if it’s a family-oriented home. Attic bedrooms also have a unique, cozy charm that extend their appeal beyond just an extra bedroom. Keep in mind that converting other finished spaces, like basements, into extra bedrooms, can also be a huge upgrade.

12. Open Floor Plan

Most buyers today prefer an open floor plan, especially when it comes to central shared spaces like the kitchen, dining room, living room, and family room. Knocking down walls between rooms is actually quite complicated, so you’ll want to let a qualified, licensed contractor handle this job for you.

13. New Garage Door

Like new windows and a gleaming new steel front door, a new garage door can substantially increase your home’s curb appeal. A fresh new garage door looks nice, and a new, smoothly running garage door system tells buyers your home is well-maintained and updated. There are few things more off-putting to buyers than a squealing, shaky garage door.

Luke Babich is the co-founder of Clever Real Estate, a real estate education platform committed to helping home buyers, sellers, and investors make smarter financial decisions. A licensed real estate agent in Missouri, his research and insights have been featured on BiggerPockets, Inman, the LA Times, and other media outlets.

Babich has a bachelor’s degree with honors in political science from Stanford University.

Moving into a new home can be exciting as it opens you up to the chance of a fresh start. It’ll be a place where you can start a new with yourself or with your family and finally be able to enjoy what new adventure awaits. 

While there are plenty of beautiful homes in different states in America you might see on the market, it’s vital that you don’t just settle immediately, as there are plenty of factors to consider.

When searching for new homes in Argyle, Texas or any other city you’re

Moving into a new home can be exciting as it opens you up to the chance of a fresh start. It’ll be a place where you can start a new with yourself or with your family and finally be able to enjoy what new adventure awaits. 

While there are plenty of beautiful homes in different states in America you might see on the market, it’s vital that you don’t just settle immediately, as there are plenty of factors to consider.

When searching for new homes in Argyle, Texas or any other city you’re interested in, you should be thorough and meticulous, especially since you’ll use a lot of money. This isn’t just buying a piece of clothing, wherein you can buy a new one instantly, as this will be your investment, as you’re spending thousands of dollars. 

To avoid any disappointments and frustrations, below are some factors to check when searching for a new home: 

1. Location 

One of the first things you need to check when searching for a new home is its location. This will determine your convenience and how comfortable you’ll be inside your home. Moreover, this is one of the few things you cannot change in your home as this is where your house is situated.  

For your home’s location, you should check if it’s near your work, a good school district, hospitals, grocery stores, a park, and other home necessities. The nearer you are to those establishments, the better it’ll be for you to access them, perfect for any emergencies quickly. Alternatively, you might want to check some communities, such as Harvest by Hillwood, which can provide you with everything you need, all in one place.

2. Site

Apart from the location, you also need to consider the actual site of your home. It could be located up or down the hill, requiring a few steps to climb or risk your home from natural disasters. 

Ideally, you should check the property about how near or far it is from the fault line and if there’s a possibility of flooding in your area. Even if it seldom happens during the day, it’ll be best if you could have a home that’s perfectly safe from any natural disasters. This will help make everyone feel comfortable and secure while inside your home.  

3. Neighborhood 

Another thing you can’t control with your property is your neighborhood. No matter how beautiful your house is, if your community is too much to handle, it might not give you a relaxing ambiance. 

To see what your neighborhood feels like, you should drive by during the weekend and weekdays, both day and night, and see how your future neighbors interact. You should also check how they take care of the yard as it’ll determine if they’re neat or will cause possible health concerns in the future.  

4. Lot Size 

Checking the lot size is crucial when looking for a new residence. Your lot size determines how you can extend your home in case your family finds your current floor size too small and uncomfortable for everyone to move in. Additionally, you can manipulate how you’d like your yard to be. You can either add a patio or pool or increase your driveway – it can help you determine if the house price is within the right range or falls within the overpriced side.  

5. Curb Appeal 

Of course, one of the biggest factors when buying a home is to check its curb appeal. It’s the first thing people see when they check out a house and decide if it’s something they’d be comfortable living in, along with imagining themselves being inside. The curb appeal can help to make a good first impression and determine the property value. 

A modern look should cost more, as they’re newly renovated and will not require any unnecessary adjustments. Alternatively, you might open yourself up to improving the curb appeal yourself to save on cost.  

6. Natural Lighting 

One of the most neglected features that most home buyers tend to forget is the ability of the house to produce natural lighting during the day. 

Even if you can easily switch on the lights, inviting plenty of natural lighting inside your home can be helpful to your electricity bills. It can also help to make your home look cozier as the natural light helps to bring warmth inside your property. 

Ideally, you should check the property during the day and turn off the lights to check how bright and airy the house feels.  

7. Number Of Rooms 

If you’re living with your family or other people, it’ll only be logical if you could prioritize the number of rooms as well. The larger your crowd is, the more rooms you need to ensure everyone’s privacy. Along with this, you should also consider the number of bathrooms that the house can accommodate, as adding more can be costly as you’ll be working with plumbing reconstruction. 

If you’re inviting guests over, it’ll be helpful if your house includes a powder room or a full-sized bathroom on the ground floor. Moreover, having individual bathrooms in each bedroom would surely be efficient for everyone.  

8. Storage Options 

You’d be surprised at the number of things you need to keep inside the house that you won’t regularly use. This includes your set of pots, toolbox, cleaning supplies, and more. Since those things aren’t really a treat for the eyes, you need to keep them inside a storage room or cabinet, allowing your house to look neat and organized. 

With that, you need to look for a property that can provide you with as many storage options as possible. It’ll be helpful too if you could look for ones that offer double-purpose furniture that allows you to store and use it, save space, and make the storage process seamless.  

9. Price 

Of course, one of the most significant factors when searching for a new home would be its price. There’s nothing more frustrating than finding the perfect home, only to find out it’s not within your price range. 

To set your expectations with your house hunting process, you should set your homebuying budget, including the closing fee, agent’s commission, renovation, and furniture shopping. This will help you stay on track and avoid overspending on features you don’t actually need.  

Takeaway 

Searching for a new home can be tricky as there are plenty of factors you need to consider. But with the right research of the entire property, including its location, curb appeal, and house features, you should be able to find the perfect property for you and your family to stay in. While the process might be a bit of a handful, everything would be worth it once you settle in. 

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Chances are you’ve heard about life insurance. You’re aware this is coverage people carry to protect their loved ones in the event of their death. If that’s where your knowledge of the subject ends, you’ll need to learn a bit more. 

Life insurance policies can vary greatly from coverage to cost and several things in between. In order to make sure you get the policy that provides exactly what you need, it’s best to have an idea of what level of coverage you’re looking for. A generic rule

Chances are you’ve heard about life insurance. You’re aware this is coverage people carry to protect their loved ones in the event of their death. If that’s where your knowledge of the subject ends, you’ll need to learn a bit more. 

Life insurance policies can vary greatly from coverage to cost and several things in between. In order to make sure you get the policy that provides exactly what you need, it’s best to have an idea of what level of coverage you’re looking for. A generic rule of thumb is 10x the amount of your annual salary. Keep in mind this doesn’t take into consideration your specific details such as your level of debt, the balance of your mortgage, funeral expenses or impending college tuition for your children. 

Homeowner Policies

Homeowner life insurance policies are essential for anyone who owns property that isn’t paid off. After your passing, the mortgage can be an unbearable expense for your loved ones to incur without the help of your income. The last thing you want to worry about is how your family will make ends meet when you’re no longer contributing to the overall household income.

Once you sit down and examine your expenses, you’ll have a better idea about the amount of coverage you need from your insurance policy. Armed with that information, you’re on your way to choosing a policy that will best fit your needs.

Mortgage life insurance is exactly what it says. When you die, this type of insurance will pay off the balance of your mortgage. That payment goes directly to the lender to satisfy your outstanding mortgage balance and there’s no payout directly to your family. In addition, as your mortgage is paid down, the death benefit decreases but the premiums don’t. If you have more financial responsibilities outside your mortgage, such as debt and funeral expenses, this probably won’t be the best choice for you. 

Term life insurance is a straightforward, no-frills policy. You purchase this insurance for a set amount of years, known as the “term” of the policy. If you die within the life of your policy, your family is paid a guaranteed amount. Should you outlive the term of your policy, most companies will allow you to either purchase an additional term or convert your policy into a whole life policy. You don’t have the option of borrowing against the amount you’ve invested in the policy and the final payout doesn’t fluctuate. Term life insurance is typically the most affordable policy. 

Whole life insurance is a policy that is designed to cover you for your entire life. It also acts as cash savings because you can borrow against it. The amount of the policy can vary based on market performance. When you borrow against the cash value of the policy, you risk a lower payout if that loan, which is assessed interest, isn’t paid off before the death benefit is used. 

Rates

When it comes to purchasing life insurance, some factors will directly impact the premium you pay. For starters, the greater the payout on the policy, the higher the premiums will be. The age you take out the policy will also affect the cost. Insurance companies see people who are younger as less of a risk, and therefore the premiums are lower. There are also certain health and lifestyle details that may impact your rate. Among those are health concerns, medical conditions and if you’re a smoker. 

If you’re a homeowner and have dependents, carrying life insurance is a must! Remember to stay on top of your policy premiums as not meeting your obligations can lead to the cancellation of your policy or refusal of payout benefits.