New Homeowner? 3 Dangers You Need to Know About

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( — March 27, 2018) — Trouble could come knocking after you have signed on the dotted line and deposited the down payment to your new house. 

For many new homeowners, signing a contract often means the end of months and maybe years of research into finding the right property. But homeowners should know that caution should continue, even after all the papers are signed. Proper preparation can help you keep unpleasant surprises to a minimum.

Here are some risks and dangers that homeowners should be aware of.

Accidents on your property are your fault. 

Say you host a birthday party for your daughter. The party entertainers show up on time. The caterers get your preference sheet right. And Little Margaret is declaring it’s her best birthday ever! But then one of the caterers, known as an invitee, slips and falls. Guess who could be sued? You. The legal definition of an invitee is someone you are employing, or a customer or a tenant.

Did you know that it is the responsibility of property owners to keep their house safe for invitees? That means keeping your place free of items that could fall or be tripped on. According to Reyna Injury Lawyers, “These may seem like minor incidents, but slips and falls often cause serious injuries that result in mounting medical bills, numerous days missed from work, and other losses.” 

Before having someone over, make sure that you clear the area they will be working in and warn of possible hazards.

What you don’t know about defaulting on your payment could hurt you. 

One of the largest dangers that homeowners will face is defaulting on payments. The results of defaulting on a loan are grim. Your credit history is damaged and can haunt you for a long time. You will be unable to open new financial accounts. And you might face legal action.

Defaulting on payments is the last thing on a new homeowner’s mind. Yet, the reality is that setbacks such as the loss of a job, a divorce, or settling others’ debts can create unforeseen circumstances.

Additionally, there are other ways you could default on your mortgage that do not have to do with falling behind on bank payments. For instance,

–   If you fail to pay property taxes (not escrowed).

–   If you fail to pay your property insurance (not escrowed).

–   If you transfer ownership of the property or house without the bank/lender’s permission.

Reading up on what would happen if you were to default is a good place to start in shoring up your defenses. Develop a plan of action to deploy in this worst-case scenario. For example, if you become unemployed or are in financially unstable circumstances. Action steps include:

–   If you have some insurance coverage, check if it covers your mortgage payments in the case of unemployment. Some do.

–   Contact your bank or other lending institution and see if you can arrange a new payment plan that will allow you to make smaller payments. says reaching out to your lender before defaulting on a payment can increase your chances of working out an alternative plan. The Ohio Dept of Commerce Finance Division provides an example of a mortgage hardship letter that can be adapted to fit your needs.

–   Other actions include seeking help from the Federal Housing Administration. Other government agencies offer programs to help the unemployed with their mortgages

Uninsured natural disasters can devastate your wallet.

A homeowner’s policy will insure you against standard losses in the event of fire, hail, or theft. But there are some natural disasters it does not cover. Reading the fine print, or making a good guess based on what is not included in the fine print will show you where you need more protection. 

Often, uninsured areas include damage by flooding, hurricanes, sinkholes, or earthquakes. And the damage as a result. Also, house maintenance issues are not a part of a standard homeowner’s insurance policy. That means roof repairs or other structural repairs need to be funded by you and could eat away at your savings.

The US has seen a climb in natural disasters over the last few years. And the World Economic Forum has listed climate change and the resulting extreme weather events among their top 5 concerns for 2018. Hire a lawyer to help you understand where you are at risk. And decide whether you could use further coverage for that area or not. Having an emergency fund will also help you pay for unexpected house repair costs.