The Proper Response

Scott Hughes — Wed, 17 May 2006 15:01:00 -0700

When someone tells you that they are buying a house (shopping around, under contract, closing, whatever)… The proper response is not “Congratulations!” Instead, one should hang his head low and with a concerned face ask, “Sorry buddy, is there anything I can do to help?”

Home inspectors, mortgages, appraisals, surveys, closing costs, origination fees, APR, points, homeowner’s insurance, hazard insurance, 15 yr vs 30 yr, 10% down vs 20% down, HOA vs HOB, and actually worrying about what the Fed is going to do next…

This is no small undertaking. So, next time a friend of yours says he’s buying a house, don’t patronize him with that smile. Try to empathize.

Update 6/7/06:
I noticed a lot of hits for people looking for information on HOA vs HOB. I was surprised to see that I was at the top of the google search results for the query “HOA vs HOB”, so I thought I’d enlighten any searchers on what I learned about it. There wasn’t a lot of info that I could find on it as I searched and I eventually discovered it’s because it’s kind of a meaningless distinction. In general, HOB is supposed to mean more coverage than HOA. However, in practice it isn’t always true. By more coverage, I mean that an HOB would typically cover mold damage, while an HOA would not. In the state of Texas, we are recovering from a mold damage bonanza where a lot of people were making claims a few years ago after some babies got sick (at least one died) from inhaling mold spores. So, HOB policies here will now exclude mold damage by default with an option to buy it back at an increased price. The HOB is typically recommended as the best deal for your money (and the HOC is just way overboard), but for my money I decided to go with an HOA-Amended. It’s ‘amended’ basically with all the extras that make it an HOB. The basic lesson that I wanted to get across here is that the difference between an HOA and an HOB doesn’t matter at all. Instead of worrying about this label, ask the insurance company who is sending you the quote to give you a detailed list of all the coverages included. Compare the specific coverages between the insurers and make sure you’re not saving money at the cost of a necessary coverage item (like accidental water damage). You should try to get as many quotes as you can… If you only got one quote, I can practically guarantee that you are overpaying.

Global Reset: The Proper Response

The Proper Response