Before deciding to move to that new location, make sure you know how much it will really cost you to live their. Residents fed up with high property taxes or expensive housing may be tempted to relocate to a home in a lower-cost region. People who fail to do their homework may get burned. Whether you are moving by choice or by necessity, you should evaluate all the costs of relocating because costs vary a lot even within a metropolitan area. Before you move, weigh the following costs:

Transportation

After housing, transportation is the second-biggest expense for most households, according to the Center for Neighborhood Technology in Chicago. Costs can be high whether residents drive their own cars or use public transportation. The first calculation when it comes to choosing a place to live should be this: You don’t live your life in your home, you live it outside your home. While homeowners generally are urged to keep housing costs to no more than 31% of income, the combined costs of housing and transportation should not exceed 45% of income. Many home shoppers budgeting for a new home weigh their monthly payment, taxes and insurance, but they don’t always estimate their transportation costs. It’s a mistake to think of transportation costs purely in terms of commuting. For every five miles that the average person drives, only one mile is for commuting. People need to think about the compactness of their neighborhood, how far they need to drive to reach places like the grocery store, school and medical offices.

Taxes

Taxes are especially important when comparing the overall cost of living in one area to another. Property taxes will be estimated on each home listing, but everyone should also review sales taxes and state and local income taxes. Some states also have personal property taxes on items such as cars and boats, which can add to the cost of living.

Insurance and utilities

It is recommended that people contact their insurance agent to receive an estimate of the costs of car insurance and homeowners insurance in the new location. People moving to a flood-prone or tornado-prone area may find they need additional hazard insurance. Car insurance costs depend not only on the car and driver, but also regional theft and accident rates. Utility costs also can vary from region to region. Utility costs have a lot to do with the size of the property and the energy efficiency of the design and the systems. The best way to estimate them is to get copies of the utility bills from the owners.

Other costs

Even the cost of basic groceries and medicines can vary from place to place. For example, someone earning $200,000 in Washington, D.C., would need 30% more income to maintain his or her lifestyle in New York City. By contrast, that same D.C. resident could earn 33% less in Dallas and still maintain the same lifestyle. It’s very important for people to know what the fees are and what they cover in terms of amenities and maintenance. You need to look at the association’s finances and ask about the rate of increase in fees. Of course, costs are not the only factor in deciding whether or not to relocate. I think the primary consideration should be quality of life.  As long as they can afford to live there and still save for retirement, people should choose where they want to live.

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If you’re pondering whether to buy or rent, you know the decision is partly an emotional one. If you detest landlords and have plenty of money to put toward a house, you may prefer the pride of ownership, regardless of how low rents go. On the other hand, if you plan to leave town in a year, the transaction costs involved in owning make it a prohibitive prospect. For most people, the choice is tougher. If you’re settled in a hometown and want to make the financially smartest move, a few mathematical calculations should lead you toward an answer. First, you find a home you’d like to own and calculate its “capitalization rate.” The cap rate is the amount of rental income you would earn if you bought the house and leased it out at the market rate. You express the amount as a percentage of what you’d pay for the house. So if you plunk down $100,000 for a house that you calculate could produce $5,000 a year in rental income, you’d say the capitalization rate on the house is 5%. The higher the cap rate, the better for the buyer. If the home you wish to buy has an implied cap rate that is equal to or higher than the return you think you can safely garner in stocks or bonds, it probably makes sense to go ahead and buy. What’s nice about a cap rate is that you don’t have to guess at what housing prices will do in the coming year. You only need to know what you’d pay for a home now and what it would rent for now. It’s important to calculate the cap rate correctly. Rental income is not the same as gross rent. Get a couple of local real-estate agents to tell you realistically what the house you wish to buy would garner in annual rent. Then subtract property taxes, insurance and a reserve for routine upkeep. What’s left is your rental income. (A good rule of thumb is that rental income is two-thirds of gross annual rent.) If you do buy, of course, it’s not as though you’ll get rental checks in the mail. The rental income figure you calculate is the amount of money you’re saving by not having to rent your own home. For most of us, those savings will be directed toward mortgage payments. (For a few years, those payments will mostly go to covering interest. Eventually most of it will go toward paying down the principal on your loan, which is as good as putting money in your pocket.)

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You’re at a disadvantage when you have major house damage or a total loss of your home. You face a home insurance claim process that could easily stretch out for more than a year, require reams of paperwork and leave you exhausted. Here is a look at many of the things that can take people by surprise when they have a large home insurance claim:

1. A claim for a total loss of a house can cost less than rebuilding a damaged house.

Construction from scratch costs less per foot than construction for rebuilding. Often it’s “easier” to fix your problem if your house is simply gone, rather than to try to repair the damaged sections of what’s left. When you start from scratch, you don’t have to incorporate changes that exist with the building, so you have a clean slate. Also, it’s often more costly to retrofit your old house to prevailing code than to start fresh.

2. If you have a mortgage, your insurance checks will be made out to both you and your mortgage bank.

Your mortgage holder is likely listed as a “loss payee” on your home insurance policy, so payments for rebuilding are issued to both you and your lien holder. And don’t expect your mortgage holder to sign over the check to you. Policyholders have to endorse and send the check to the mortgage company, and it will sit in escrow until repairs are made. Mortgage banks typically release the funds back to you in three installments over the course of your reconstruction. Mortgage companies want to be sure your property is repaired before releasing payment to you. As a result, you may have to advance your own money for construction costs until the mortgage company verifies the repairs.

3. Don’t cash any insurance checks marked “full and final settlement.”

In some states, such as California, it’s illegal for an insurer to issue a check like this. You don’t want to cut yourself off from any funds you’d be entitled to if you later discover that not everything has been paid for.

4. Don’t sign a release on your home insurance claim.

This takes the home insurer off the hook for any future payments on your claim. Insurance companies ask the insured to do it when they think there’s a problem or big dispute coming. The home insurance policy does not require the insured to execute a release, so why should you sign?

5. Don’t let your insurance company replace your Pottery Barn stuff with Wal-Mart stuff.

The values of particular items are often disputed in home insurance claims. If you’ve bought expensive items, your insurance company may say it can replace them with very similar items from Wal-Mart or Target. The insured is entitled to be paid for what they had — not a knockoff version of it.

6. Many condo owners have no idea that they need their own home insurance policies.

They think that the condo association’s policy covers their property. However, the association’s policy covers only common areas, typically up to the walls of the condo. If you want your own space and belongings protected, you need an HO-6 home insurance policy. Otherwise, all your belongings, furniture, appliances and cabinets are uninsured. Without an HO-6, you also may have no liability protection if you’re sued for something that happens within your condo, like a slip-and-fall injury.

7. If you’re forced to evacuate, don’t sleep at a shelter.

Your home insurance covers your “additional living expenses” if there’s a mandatory evacuation, including hotels and food — even additional transportation costs. Why sleep on a cot when you could go to a hotel? You don’t realize you have that coverage until you have a loss.

8. After a widespread disaster, insurance companies will bring in company adjusters from out of state who aren’t familiar with local costs.

Adjusters from outside your area may not have a handle on how much electricians, plumbers or other workers charge, or how much it costs to rebuild a house. Often they will rely on a software program called Xactimate, which isn’t very exact if you don’t account for local costs. The insurance company will bring in out-of-state adjusters who are probably not licensed in the state. They’re not as familiar with local building codes. What we saw from the 2007 fires in Southern California was that out-of-state adjusters can’t comprehend that it will cost $800,000 or $1 million to rebuild someone’s house. They can’t comprehend local building values.

9. People regularly settle for less than the total cost of their damages because they are exhausted.

Especially near the end of a complicated claim, such as a total home loss, homeowners just want the process to be over. Even if your policy entitles you to “replacement cost” of your belongings, home insurance companies will initially issue checks for your belongings’ actual cash value. Then, once you’ve replace the items, you must submit your receipts to get the difference between the initial checks and what you actually paid for replacements. In reality, most people don’t go back and submit receipts because they’re so frustrated with the claim, they’re done with it. They’ll settle for less and close the claim and rebuild for less, and the insurance company knows this. Hiring a public claims adjuster can put you on an even playing field with your insurance company. Your insurer may assign three adjusters to work on your claim: one for “additional living expenses,” one for your personal property and one for the building portion of your claim. A public adjuster will be able to explain the process and work on your behalf handling the countless meetings, e-mails, phone calls and paper documents that flow for a large claim.

Read at: http://articles.moneycentral.msn.com/Insurance/InsureYourHome/9-secrets-of-home-insurance-claims.aspx?page=1