1. Don't rush into a cash settlement
The process of rebuilding a home can take time, and you or your family may not have the stomach for it. Following a disaster, insurance companies may send out appraisers to settle homeowner claims in cash. But, tempting as it may be to take that money and use it to get you through the early stages of your ordeal, it may not be the best idea.
"Make no mistake, many of those all-cash settlement offers will be lowball offers," David Lazarus of KTLA 5 warned viewers in a segment broadcast Jan. 14. "Get a second opinion first."
Taking a low offer may only provide temporary relief, eventually leaving you short. Before making a decision, reach out to a different real estate or finance expert first to see if the offer you're presented with is reasonable and fits with your plans.
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Learn More2. Beware of predatory buyers
Although thousands of L.A. homes are now destroyed, the land still has value. In some cases, the land's value can be higher than the house that sits on it. For this reason, be wary of predatory buyers, developers and investors who may try to pressure you into selling your land. And if you’re inclined to accept an offer, get a second opinion before signing a contract.
You should also know that in mid-January, California Gov. Gavin Newsom signed an executive order barring predatory investors from making unsolicited lowball offers to wildfire victims. If you're pressured or harassed to sell your land, report that violator here.
3. Mortgage payment options
Unfortunately, the obligation to pay off a mortgage does not go away even if your home is completely destroyed. But you may have options.
If you're currently displaced and aren't sure how you'll pay your mortgage, talk to your loan servicer. You may be eligible to defer your monthly payments or put your mortgage into forbearance, which allows you to pause payments for a period of time without a negative impact on your credit score.
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Discover the secret4. Temporary funds from insurer
As part of your insurance coverage, you may be entitled to limited funds to cover temporary housing and other near-term needs. This is not the same thing as an all-cash settlement, where you accept a lump sum of money instead of having your insurer cover the cost of rebuilding your home.
Read through your insurance paperwork or contact your insurer and ask if you're eligible for any funds. You may not be able to afford a temporary rental on your own, but with your insurer's help it may be possible.
5. Find out if you qualify for federal aid
If your home was destroyed in the recent L.A. wildfires, you may be entitled to federal aid, even if you have insurance. Specifically, funds may be available to you to cover costs such as temporary housing and replacing personal items.
If you have insurance, it’s best to file a claim with your insurer as your first step. But from there, don’t hesitate to file for federal aid.
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