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Shopping for auto insurance or dealing with an insurance claim? It’s common to hit a few potholes on the way to understanding car insurance.

Auto insurance terminology can be difficult to navigate, so this glossary may help you find your way.

Car Insurance Terminology

Here are basic auto insurance terms explained:

Accident Forgiveness

Accident forgiveness is a benefit that can be added to a car insurance policy to prevent a driver’s premium from increasing after their first at-fault accident.

Each insurer’s definition of accident forgiveness may vary, and it isn’t available in every state. Some insurers include it at no charge, or it may be an add-on, which means it could be earned or purchased.

Actual Cash Value

Actual cash value is the term used to describe what a vehicle was worth before it was damaged or stolen, taking depreciation into consideration. The amount is calculated by the insurer.

Adjuster

An adjuster is an employee who evaluates claims for an insurance company. The adjuster investigates the claim and is expected to make a fair and informed decision regarding how much the insurance company should pay.

Agent or Broker

Both agents and brokers help consumers obtain auto insurance, but there are differences in their roles. An agent represents an insurance company (or companies) and sells insurance to and performs services for policyholders.

A broker represents the consumer and may evaluate several companies to find a policy that best suits that individual, family, or organization’s needs.

Both agents and brokers are licensed and regulated by state laws, and both may be paid commissions from insurance companies.

At Fault

Drivers are considered “at fault” in an accident when it’s determined something they did or didn’t do caused the collision to occur. A driver may still be considered at fault even if no ticket was issued or if the insurance company divides the blame between the parties involved in the accident.

In some states, drivers can’t receive an insurance payout if they are found to be more than 50% at fault.

Casualty Insurance

Casualty insurance protects a driver who is legally responsible for another person’s injuries or property damage in a car accident.

Claim

When an insured person asks their insurance company to cover a loss, it’s called a claim.

Claimant

A person who submits an insurance claim.

Collision Coverage

Collision coverage helps pay for damage to an insured driver’s car if the driver causes a crash with another car, hits an object (a mailbox or fence, for example), or causes a rollover.

It also may help if another driver is responsible for the accident but doesn’t have any insurance or enough insurance to cover the costs.

Collision coverage is usually required with an auto loan. Learn more about smarter ways to get a car loan.

Comprehensive Coverage

Comprehensive coverage pays for damage that’s caused by hitting an animal on the road, as well as specified noncollision events, such as car theft, a fire, or a falling object. It is usually required with an auto loan.

Recommended: How Much Auto Insurance Do I Really Need?

Damage Appraisal

When a car is in an accident, an insurance company’s claims adjuster may appraise the damage, and/or the car owner may get repair estimates from one or two body shops that can do the repairs.

Policyholders can appeal an appraisal if it seems low and they have some backup to prove it.

Declarations Page

This page in an insurance policy includes its most significant details, including who is insured, information about the vehicle that’s covered, types of coverage, and coverage limits.

Deductible

This is the predetermined amount the policyholder will pay for repairs before insurance coverage kicks in. Generally, the higher the deductible, the lower the monthly premium.

Depreciation

Depreciation is the value lost from a vehicle’s original price due to age, mileage, overall condition, and other factors. Depreciation is used to determine the actual cash value of a car when the insurer decides it’s a total loss.

Effective Date

This is the exact date that an auto insurance policy starts to cover a vehicle.

Endorsement

An endorsement, or rider, is a written agreement that adds or modifies the coverage provided by an insurance policy.

Exclusion

Exclusions are things that aren’t covered by an auto insurance policy. (Some common exclusions are wear and tear, mechanical breakdowns, and having an accident while racing.)

Full Coverage

Full coverage usually refers to a car insurance policy that includes liability, collision, and comprehensive coverage.

GAP Coverage

Guaranteed asset protection insurance is optional coverage that helps pay off an auto loan if a car is destroyed or stolen and the insured person owes more than the car’s depreciated value. It covers the difference, or gap, between what is owed and what the insurance company would pay on the claim.

Indemnity

Indemnity is the insurance company’s promise to help return policyholders to the position they were in before a covered incident caused a loss. The insurer “indemnifies” the policyholder from losses by taking on some of the financial responsibility.

Liability Insurance

If you’re at fault in an accident, your liability coverage pays for the other driver’s (or drivers’) car repairs and medical bills.

Coverage limits are often expressed in three numbers. For example, if a policy is written as 25/50/15, it means coverage of up to $25,000 for each person injured in an accident and $50,000 for the entire accident and $15,000 worth of property damage.

The cost of liability-only car insurance varies by state, as does the required minimum level of liability insurance.

Recommended: What Does Liability Auto Insurance Typically Cover?

Limit

This is the maximum amount a car insurance policy will pay for a particular incident. Coverage limits can vary greatly from one policy to the next.

Medical Payments Coverage

Medical payments coverage (or medical expense coverage, or MedPay) is optional coverage that can help pay medical expenses related to a vehicle accident.

It covers the insured driver, their passengers, and any pedestrians who are injured when there’s an accident, regardless of who caused it.

It also may cover the policyholder when that person is a passenger in another vehicle or is injured by a vehicle when walking, riding a bike, or riding public transportation. This coverage is not available in all states.

No-Fault Insurance

Several states have no-fault laws, which generally means that when there’s a car accident, everyone involved files a claim with their own insurance company, regardless of fault.

Also known as personal injury protection, no-fault insurance covers medical expenses regardless of who’s at fault. It doesn’t mean, however, that fault won’t be determined. No-fault insurance refers to injuries and medical bills. If a person’s car is damaged in an accident and they were not at fault, the at-fault driver’s insurance company will be responsible for the repairs.

Optional Coverage

Optional coverage refers to any car insurance coverage that is not required by law.

Personal Injury Protection

Several states require personal injury protection (PIP) coverage to help pay for medical expenses that an insured driver and any passengers suffer in an accident, regardless of who’s at fault.

PIP also may cover loss of income, funeral expenses, and other costs. PIP is the basic coverage required by no-fault insurance states.

Primary (and Secondary) Driver

The person who drives an insured car the most often is considered its primary driver. Typically, the primary driver is the person who owns or leases the vehicle. If spouses share an insurance policy, they may both be listed as primary drivers on a car or cars.

A car may have multiple secondary, or occasional, drivers. These are generally licensed drivers who live in the same household (children, grandparents, roommates, nannies, etc.) and may use the insured car occasionally but are not the car’s primary driver.

Recommended: Cost of Car Insurance for Young Drivers

Primary Use

This term refers to how a vehicle will most often be used — for commuting to work, for business, for farming, or for pleasure.

Premium

A premium is the amount a person pays for auto insurance. Premiums may be paid monthly, quarterly, twice a year, or annually, depending on personal choice and what the provider allows.

Replacement Cost

Some insurance companies offer replacement cost coverage for newer vehicles. This means that if a car is damaged or stolen, the insurer will pay to replace it with the same vehicle.

Coverage varies by company, and not every insurance company offers replacement coverage.

State-Required Minimum

Every state has different legal minimum requirements for the types and amounts of insurance coverage drivers must have. The limits are usually low. Lenders may require more coverage for those who are buying or leasing a car.

Total Loss or ‘Totaled’

If a car is severely damaged, the insurer may determine that it is a total loss. That usually means the car is so badly damaged that it either can’t be safely repaired or its market value is less than the price of putting it back together.

If a state has a total-loss threshold, an insurer considers the car a total loss when the cost of the damage exceeds the limit set by the state.

Underwriting

The underwriting process involves evaluating the risks (and determining appropriate rates) in insuring a particular driver.

Insurance underwriting these days is often done with a computer program. But if a case is unusual, a professional may step in to further assess the situation.

Uninsured and Underinsured Motorist Coverage

Uninsured motorist and underinsured motorist coverage protects drivers and their passengers who are involved in an accident with a motorist who has little or no insurance. Some states require this coverage, but the limits vary.

Some states require this coverage, but the limits vary.

Uninsured/underinsured motorist bodily injury insurance covers medical costs. Uninsured/underinsured motorist property damage pays to repair a vehicle.

The Takeaway

Understanding car insurance basics is important for drivers. Knowing auto insurance terms, coverage your state or lender may require, and what other types of coverage could further safeguard your finances can make you a more informed consumer.

When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.

Compare quotes from top car insurance carriers.

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Insurance not available in all states.
Gabi is a registered service mark of Gabi Personal Insurance Agency, Inc.
SoFi is compensated by Gabi for each customer who completes an application through the SoFi-Gabi partnership.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Whether it’s protecting personal belongings from fire or theft or serving as a source of liability insurance if a guest gets hurt inside the home, renters insurance can provide plenty of benefits for the tenant.

But can a landlord require renters insurance? The short answer is yes. Let’s take a closer look at the nuances of this coverage and why a landlord might want to make it mandatory.

Can a Landlord Require Renters Insurance in All States?

In most states, the answer is yes, they can. (Oklahoma may currently be an exception.) What’s more, landlords can usually determine a minimum policy amount that their renters must carry. When that happens, the landlord will likely be more concerned about the amount of the liability coverage a tenant has, because that can have a financial impact on the landlord if, say, damage from a fire or an overflowing bathtub occurs. They may be less concerned about the amount of personal property coverage that a tenant has in their renters insurance policy.

It’s important to note that while landlords are allowed to require tenants to have renters insurance, there are no states that require renters insurance. However, this could change, so check your state’s laws.

To get a good understanding of what a landlord requires for the apartment you want to lease, be sure to read the lease language carefully. It may contain a clause, for example, that requires a new tenant to provide proof of renters insurance within a certain period of time. If more clarity is needed, ask the landlord for an explanation before signing the lease.

Reasons Why Landlords Require Renters Insurance

Mandating renters insurance can be part of a landlord’s tenant screening process, just like checking a renter’s credit scores may be. Buying and maintaining a policy could be a sign that they’ll be able to consistently pay the rent and are willing to take responsibility for the rented space and their belongings.

Requiring this type of coverage could also lower a landlord’s overall liability. Let’s say a tenant doesn’t have an insurance policy, and some of their belongings are stolen. That tenant may decide to sue the landlord to get the money to replace those items. Similarly, if a tenant or their guest is injured on the property, they may choose to bring the landlord to court to help cover medical bills. It’s also possible that, if someone gets injured in a rented space and doesn’t have renters insurance, the hospital caring for the injured party might sue the landlord. Even if the landlord’s policy covers the hospital bill, this could result in higher insurance premiums for the landlord.

Here’s a related possibility: Suppose there’s a fire in an apartment complex and, because of smoke damage, tenants need to temporarily find other places to live. Tenants without renters insurance may not be able to pay for temporary lodgings and may attempt to get those funds from the landlord. In some states, the landlord may in fact need to provide relocation benefits for tenants who don’t have their own coverage. So, requiring a policy can shift part of the financial burden from the landlord to the affected tenants.

Continuing with the fire scenario, let’s say it’s one that was accidentally set by a tenant, and it damaged several parts of the building. Let’s also say that the landlord’s insurance policy will cover the costs, minus the deductible on the landlord’s policy. That can help to cover cleanup and remodeling expenses but the deductible can be significant—and the tenant’s renters insurance may cover the dollar amount of that deductible. This reduces the landlord’s out-of-pocket expenses, which can be a real plus for that landlord.

Recommended: What Does Renters Insurance Cover?

Proof of Insurance

If a landlord requires renters insurance, they may ask for proof of existence. Perhaps they’ll want to see a statement from an insurance company or a copy of the policy itself, though they may also simply take a tenant’s word for it.

Sometimes, a landlord will want to be listed on the policy as an “additional interest.” When that happens, the landlord will be notified if the policy coverage lapses because of non-payment or because the tenant cancels the policy.

Note that naming someone as an “additional interest” is different from naming them as an “additional insured.” The second term refers to people who are also covered by a tenant’s policy, perhaps a roommate or partner.

Securing a Policy

When deciding what policy to buy, it’s important to factor in the value of personal belongings that need to be covered and what is affordable. Different insurance companies offer different coverages at differing price ranges. After determining the value of personal belongings and budgetary constraints, it may be time to compare policies and see which ones fit in your budget.

The National Association of Insurance Commissioners (NAIC) says the average renters insurance policy costs between $15 to $30 per month. Compare that to the cost of replacing personal belongings, which would typically be much higher. And that’s not even factoring in the benefits of having liability coverage and additional living cost coverage, such as temporary lodging if you need to leave the rented space.

Recommended: Most Affordable Renters Insurance for Apartments

Actual Cash Value Versus Replacement Costs

Some policies pay out the actual cash value of lost or damaged belongings, while others cover the full costs of replacing what was lost or damaged.

Let’s say that a three-year-old laptop was stolen from a tenant’s apartment. If that person’s policy uses cash value when reimbursing the tenant, the amount would be what the laptop originally cost minus any depreciation that took place over that three-year period. If the policy is a replacement cost one, then the tenant would be reimbursed what it would cost to get a similar laptop today.

Review the policy’s deductible. This is the amount that the policyholder is responsible for before insurance coverage applies. Typical deductibles fall around $500 or $1,000, although they may be higher. Some policies may offer deductibles that are a percentage of the policy’s coverage amount.

The Takeaway

Renters insurance can provide peace of mind to tenants in the event their property is stolen or damaged. It can also help lower a landlord’s overall liability and financial burden. Though there’s no federal law mandating renters insurance, landlords in most states are able to require tenants to have it. Before signing on the dotted line, double-check the lease agreement to confirm whether you need to purchase a policy. A typical renters insurance policy costs around $15 to $30 per month, but coverage and cost may vary.

Ready to start shopping? SoFi has partnered with Experian to offer renters insurance that’s affordable and easy to apply for and understand, with instant quotes available.

Experian allows you to match your current coverage to new policy offers with little to no data entry. And you can easily bundle your home and auto insurance to save money. All with no fees and no paperwork.

Explore renters insurance options offered through SoFi and Experian.

Photo credit: iStock/staticnak1983

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Insurance not available in all states.
Experian is a registered service mark of Experian Personal Insurance Agency, Inc.
Social Finance, Inc. ("SoFi") is compensated by Experian for each customer who purchases a policy through Experian from the site.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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There’s no denying that a Disney World vacation is at the top of many a travel bucket list. But Orlando’s ultimate amusement park can also be expensive, especially if you’re traveling with the whole family. While some costs are unavoidable, there are ways to save money at Disney World.

It can be challenging to get discounts on park tickets themselves, but there are a few tricks you can use to cut costs overall. Read on for the full rundown on how to save money at Disney World.

Tips for Saving Money at Disney World

For many kids and adults, a trip to Disney World is a once-in-a-lifetime dream vacation. Many parents look forward to the day they can take their kids to Disney just to see the looks on their faces when they walk into the Magic Kingdom.

Here are a few ways that you can save money at Disney World.

Taking Advantage of a Free Disney Dining Plan

One of your biggest expenses at Disney World is meals. Food can be quite expensive in the park, since they know that you’re a captive audience.

You can bring your own food to Disney World, but it usually isn’t a great option for many people. Occasionally, Disney runs sales where a Disney Dining Plan is included in the cost of your ticket. While it may not make sense for every situation, it’s worth checking out in order to save money on food.

Travel Off-Season

The cost of Disney World park tickets is the same no matter when you go, but hotel rates vary throughout the year. Your Disney World hotel cost will depend on a number of factors, but a good rule of thumb is that the more popular times (spring break, summer vacation, holidays) also come with higher prices. Consider staying during the off-season or during shoulder season, when prices may be lower and there may be smaller crowds.

Another option is using credit card rewards to pay for hotels. Some hotel credit cards offer a signup bonus that can provide enough points to pay for most or even all of your Disney World trip.

Stick to Your Budget

It’s a smart idea to set a budget in advance for your Disney World vacation and to create a separate travel fund. Not only can this help you save the money to afford your trip, it can also keep you from splurging too much while you’re there.

Saving money on a trip to Disney World doesn’t have to mean cutting down on the fun. Just make sure you budget appropriately and identify what is and is not important to you. This will help you stick to the important credit card rule of keeping your balance in check.

Choose Low-Cost Souvenirs

Like in-park food, souvenirs are another area where you’ll pay for convenience. If you have extra days in Orlando, consider shopping off-property for Disney souvenirs — like at the official Disney’s Character Warehouse store. If you’re traveling with kids, consider giving them an upfront “souvenir budget” and letting them choose how they want to spend it.

Recommended: 6 Souvenirs You Won’t Regret Buying (and 5 You Might)

Buy Discounted Disney World Park Tickets

Because Disney World park tickets are usually in such high demand, there aren’t a lot of opportunities to buy them at a discount. To snag Disney World savings in this area, one option is to use cash back rewards toward the cost of Disney park tickets.

Another option is to look for stores that sell Disney gift cards. You can use Disney gift cards for almost anything at Disney World, and some stores will occasionally discount them. Even if you pay full price for a gift card, you might be able to get credit card rewards or credit card points with your gift card purchase.

Use Travel Rewards on a Disney World Vacation

Applying for a rewards credit card that offers credit card miles or cash back rewards can subsidize your Disney World budget.

The two areas where travel rewards can help you save are flights and hotels. If you apply for an airline credit card, the miles you get might help cover your flights. Similarly, the hotel points you earn from a hotel credit card can help pay for your lodging while on a Disney World vacation.

The Takeaway

A Disney World vacation can be quite expensive, especially if you’re traveling with a family. This makes it important to learn all the tips you can to save money at Disney World. Look to use your credit card travel rewards toward flights and lodging costs, and consider a cash back credit card to help cover the other costs like park tickets, souvenirs, and food during your vacation.

One opportunity for saving money at Disney World is to use credit card rewards to help pay for your vacation with a cash back credit card. With the SoFi credit card, you can earn unlimited 2% cash back rewards. Cardholders earn 1% cash back rewards when redeemed for a statement credit.¹ Plus, you can earn even more when you set up direct deposit on your SoFi Checking and Savings account.

The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.¹

Take advantage of this offer by applying for a SoFi credit card today.

FAQ

How can I spend less at Disney World?

There’s no denying that Disney World is an expensive place, but you have a couple of options if you’re trying to spend less at Disney World. One is to use your credit card points to help offset the cost. The other is to set a budget for the necessary costs that are important to you. Having a budget can help prepare you mentally to spend less.

How can I get airline miles to cover my flights to Disney World?

Airline credit cards are great for earning airline miles to help pay for flights. Look at the cost of airline tickets to Orlando from where you live, and see how many airline miles it would take to fly there. Then, look at signing up for an airline credit card to help get you the miles that you need.

When is the best time of the year to visit Disney World?

There isn’t only one set time of year that is the best to visit Disney World — it will depend on your specific situation and how flexible you can be with your travel plans. Typically, Disney World will be more crowded (and hotels more expensive) during peak travel periods like summer, spring break, and holidays. Conversely, you may experience smaller crowds and lower prices if you travel in the off-season.

How can I save on souvenirs at Disney World?

If you’re buying souvenirs inside the parks themselves, there’s no denying that the prices will be expensive. One way to overcome the souvenir sticker shock is to determine what kind of souvenirs are important to you and set a budget to cover that amount. You can also consider buying some Disney souvenirs at the Disney outlet store (Disney’s Character Warehouse).

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Photo credit: iStock/miniseries

¹See Rewards Details at SoFi.com/card/rewards.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

The SoFi Credit Card is issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

¹Members earn 2 rewards points for every dollar spent on purchases. No rewards points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points into your SoFi Checking or Savings account, SoFi Money® account, SoFi Active Invest account, SoFi Credit Card account, or SoFi Personal, Private Student, or Student Loan Refinance, your rewards points will redeem at a rate of 1 cent per every point. For more details please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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The main factors that can hurt a home appraisal include needed updates, comparable properties, market conditions, your home’s location, and whether you hired an inspector to flag issues or necessary repairs. By getting ahead of the factors within your control before an appraisal, you may get a more favorable answer to the all-important question of what your house is really worth.

The more you know and understand about the home appraisal process, the better. Here’s a crash course of sorts on the process and what negatively affects home appraisal.

Recommended: Should I Sell My House Now or Wait?

A Primer on Home Appraisals

A home appraisal reveals the fair market value of a home, which is important whether you’re buying, selling or refinancing a mortgage. An appraisal can also be used to determine property taxes. Lenders require appraisals because they ensure that the lender won’t offer you a loan that’s more than what the home is appraised value is worth.

So, what do appraisers look for when they do a home appraisal? A real estate appraiser, who is a third party licensed or certified by the state, will review a home inside and out, looking at a home’s age, size, foundation, appliances and neighborhood, among other things. They will then compare the house to similar homes in the area to assess its value.

An appraisal is usually required by a lender when a buyer is getting a mortgage or when someone is refinancing their mortgage. If an appraisal is for a home sale, neither the buyer nor the homeowner can be present. When someone is refinancing, on the other hand, the homeowner is permitted to attend. That no doubt is a plus as it’s an opportunity for the homeowner to ensure the appraiser takes note of any upgrades and new features that could increase their home’s worth.

Things That Can Hurt Your Home Appraisal

Much hinges on the home’s appraisal itself, so you’ll want it to go as smoothly as possible. Start by knowing what hurts a home appraisal so you can avoid any hiccups that could prevent you from getting the highest value for your home.

1. Much-Needed Updates That Never Happened

If you’ve been putting off any needed upgrades, this is when it could come back to bite you. Let’s say you’ve been meaning to renovate your kitchen and somehow just didn’t get around to it. A kitchen that looks pretty much like it did 30 years ago isn’t going to wow anybody, least of all an appraiser who will wonder what else is in decline.

While it can be helpful to take care of some common home upgrades that can net you a return on your investment, you don’t necessarily want to go crazy updating either. Not only could it be tougher to recoup all the money you put into home improvements, you may find that while you love the changes you’ve made, your taste may not have universal appeal. It’s a delicate balance to make upgrades that will get two thumbs up from the appraiser and the potential buyers.

2. Comparable Properties

When it comes to housing, you do kind of have to keep up with the Joneses. With appraisals, it’s all about sales of comparable homes over the last 12 months. What are homes similar to yours on your street or a few blocks over selling for? If they are getting top dollar that will push up the price of your home. On the flip side, if those homes are hanging around on the market for months and selling at prices below expected, that could put a drag on what you can get for yours.

Comparable sales help determine the market, which is why both your real estate and your appraiser will look at them. Ideally, the appraiser, as much as possible, is comparing apples to apples so you get a fair appraisal. The other properties should be similar in size, age and amenities, among other factors. It’s a losing proposition for you if the appraiser goes for the extreme, say a house that sold at a bargain because someone was in a hurry to bail for whatever reason.

3. Skipping a Home Inspection

When it comes to your house, ignorance is not bliss. While you may know when you need to make a repair to a leaky roof, for instance, there can be plenty wrong that’s not obvious to you. That’s why it’s a good idea to have a home inspection before you put your house on the market.

A home inspector can suss out all manner of malfunctions that could be plaguing your house, particularly things you may be clueless about. If you get bad news, think of it as good news since you’ll now have the opportunity to make necessary home repairs before you put your house on the market and an appraiser comes with a magnifying glass of sorts looking for signs of trouble.

4. An Undesirable Location

Few things matter more in real estate market than location. If you’re in a neighborhood that’s seen as flawed or your house is on a busy or noisy street, that could all come into play when it comes to the value of your property.

Location also counts within your home. If your layout is dated — say it’s old-fashioned and highly compartmentalized instead of today’s more in-demand open layout concepts — that could be less attractive to buyers. Or, they might only be interested in knocking down walls and reconfiguring the space, which likely means they’ll want to pay less for the house if they are going to have put money into it to bring it in line with what they’re looking for.

4 Ways to Prevent Low Home Appraisals

Just like there are some things you can get out ahead of before they hurt your home appraisal, there are also some moves you can make to prevent your home appraisal coming in lower than you’d like.

1.   Hire your own appraiser: Typically, the lender hires the appraiser. However, there’s no reason you can’t hire your own appraiser before the sale. Your realtor should have a handle on someone who is experienced and has a reputation for giving fair estimates. You then can ask the buyer or lender’s appraiser to review what your appraiser produced.

2.   Provide records: If you have records of repairs and upgrades that’s the kind of proof that works in your favor. It also doesn’t hurt to have documentation like photos — before and afters aren’t just for an Instagram post of your new haircut.

3.   Prepare for the appraiser’s visit: Don’t dismiss the importance of maintaining curb appeal. Your home should be clean inside and outside before the appraiser comes over. Strive to get as close to an interior design catalog as you can.

4.   Dig up property comparables on your own: You don’t have to leave it to the appraiser and real estate agents to do all the homework. Go the extra mile and consider calling real estate agents with homes in escrow to get the sales prices. Create a list that you can pass along to the appraiser.

Checking Your Home Value Without an Appraisal

You can get a sense of what your home is worth even if you don’t get an appraisal. There are several websites that can give you valuable insight into your home’s potential value, including Zillow, Trulia, Redfin, Realtor.com and Eppraisal, among others.

Another option is to use a house price index (HPI) calculator , which relies on data from mortgage transactions over time to estimate a home’s value. Projections are based on both the purchase price of the home and the changing value of other homes nearby. This tool can help you see how much a house has appreciated over time. You’ll also get a glimpse of estimated future changes in mortgage rates.

Recommended: Does Net Worth Include Home Equity?

The Takeaway

Because appraisal value of your home is likely your biggest asset, it’s worth putting the time and effort into the appraisal process. The payoff could be huge if you tend to the major factors that hurt an appraisal or get proactive about preventing a low appraisal.

If you’re worried about budgeting for any necessary updates or repairs, a tool like SoFi can help you track your spending in different categories.

Stay on top of your budget as you get your house appraisal ready.

Photo credit: iStock/ucpage

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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A year may seem like a short period of time, but you can accomplish a lot, including developing a one-year savings plan that can help you hit some significant financial goals. A plan that lasts 365 days can give you, as an earner, the opportunity to save and feel a sense of accomplishment.

In other words, a year from today, you could be richer than you are now, or potentially have a better emergency fund. Or, if you are diligent, you may be on your way to funding a European vacation or finally redoing that dated bathroom.

Of course, creating a plan that will work for your unique situation does require a bit of upfront effort. That’s exactly what you’ll learn when you read on.

Decide What are You Saving For

Before you even glance at your budget, it’s important to get clear about exactly what you’re saving for. Creating a specific objective can give you the information you need to create a solid plan to make it happen — it might also help motivate you to stick to that plan once you’ve made it.

For a one-year saving plan, consider factors like your income and current cost of living to settle on something that will likely be achievable in just a year. For instance, maybe this year you want to stash cash for one of the following:

•   A vacation you’ve been dreaming of for years (pending pandemic complications, of course).

•   A down payment for a new car.

•   A down payment (or significant portion thereof) for a new home.

•   Long-awaited home improvements.

•   Putting extra money away for retirement.

You may be familiar with the idea of SMART goals — that objectives are most easily met when they’re Specific, Measurable, Achievable, Relevant and Time-bound.

In the world of one-year savings plans, that means coming up with a specific dollar figure for your goal and making sure it’s relevant enough to your life to keep you motivated.

You probably also want to consult your earnings and expenses to ensure that it’s a realistic goal; it’s going to be a lot harder to save up $5,000 if you’re making $30,000 than it is if you’re making $60,000. (You’ll learn more about budgeting and cuts in just a second.) Divide your total goal by 12 to see how much it would require you to set aside each month, which will give you better insight as to how achievable it really is.

Once you’ve got your goal worked out, write it down and post it in a prominent place in your home, like on your refrigerator. Studies have shown that you’re more likely to reach your financial goals if you take this simple action, so it’s worth picking up your pen!

How To Create a One-Year Saving Plan You’ll Stick To

Now that you’ve got a goal in mind, you still need to figure out how to turn it into a reality.
Here are some ideas on how you could do it..

Start with Your Existing Budget

You can’t make any big changes to your finances if you don’t know what they look like in the first place. And that means the first step toward revamping your budget is to take a closer look at how it looks right now.

If you don’t have a budget yet, take a month to track exactly where all your money is going. Be sure to include both regular, fixed expenses, like rent and insurance, as well as more flexible, discretionary spending like food and transportation. Be brutally honest. Tacking every cent of fixed vs. variable expenses will give you the best chance at figuring out how to spend less.

Which leads us to our next step…

Get Creative with Budget Cuts

There are really only two ways to save money: make more of it, or spend less of it. And while asking for a raise or starting a side-hustle might be smart moves, you only have so much leeway with your boss and time in your day. In other words, you likely have more control of how much you spend than how much you earn.

Since this is an elevated, short-term savings goal, you might be able to make more substantial cuts than you would if you were planning on implementing this savings strategy for the rest of your life. There are simple ways to cut down monthly expenses and save money daily. For instance, could living without streaming services be possible? Or could you quit dining out for one month and then vow not to buy any new clothes the next? A challenge like that can engage some people’s competitive spirit.

Even without these measures, how can you dial down your own living expenses? You might quit buying overpriced, pre-packaged convenience foods or find ways to get creative with ramen. Maybe you can start doing your own oil changes rather than taking the car in for service. Think of this as an opportunity to learn some new life skills while also stashing some extra cash!

Recommended: How to Save Money on Gas

Regardless of how you get there, your goal is to be able to set aside the monthly amount you’ll need to meet the one-year savings goal you wrote down and pinned to your bulletin board. So get out your calculator, and don’t be afraid to get creative.

Make a Plan for Your Investments

No matter how much money you save, it won’t go as far as it could if you just stash it under your mattress. Figuring out where to put your savings is an important step in your planning.

Different kinds of savings accounts are used to help individuals save for different goals.

•   For example, a long-term goal like retirement may be best suited for an investment vehicle like a Roth IRA, which offers some tax advantages.

•   For shorter term goals like starting an emergency fund, an account that offers more flexibility and has less restrictions, like a high yield savings account, may be a better option.

Keep it Simple

Having a plan is one thing. Sticking to it is another. But if you keep a simple savings plan, you’ll stand a much better chance of actually making it work.

For instance, automating your finances by setting up recurring transfers can direct a portion of each paycheck into your savings account. This makes saving seamless — and ensures you don’t get stuck in that all-too-familiar situation at the end of the month where you accidentally spent what you intended to set aside.

And building in systemic cuts that you don’t have to think about (like ditching that monthly subscription box, for example) is a lot easier than poring over the coupon book every Sunday.

Recommended: Money Management and Setting Financial Goals

The Takeaway

Like any money goal, your one-year savings plan is going to take some grit to get to. But having the right tools at your disposal does make the process a whole lot less painful. Whether that means choosing one of the many budgets out there to find one that suits your style or using an app your financial institution provides, there are ways to enhance your money management.

A SoFi Checking and Savings Account offers you an easy birds’-eye view of your finances, and its Vaults feature allows you to set aside savings for specific goals and purposes.

Best of all, there are no account fees, you’ll benefit from a competitive annual percentage yield (APY), which can help your money grow faster.

SoFi: Helping you achieve your financial goals.

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The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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