The 5-Minute Guide To Flood Insurance: What It Is, How It Works, And Whether You Need It

August 1, 2014 by

The 5-Minute Guide to Flood Insurance: What It Is, How It Works, and Whether You Need ItYou’ve got house insurance, and assume your property is covered for any type of detrimental occurrence that can possibly take place.

However, not all homeowners are aware that home insurance policies don’t necessarily cover damage related to a flood, as the risks are too great. As a result, homeowners must purchase flood insurance through a private company.

Floods are one of the most common hazards in the US, costing billions of dollars in damage to properties every year.

What Is Flood Insurance?

Flood insurance policies are typically made available to homeowners in flood-prone areas. The majority of insurance policies cover some form of water damage, from things like leaking faucets to bursting plumbing pipes.

However, such policies don’t cover water damage as a result of flooding of rivers or sewers that cause water to ruin a home.

Specific flood protection is provided by the National Flood Insurance Program (NFIP), which is run by the Federal Emergency Management Agency (FEMA). Standard flood insurance policies cover “direct physical damage” to a property resulting from floods.

A separate policy must be purchased to protect the belongings inside the home or building. Homeowners can buy up to $250,000 in coverage for the home, and up to $100,000 in coverage for possessions. Even renters are permitted to purchase flood insurance to cover their possessions.

How Does Flood Insurance Work?

Flood insurance isn’t sold by FEMA directly, but rather is sold to customers through private insurance agencies. Premium rates are determined by the government, and they remain consistent from one insurer to the next.

How much a homeowner pays for their own specific flood insurance depends on a number of factors, including how prone the neighborhood is to floods and how much coverage a homeowner wants. The average annual premium is approximately $520 for $100,000 worth of coverage for a property with no basement, and approximately $615 annually for a property with a basement.

Filing A Flood Insurance Claim

The claims process is like any other insurance claim. Once the claim is filed, the damage will be analyzed by an adjustor assigned by the insurance company. A “proof of loss” form will need to filled out and submitted to the insurer within 60 days of the flood occurrence.

Do You Need Flood Insurance?

It’s necessary to find out if you are eligible for flood insurance before buying it. For residents of a community to be eligible, the community needs to enforce floodplain statutes to lessen the chances of flood damage, after which FEMA ensures that such regulations are followed.

Only those who reside in a community that participates in NFIP can buy insurance – today, about 20,000 communities across the country participate in this program.

FEMA offers maps that outline what areas are at high risk for floods, and those that are at moderate-to-low risk. The law requires homeowners to have flood insurance if the properties are located in a high-risk zone and have a federally-backed mortgage. This is because properties located in these high-risk areas have a 26 percent chance of suffering flood damage during the 30 years that it would take to pay off a mortgage.

Homeowners are not required to buy flood insurance if they reside in a moderate-to-low-risk zone, though it may be a good idea to purchase it anyway. Properties outside the high-risk areas make up over 20 percent of NFIP claims. Homeowners in these areas can purchase up to $200,000 in flood insurance.

The bottom line is, even if you don’t necessarily live in a high-risk zone, this doesn’t mean your home won’t ever get flooded. Many conditions can result in flood damage, including clogged drain systems, flash rainstorms, and damaged levees.

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National Association of REALTORS Existing Home Sales Exceed Projections

July 23, 2014 by

National Association of REALTORSAccording to the National Association of REALTORS®, existing home sales surpassed both May sales and expectations for June. Sales of previously owned homes increased by 2.60 percent in June and reached a seasonally adjusted annual level of 5.04 million sales. June’s reading was the third consecutive monthly increase in sales of existing homes and was the highest reading for existing home sales in eight months. Existing home sales remain 2.30 percent below the June 2013 reading of 5.16 million sales of existing homes.

Analysts projected sales of 5 million existing homes for June against May’s initial reading of 4.89 million sales of previously owned homes; the May reading was later revised to 4.91 million sales. Lawrence Yun, chief economist for the National Association of REALTORS® said that market conditions are becoming “more balanced,” and noted that inventories of existing homes are at their highest level in over a year and that price gains have slowed to much more welcoming levels in many parts of the country.

Housing Market Headwinds Declining

After a particularly harsh winter and lagging labor reports, analysts forecasted lower annual sales of existing homes for 2014 than for 2013. Labor markets are stronger according to recent labor market reports and a declining national unemployment rate. Steady work is an important factor for families considering a home purchase; as labor markets improve, more would-be homeowners are expected to become active buyers.

Housing markets are not without challenges. In recent unrelated reports, the Federal Reserve has noted higher than anticipated inflation may cause the Fed to raise its target Federal Funds rate in the next several months. Gas and food prices, important components of consumers’ household budgets continue to rise and could slow save toward a home for some families. Steve Brown, president of the National Association of REALTORS®, said that first-time and moderate income buyers continue to deal with affordability due to increased FHA costs and tight mortgage credit. Relief may be in sight as a slower pace of home price growth suggests that more buyers may be able to afford homes.

FHFA House Price Index Reports Gain in May Home Sales

FHFA released its May index of home sales connected with mortgages owned or backed by Fannie Mae and Freddie Mac. The index posted a month-to-month gain of 0.40 percent in May and a year-over-year gain of 5.90 percent year-over-year. FHFA said that increased sales were driven by a 9/60 percent increase in sales in the Pacific region and that average home prices remain 6.50 percent below April 2007.

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4 Tips To Lower Homeowners Insurance For Your Home

June 11, 2014 by

4 Tips To Lower Homeowners Insurance For Your HomeWith the prices for everything skyrocketing these days, every penny counts. This includes your homeowner’s insurance costs. If you’re thinking of buying a home and need homeowner’s insurance, here are a few tips on getting quality insurance for a fair price:

Tip #1: Shop Around

Ask family and friends about their homeowner’s insurance. Check the Yellow Pages, the National Association of Insurance Commissioners (NAIC) and the state insurance department. 

Other places to shop for insurance include consumer guides, insurance agents and online insurance quote services. Don’t just look for lower prices, however. You need a fair price for the services you need.

Tip #2: Raise Your Deductible

The deductible is how much you have to pay before the insurance company starts to pay a claim on your home. The higher the deductible, the lower the premiums. If you live in a disaster-prone area, your policy may have a separate deductible for specific types of damages. 

Make sure, when reading the policy, you carefully go over damage-specific information.

Tip #3: Use The Same Insurer

Some companies will take five to fifteen percent off your premium if you buy more than one policy from them. If the insurer offers homeowner’s, auto and liability coverage, you stand a chance of having a lower premium than if they only offer one or the other. 

The key is to make sure that the combined price is lower than if you bought them separately.

Tip #4: Improve Home Security

By installing a sophisticated fire sprinkler system and a fire/burglar alarm that rings the monitoring stations, some companies will cut your premium as much as fifteen or twenty percent. 

For a smoke detector, burglar alarm or deadbolt locks, you can usually get at least a five percent discount. Check with your insurer to make sure that the system you’re installing will lower your premiums, though; the systems aren’t cheap and not all of them qualify for a discount.

Read everything carefully before you sign, to make sure the policy covers your insurance needs without adding on hidden fees. Even a little money saved can go a long way toward making it easier to live within your budget. 

Ready to buy a home? Let me help you find the perfect home and get it at the best terms and price. Call or email your trusted real estate professional.

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Understanding Your Credit Score And How It Impacts Your Home Ownership Prospects

June 10, 2014 by

Understanding Your Credit Score And How It Impacts Your Home Ownership Prospects

Understanding your credit score and how it impacts your home ownership prospects your credit score is an important part of your financial profile. It has a direct impact on your ability to take out loans.

The score itself is a numerical reflection of your credit history. It gives lenders a way to discern your reliability before approving a loan like a mortgage for instance.

Though this is the basic function of a credit score, it can also have a far-reaching influence over other aspects of home ownership.

Mortgage Loan Approval: Will Your Score Make the Cut?

First and foremost, the status of your credit score is a deciding factor in whether or not you are approved for a loan.

Even if you put down a large down payment on your home, a low credit score can still cause the loan to be rejected. For this reason, it’s best to wait until you’ve built up a good credit score before looking to purchase a house.

Mortgage Interest Rates: The Lower The Score The Higher The Rate

High interest rates are another reason to hold off on purchasing a home until you’ve obtained a very good credit score. While applying for a loan with the minimum credit score required might get the loan approved, it also means having to pay higher interest rates.

Shooting for a credit score above the bare minimum before applying for a mortgage will increase the likelihood of receiving a much lower interest rate. A higher credit score demonstrates a credit history of timely payments and the ability to successfully pay off debts, which are key factors in mortgage approvals.

Homeowner’s Insurance Approval And Premium Rates

An insurance broker running a credit check might seem a little out of the ordinary, but in actuality when is comes to home insurance, companies frequently run credit checks on prospective clients. When an insurance company inquires about your credit history, all they receive is your credit score and nothing more.

The nitty-gritty details of your credit history remain private. So, why are insurance companies running credit checks in the first place? Credit scores are an integral part of the scoring system they use to determine premium rates for each client.

Though your credit score might seem irrelevant in determining how likely you are to file an insurance claim, the industry argues that there is a documented connection between those who are more likely to file insurance claims and the lowly state of their credit scores. This trend has led insurance providers to offer higher insurance premiums to those with lower credit scores.

In some cases companies may refuse to insure a client based on a poor credit rating. Credit scores have a profound influence over financial transactions. You ability to make a large purchase like a new home can be severely hindered by a poor credit score.

If you have a low credit score, consider taking some time to repair your credit history before applying for large loans. Correct any lingering errors on your credit report and get into the habit of making consistent, timely bill payments.

Addressing these issues could dramatically improve your credit score in a year’s time, putting you in a much better position to tackle home ownership.

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Getting Past No: What To Do If You’re Turned Down For A Mortgage Or Other Home Financing

May 20, 2014 by

Getting Past No: What to Do If You're Turned Down for a Mortgage or Other Home FinancingGetting pre-approved for a mortgage loan is an integral part of having the ability to purchase a home in today’s society.

With most home prices well above what the majority of us have in the bank, getting approved for a mortgage can be the deal maker or breaker when it comes to purchasing a piece of property. Therefore, getting rejected for a mortgage can feel like a huge loss.

The first thing to realize, however, is that there are action steps you can take to get to “yes.” Here’s what to do if you’re turned down for a mortgage or other home financing.

Shop Around: Don’t Take “No” The First Time

If you get a “no” from your bank the first time around, don’t be fooled into thinking that everyone will give you the same answer.

Instead, be sure to shop around your mortgage with different banks, and opt to speak to a mortgage broker to leverage all of your options.

When looking at several different lenders, you’ll have a much higher chance of getting a yes since every lender adheres to different rules and restrictions. Though you may end up with a mortgage with a slightly higher interest rate, you’re likely to get approved for a mortgage or other home financing.

Ask Friends: Get A Co-Signer

If your “no” was the result of bad credit history or a low credit score, perhaps you should consider asking for the help of friends and family. Sometimes bringing a co-signer in on the deal who has better credit history and a higher credit score will change the response of your bank or lender significantly, and suddenly you’ll find yourself hearing the sought-after “y” word.

Ask Questions: Fix The Problem

If you’ve sought out several different banks and lenders, and still find yourself with rejected mortgage applications, be sure to understand why the “no” came in the first place. If it’s an issue of your credit history, which can’t be appeased with a co-signer, you may need to put in the time in order to correct some of your credit issues.

Other common reasons why people are rejected for a mortgage include unrealistic borrowing expectations, i.e. applying for a mortgage that is too high for you to satisfy, as well as an unreliable employment history or a general lack of credit history. Speak with your mortgage professional to determine the reason, and if shopping around or bringing in a co-signor doesn’t transform the “no” to a “yes,” seek to fix the problem instead.

Though it can be a daunting task to apply for a mortgage after you’ve been rejected, ensuring that you arrive at that ultimate “yes” is something you need to undertake in order to purchase a home and reach that next milestone in your life.

Having trusted professionals on your side is something that will surely ease the tension on all things involved in purchasing a home, including getting approved for a mortgage. For more information on how to get past “no” when searching for a home, call your trusted mortgage professional today.

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What Will Harp 3.0 Mean For Homeowners After 2014?

May 13, 2014 by

What Will Harp 3.0 Mean for Homeowners After 2014?As economic influences affect the housing market in the United States, there has been the introduction and development of programs to assist with the downturn.

During the 2009 economic crisis in the United States that resulted in home prices and values falling, a program named HARP was introduced to assist the many affected homeowners.

Harp has since developed and a 3.0 version has been introduced. As a result, many homeowners are beginning to wonder: What will Harp 3.0 mean for homeowners after 2014?

The Economic Crisis: Harp 1.0 In 2009

In 2009, HARP 1.0 was introduced. The program was designed to help homebuyers who couldn’t refinance their homes because of the sudden and significant dip in home values.

It was open to borrowers with loans that were taken out prior to May 31, 2009, and other requirements made the program available only to homebuyers with a good payment history and a loan-to-value ration of 125 percent, meaning that the borrower could not receive a loan of over 25 percent of the home’s total value.

This program came to help some homeowners who were affected by the economic downturn, but wasn’t available to those in the foreclosure centers in particular areas of California, Nevada, and Arizona.

Harp 2.0: Redefined Assistance

In October of 2011, Harp 2.0 was introduced with changes that helped to make the program more helpful to homeowners who were in trouble as a result of the financial and housing downturn.

The 125 percent limit on the loan-to-value of the Harp 1.0 program was removed, allowing those with significant value drops in their homes to receive help as well. Changes were also added to allow borrowers to refinance investment properties, and borrowers were allowed to switch lenders to shop around for a refinance under the Harp 2.0 program.

Harp 3.0 For Homeowners In 2014

Though the previous Harp programs have assisted over three million homeowners since the financial downturn, there are still many homeowners in need of assistance. With nine million homeowners in a financial crisis after the 2009 economic downturn, there is still much that can be improved upon to help assist in these circumstances.

The Responsible Homeowner Refinancing Act of 2013, which is widely referred to as Harp 3.0, is one approach to solving the problem.

The Harp 3.0 program has been presented, and, if passed, will lower the fees involved. This means that need for appraisals will be lessened, making the program more widely available to homeowners experiencing financial difficulties, and there will be greater ease in the underwriting process.

The Harp 3.0 program, if passed, would also not be constrained to only loans owned by Fannie Mae or Freddie Mac, as restricted in Harp 1.0 and 2.0. The new version of the Harp refinance program means that homeowners with sub-prime mortgages may become eligible, too.

With the media covering the possibility of Harp 3.0 in 2014 and many homeowners anticipating its availability, which might finally mean their eligibility for refinancing, there is a great chance of significant financial improvement and progress for homeowners. Getting refinanced is exactly the progress many homeowners have been awaiting.

For more information on the Harp 3.0 program, talk to your mortgage professional today.

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Is It Best To Put Down A Large Down Payment, Or Be Agile With Your Savings?

May 7, 2014 by

Is It Best to Put Down a Large Down Payment, or Be Agile With Your Savings?Putting down the largest sum of money at your disposal might seem like the best way to go when it comes to your mortgage down payment. There is a certain amount of truth to this, but the reality is bigger is not always better.

Ideally, the amount of money you settle on for your mortgage down payment will take into account your monthly budgeting requirements.

The Big Advantages Of A Large Down Payment

Fewer Mortgage Payments: The larger the down payment, the higher the likelihood that you will be able to afford a shorter mortgage. Unlike some of the other benefits of large down payments, ensuring this perk is available to you is solely dependent on whether or not your post-down payment budget will be able to support the necessary payments.

Lower Payment Totals: If you choose to stick to a longer payment plan, each month’s payment will be significantly less than it would have been had you chosen to put less money down up front. Of course, if you choose a shorter mortgage you will be required to pay more.

No Need For Mortgage Insurance: When the down payment is a lower percentage of the purchase amount, lenders will often require clients to apply for mortgage insurance as way to protect themselves in the case that a client defaults on the loan. However, if the buyer is able to make a larger down payment, mortgage insurance can be completely avoided.

Lower Interest Rates: The interest rate on your mortgage is dependent on how much you need to borrow. The more you pay out of pocket, the less money you will have to borrow from a lender. This means the interest rate on the loan will be lower and you will lose less money on the loan overall.

Coping Smartly With A Small Down Payment

Making a larger down payment may not be an option for you in your current financial state. Opting to make a smaller down payment will still allow you to purchase your new home, with a few extra conditions. Higher interest rates and having to take out mortgage insurance are the two primary conditions you are likely to come across.

Once the down payment is made, your main concern becomes making the most of your monthly mortgage payments.

A great coping strategy is to get into the habit of paying off more than the amount due on as many scheduled payment days as possible. Another good strategy is to arrange for an accelerated payment schedule. These small adjustments could help you pay off your mortgage faster, and save you more money as a result.

When settling on a down payment amount, the most important issue to factor into your decision is whether or not you are capable of remaining financially secure after the payment is made.

If a larger down payment is going to dramatically impact your emergency funds, you may want to reconsider. Contact your local mortgage professional to learn more about choosing the most suitable mortgage for your budget.

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How Will A Short Sale Affect Your Ability To Buy Another House In The Future?

May 6, 2014 by

How Will a Short Sale Affect Your Ability to Buy Another House in the Future?The last few years have been financially difficult for millions of homeowners, with job losses and decline in home values devastating families all over the US. As a result, a great number of homes have gone through short sales, which has had a detrimental effect on consumers’ credit ratings.

If you’ve considered or experienced a short sale, one of the biggest concerns you may have is how it will impact your ability to purchase another property in the future. Here are five key variables on how a short sale can impact your next home purchase.

Duration Of Delinquency Plays A Big Role

Short sale transactions take a long time to complete, depending on the state that you live in and the bank’s policies. During this process, homeowners in a short sale may have trouble continuing to make monthly mortgage payments. The duration of delinquency can have a major negative impact on your credit score, even before the final short sale is reported.

Deficiency Judgments May Have Long-Lasting Effects

A short sale usually with comes a large debt that is left unpaid that banks look to settle. In the case of short sale, this debt is the difference between the amount owed and the amount for which the home is sold.

When you’re on the hook to come up with this difference, a deficiency judgment is filed through the courts and is attached to your credit rating as a negative debt outstanding. This can have a lasting effect on your credit rating, and can hinder your chances of buying a home in the future.

Lower Credit Scores Often Mean Higher Interest Rates

The poorer your credit rating, the more likely you are to be charged a higher interest rate when borrowing money. With the large cost of a home purchase, a high interest rate over a long amortization period can prove to be extremely costly, which many home owners may find difficult, if not impossible, to pay for.

Larger Down Payments May Be Necessary

Many banks and credit unions have specific guidelines that require you to put more money down on a future home purchase if you’ve experienced a housing-related credit issue in the past. Certain banks may request as much 20 percent for a down payment. Many homeowners may not be able to come up with such funds, or may need a lot of time to build up such capital before being able to buy a house.

A Long Waiting Period Might Apply

Since the housing crisis in the US, many major mortgage insurers and investors, like Freddie Mac, FHA, and Fannie Mae, have implemented new rules on how long you have to wait after a short sale before you can purchase again. Depending on the type of loan, this can be anywhere between two to four years on a short sale.

It’s critical to stay informed and understand how these rules can impact your ability to buy a home in the future after a short sale. Speaking with a seasoned mortgage specialist can help you stay in the know, and help you assess your finances and credit health before you plunge into the real estate market in the future.

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It’s Almost Spring Cleaning Time! Kick Clutter to the Curb With These Home Cleaning Tips

March 21, 2014 by

It's Almost Spring Cleaning Time! Kick Clutter to the Curb With These Home Cleaning TipsSpring is around the corner, and it’s time to get your home in order!

Spring cleaning can be fun and easy if you follow some general guidelines, which are sure to get your home ready for the nice weather and looking as beautiful as the weather is about to. Kick the winter clutter to the curb with these spring cleaning tips.

Start With The Closets

Spring is here, and winter wear is no longer needed! It’s time to box up all of the winter boots, jackets, gloves, and scarfs until next season.

Starting your spring clean with your closets is a good tip, and will get you prepared for the rest of the process while creating more space and organization in the bedrooms of the house. This is also the perfect opportunity to create a “give away” box full of clothes that are no longer being worn.

Reorganize: Bookshelves, Countertops, And Desks

Reorganizing is the perfect way to prepare your home for the spring and summer. Good clutter is common in many homes, like useful books that are interesting for guests to read or decorations that offer a sense of warmth and character to the home.

So pick up the fallen and leaning books on the bookshelf, reorganize your kitchen countertops, and de-clutter your home office. For busy home offices, purchase organizational tools like additional shelving units, compile and file away old bills and receipts, and toss anything else that is no longer needed or of any use.

Get Scrubbing: Removing Stains And Odors

Getting ready for spring means removing the stains, dirt, and odors that accumulated in your home over the colder months. First, you should start with wiping your painted walls with a wet cloth to remove scuffmarks and dust.

If the water doesn’t do the trick, you can try mixing a little dishwashing soap in with the bucket of warm water. You may even want to repaint certain high-traffic areas, like entrance halls and the baseboards around the front door.

Next, you can go for the floors. Having a fresh carpet cleaning is sure to kick-start your spring cleaning; this may be something that you wish to have done by a professional. To make the most out of your carpet cleaning, have it scheduled for when the kids are out of the house for a while, and wait until the worst of the weather is over.

Make sure the kids take their shoes off inside, but get them to leave their socks on to avoid natural oils from getting into your freshly cleaned carpet. Vacuum area rugs in the same fashion, and mop the kitchen and bathroom floors at the same time you clean your hardwood floors.

Give the showers, bathtubs, and toilets in the house a good scrub. In the kitchen, empty the fridge and freezer of their contents, and give the inside a good scrub down as well.

Once the tidying, de-cluttering, and scrubbing are done, you will get to enjoy the fun part of spring cleaning: spring decorating! And while you’re at it, why not buy yourself and your home some spring flowers for a job well done.

If you’re doing a big spring clean this year because you’re looking to sell your home, these tips will get your home ready for any buyer’s eyes. Contact your mortgage professional today to get more tips on buying or selling a home.

 

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Existing Home Sales Rise As Home Inventory Shrinks

February 28, 2013 by

Existing Home Sales Numbers ReleasedHome sales rose for the 11th consecutive month according to the National Association of REALTORS® Existing Home Sales Report for January.

This is the first time this has occurred since the period between July of 2005 and May of 2006.

National Average Home Price Up Over 12% Annually

The national average home price in January was $173,600, which is 12.3 percent higher than for January 2012. 

Calculated on a seasonally-adjusted annual basis, Existing Home Sales data is compiled using completed sales of single family homes, condominium units and co-ops.

January’s existing home sales rose by 0.4 percent to 4.92 million sales nationally as compared to December’s revised annual rate of 4.90 million sales nationally.

National sales of existing homes increased by 9.1 percent as compared to January 2012.

Regional Home Sales Support Housing Recovery

Regional home sales for January suggest more good news for housing markets. Seasonally- adjusted annual home sales rose in all regions of the U.S. except in the West, while median home prices rose for all regions.

Northeast: Home sales were up by 4.8 percent in January to 650,000 sales, which is 12.1 percent more homes sold than for January 2012. The median home price rose by 2.4 percent from January 2012 to $230,500.

Midwest: Annual home sales in January increased by 3.6 percent to 1.16 million; this is 17.2 percent higher than for January 2012. The median home price in the Midwest rose to $131,800, an increase of 8.6 percent as compared to January 2012.

South: Home sales were up by 1 percent to 1.96 million sales in January; this represents a 14.0 percent increase in annual sales as compared to one year ago. The average home price for the South was $152,100, an increase of 13.4 percent over January 2012.

West: Home sales fell by 5.7 percent to an annual rate of $1.15 million. This represents a 5.7 percent decrease in sales from one year ago. The median home price in January was $239,800 and was 26.6 percent above the region’s median sale price for January 2012.

A falling inventory of homes for sale may be holding back buyers; the inventory of homes for sale fell to a 4.2 month supply from December’s 4.5 month supply of homes. A 6-month supply of homes is considered average.

Home Prices May Rise Quickly

While the spring home buying season will likely see more homes come on the market , economists caution that home prices could rise faster than expected due to increasing demand. A seller’s market could be in the making.

Mortgage rates also appear to be rising; now may be your best time for gaining the advantage of relatively low home prices and mortgage rates.

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