Insurance companies (carriers) may hire
their own in-house insurance adjusters or use independent insurance adjusters.
Wednesday, November 28, 2012
DEALING WITH YOUR INSURANCE ADJUSTER
Thursday, November 15, 2012
Rent vs. Own- Are You Ready?
The question plaguing every tenant who wants a home of their own is whether
they should continue to rent or is it the right time to buy?
The combination of good prices and low mortgage rates make it considerably cheaper to own than rent in most markets. Assuming a person is qualified with a down payment and won't be moving for several years, there may not be a better time to buy a home.
In the example below, the total house payment is $1,281.01 compared to $1,500 to rent the same home. Before you consider any of the financial benefits attached to home ownership, it's cheaper to own than to rent.
The net cost of housing falls to $764 or just more than half the house payment when you consider the principal reduction due to normal amortization, a modest appreciation and the tax savings along with a reasonable maintenance expense that a tenant would not have to pay.
One of the biggest benefits is the growing equity. As the value goes up, the unpaid balance goes down. A favorable leverage causes their low down payment to grow to $40,609 in a short seven years based on a modest 1% appreciation.
There's an expression often heard in real estate circles: "Whether you rent or buy, you pay for the house you occupy." You're either buying it for yourself or you're helping the landlord buy it.
Check out a Rent vs. Own to see how your numbers will compare to this example or call us to do it for you.
The combination of good prices and low mortgage rates make it considerably cheaper to own than rent in most markets. Assuming a person is qualified with a down payment and won't be moving for several years, there may not be a better time to buy a home.
In the example below, the total house payment is $1,281.01 compared to $1,500 to rent the same home. Before you consider any of the financial benefits attached to home ownership, it's cheaper to own than to rent.
The net cost of housing falls to $764 or just more than half the house payment when you consider the principal reduction due to normal amortization, a modest appreciation and the tax savings along with a reasonable maintenance expense that a tenant would not have to pay.
One of the biggest benefits is the growing equity. As the value goes up, the unpaid balance goes down. A favorable leverage causes their low down payment to grow to $40,609 in a short seven years based on a modest 1% appreciation.
There's an expression often heard in real estate circles: "Whether you rent or buy, you pay for the house you occupy." You're either buying it for yourself or you're helping the landlord buy it.
Check out a Rent vs. Own to see how your numbers will compare to this example or call us to do it for you.
Wednesday, November 14, 2012
Projections On Your Mortgage
FHA loans require mortgage insurance premium to cover a possible loss to the
lender if the property has to be foreclosed and sold. The premium is substantial
and eliminating the MIP would reduce the payment considerably.
The MIP must remain in effect for five years but after that, when the balance is 78% of the original purchase price, FHA will release the requirement and your monthly payment will go down. Since amortization is affected by interest rates, the normal time to reach this 78% point could be from 9 to 12 years at today's interest rates.
In the example below, the MIP would be released in 9 years 6 months with normal payments. An extra $100 a month would allow the borrower to reach the release point in 7 years 1 month. To reach the release point in the minimum five years, the borrower would have to make an extra $268.04 per month principal contribution.
Releasing the MIP in this example would save the borrower $177.67 per month. The borrower would also save interest, build equity and shorten the term of their mortgage. Once the MIP is released, the borrower could continue the same payment schedule to further accelerate the debt reduction.
To make some projections on your mortgage, click here.
The MIP must remain in effect for five years but after that, when the balance is 78% of the original purchase price, FHA will release the requirement and your monthly payment will go down. Since amortization is affected by interest rates, the normal time to reach this 78% point could be from 9 to 12 years at today's interest rates.
In the example below, the MIP would be released in 9 years 6 months with normal payments. An extra $100 a month would allow the borrower to reach the release point in 7 years 1 month. To reach the release point in the minimum five years, the borrower would have to make an extra $268.04 per month principal contribution.
Releasing the MIP in this example would save the borrower $177.67 per month. The borrower would also save interest, build equity and shorten the term of their mortgage. Once the MIP is released, the borrower could continue the same payment schedule to further accelerate the debt reduction.
To make some projections on your mortgage, click here.
Insurance: Why Should We Have It
The purpose of insurance is to shift the risk of loss to a company in
exchange for a premium. Most policies have a deductible which is an amount the
insured pays out of pocket before the insurance starts covering the cost of the
loss.
In the process of managing insurance premiums, policy holders often consider adjusting their deductibles. Lower deductibles mean less money out of pocket if a loss occurs but obviously, results in higher premiums. Higher deductibles result in lower premiums but require that the insured bear a larger amount of the first part of the loss.
A small fire in a $300,000 home that resulted in $2,500 of damage might not be covered because it is less than the 1% deductible. If the homeowner can afford to handle the cost of repairs in exchange for cheaper premiums, it might be worth it. On the other hand, if that loss would be difficult for the homeowner, a change in the deductible could be considered.
It is a good idea to review your deductible with your property insurance agent so that you're familiar with the amount and make any changes that would be appropriate.
In the process of managing insurance premiums, policy holders often consider adjusting their deductibles. Lower deductibles mean less money out of pocket if a loss occurs but obviously, results in higher premiums. Higher deductibles result in lower premiums but require that the insured bear a larger amount of the first part of the loss.
A small fire in a $300,000 home that resulted in $2,500 of damage might not be covered because it is less than the 1% deductible. If the homeowner can afford to handle the cost of repairs in exchange for cheaper premiums, it might be worth it. On the other hand, if that loss would be difficult for the homeowner, a change in the deductible could be considered.
It is a good idea to review your deductible with your property insurance agent so that you're familiar with the amount and make any changes that would be appropriate.
Benefits of Pre-Approval
The benefits of buyer's pre-approval are without question; it is good for the
buyers, the sellers and the agents. It saves time, money and removes the
uncertainty of knowing whether the buyer is qualified. The direct benefits
include:
Even if you have been pre-approved, a suggestion that can't hurt but may help is to get a second opinion from a different lender. It will either verify that you have a good deal or you’ll discover that you can improve it. Either way, it works to your advantage. Contact me if you'd like a recommendation.
- Amount the buyer can borrow decreases as interest rates rise
- Looking at "Right" homes - price, size, amenities, location
- Find the best loan - rate, term, type
- Uncover credit issues early - time to cure possible problems
- Bargaining power - price, terms, & timing
- Close quicker - verifications have been made
Even if you have been pre-approved, a suggestion that can't hurt but may help is to get a second opinion from a different lender. It will either verify that you have a good deal or you’ll discover that you can improve it. Either way, it works to your advantage. Contact me if you'd like a recommendation.
Natural Disaster Insurance
Natural disasters may be defined as involving Mother Nature and her fury! Natural disasters particularly often included wind damage and flood damage. Of course, hurricanes and cyclones often cause additional damages due to power outages.
Flood Insurance is available through both private and government programs. The dollar premiums for such insurance coverage however are becoming more and more expensive as storms become increasingly prevalent.
Generally speaking homeowner insurance policies do not cover flood damage caused by a natural disaster. Flooding caused by frozen pipes may or may not be covered in a homeowner policy, but reimbursement for such damages is normally accompanied by a homeowner cost-sharing mechanism, known as the deductible!
Wind damage is normally covered by homeowner insurance policies, but wind damage caused by a hurricane or cyclone may involve deductibles based on a percent of the home's actual insured value.
Several points to remember about natural disaster insurance coverage and claims you submit for reimbursement for that damage:
1. Review your coverage with your insurance agent so you fully understand the coverage you have for flood, hail, wind, etc.
2. Review the type of deductible you have for any "natural disaster" insurance coverage.
3. Record your insurance policy number and your insurance agent information in several places other than your home.
4. Maintain an accurate record of the contents of your home detailing the type of possession, the cost of the possession, and when and where it was purchased. This record could be both a video and fact record. An online application that might help guide you in this effort is available at the Insurance Information Institute's website http://www.iii.org/software/. Search for the home inventory application.
5. Maintain an accurate, written record of your conversations with the claims adjuster who reviews the natural disaster to your home and personal property.
It pays to understand your insurance coverage and how to proceed when a disaster occurs.
Flood Insurance is available through both private and government programs. The dollar premiums for such insurance coverage however are becoming more and more expensive as storms become increasingly prevalent.
Generally speaking homeowner insurance policies do not cover flood damage caused by a natural disaster. Flooding caused by frozen pipes may or may not be covered in a homeowner policy, but reimbursement for such damages is normally accompanied by a homeowner cost-sharing mechanism, known as the deductible!
Wind damage is normally covered by homeowner insurance policies, but wind damage caused by a hurricane or cyclone may involve deductibles based on a percent of the home's actual insured value.
Several points to remember about natural disaster insurance coverage and claims you submit for reimbursement for that damage:
1. Review your coverage with your insurance agent so you fully understand the coverage you have for flood, hail, wind, etc.
2. Review the type of deductible you have for any "natural disaster" insurance coverage.
3. Record your insurance policy number and your insurance agent information in several places other than your home.
4. Maintain an accurate record of the contents of your home detailing the type of possession, the cost of the possession, and when and where it was purchased. This record could be both a video and fact record. An online application that might help guide you in this effort is available at the Insurance Information Institute's website http://www.iii.org/software/. Search for the home inventory application.
5. Maintain an accurate, written record of your conversations with the claims adjuster who reviews the natural disaster to your home and personal property.
It pays to understand your insurance coverage and how to proceed when a disaster occurs.
Tuesday, November 13, 2012
Refinancing
Some people believe they shouldn't refinance more often than once every two
years. The determining factors are if you'll lower your payments and plan to
stay in the home long enough to recapture the cost of refinancing. If so, you
should consider refinancing.
Interest rates have actually come down significantly in the past 12 months and even more in the past 24 months. According to the Freddie Mac Primary Mortgage Market Survey®, rates on a 30 year fixed rate mortgage are down to 3.6% in August, 2012 compared to 4.27% one year earlier.
Refinancing in the example below would save the homeowner $67.04 per month and they would recapture the cost of refinancing in 3 years and 9 months based on approximately $3,000 of closing costs.
Click Here to make your own projection on a Refinance Analysis calculator.
Interest rates have actually come down significantly in the past 12 months and even more in the past 24 months. According to the Freddie Mac Primary Mortgage Market Survey®, rates on a 30 year fixed rate mortgage are down to 3.6% in August, 2012 compared to 4.27% one year earlier.
Refinancing in the example below would save the homeowner $67.04 per month and they would recapture the cost of refinancing in 3 years and 9 months based on approximately $3,000 of closing costs.
Click Here to make your own projection on a Refinance Analysis calculator.
Benefits Of Having a 2nd Home
While a principal residence and a second home have some similar benefits,
they have some major differences. A principal residence is the primary home
where you live and a second home is used for personal enjoyment while limiting
possible rental activity to a maximum of 14 days per year.
The Mortgage Interest Deduction allows a taxpayer to deduct the qualified interest and property taxes on a principal residence and a second home. The interest is limited to a maximum of $1,000,000 combined acquisition debt and a combined $100,000 home equity debt for both the first and second homes.
The gain on a principal residence has a significant exclusion for taxpayers meeting the requirements. The gains on second homes must be recognized when sold. Even if you sell a smaller second home and invest all of the proceeds into a larger second home, you'll need to pay tax on the gain.
Tax-deferred exchanges are not allowed for properties having personal use including second homes.
If the home is owned for more than 12 months, the gain is taxed at the long-term capital gains rate. If the home is owned for less than 12 months, the gain is taxed as ordinary income which would be a considerably higher rate.
The article is intended for informational purposes. Advice from a tax professional for your specific situation should be obtained prior to making a decision that can have tax implications.
The Mortgage Interest Deduction allows a taxpayer to deduct the qualified interest and property taxes on a principal residence and a second home. The interest is limited to a maximum of $1,000,000 combined acquisition debt and a combined $100,000 home equity debt for both the first and second homes.
The gain on a principal residence has a significant exclusion for taxpayers meeting the requirements. The gains on second homes must be recognized when sold. Even if you sell a smaller second home and invest all of the proceeds into a larger second home, you'll need to pay tax on the gain.
Tax-deferred exchanges are not allowed for properties having personal use including second homes.
If the home is owned for more than 12 months, the gain is taxed at the long-term capital gains rate. If the home is owned for less than 12 months, the gain is taxed as ordinary income which would be a considerably higher rate.
The article is intended for informational purposes. Advice from a tax professional for your specific situation should be obtained prior to making a decision that can have tax implications.
Plan Ahead For Your Future!
Maybe you're not ready to move into it but that doesn't mean that you
shouldn't take advantage of the present opportunities to acquire the home you
want to live in during retirement. The combination of the low interest rates,
reduced prices and lower competition may never be this good again in our
lifetimes.
The rental market is strong and a tenant could pay for your retirement home. The cash flows are attractive and the yield is bound to be stronger than what you're currently earning. Even if you don't retire to this home, it could be a placeholder to control the costs of the home you do move into.
One thought would be to finance it with a 15 year loan that will have a lower rate than that of a 30 year loan and it will obviously amortize in half the time. Even if you don't have the home paid for by the time you retire, your equity will be larger.
Ideally, if you sell your current home when your move into this retirement home, you may be able to take up to $500,000 of tax-free gain for a married couple. That profit could be used to fund your retirement.
With home prices and mortgage rates certain to rise, this may be one of the best decisions you can make. We want to be your personal source of real estate information and we're committed to helping from purchase to sale and all the years in between.
The rental market is strong and a tenant could pay for your retirement home. The cash flows are attractive and the yield is bound to be stronger than what you're currently earning. Even if you don't retire to this home, it could be a placeholder to control the costs of the home you do move into.
One thought would be to finance it with a 15 year loan that will have a lower rate than that of a 30 year loan and it will obviously amortize in half the time. Even if you don't have the home paid for by the time you retire, your equity will be larger.
Ideally, if you sell your current home when your move into this retirement home, you may be able to take up to $500,000 of tax-free gain for a married couple. That profit could be used to fund your retirement.
With home prices and mortgage rates certain to rise, this may be one of the best decisions you can make. We want to be your personal source of real estate information and we're committed to helping from purchase to sale and all the years in between.
Prevent Burglars
Home
is a place you should feel safe and secure. Sometimes, we take it for granted
and unfortunately, we do need to remain vigilant about things we do that could
compromise our well-being. Here are a few tips you might want to consider.- Everyone loves an inviting home including burglars. Make sure it looks
occupied and is difficult to break in.
- Always lock outside doors and windows even if you're gone only a short time.
- Leave lights on when you leave. Consider timers to automatically control the lights.
- Keep your garage door closed even when you’re home; don’t tempt thieves with what you have in your garage.
- Suspend your mail and newspaper delivery when you're out of town or get a neighbor to pick it up for you.
- Posting that you're out of town or away from home on social networks is like advertising your home is unprotected.
- Equally dangerous could be allowing certain social network sites to track your location.
- Don't leave keys under doormats, in flowerpots or the plastic rocks; thieves know about those hiding places and even more than you can think.
- Trim the shrubs from around your home; don’t give criminals a place to hide.
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