Several weeks prior to your closing, you should start the process of shopping for homeowner's insurance. It's a good idea to begin looking soon after your offer has been accepted. There are dozens of carriers available so making choice can be difficult. Get recommendations from friends, co-workers or your Buyer Broker.
Insurance companies will ask you a number of questions that will affect the premium and your coverage. Be prepared to be asked the following:
Is the property in a flood zone?
Does the area get a lot of storms?
Is there a fire hydrant nearby?
What is the square footage of the home?
How old is the plumbing and electrical?
When was the home built?
How many claims have been filed over the past 5 years?
Does the home have a history of water problems?
Is there vandalism and crime in the neighborhood?
What is the type and age of the roof?
You can save money on your insurance cost by having a higher deductible on your policy. Typically, deductibles start at $500 with some companies offering up to $10,000. Be careful, however, since your lender may have its own requirements. Some mortgage companies will not allow to you to exceed $1,000. So, check with the lender prior to opting for a high deductible policy.
A standard homeowner's insurance policy provides four types of coverage: 1) Coverage for the structure of your home; 2) Coverage for personal belongings; 3) Liability protection; 4) Living expenses in the event you are temporarily unable to live in your home.
Property Structure Coverage
Most standard policies will pay to repair or rebuild your home if it is damaged or destroyed by fire, hurricane, hail, lightning or any other disaster that is listed on the policy. They will not ordinarily pay for flood or earthquake damage. If you want or need this coverage it is available at an additional cost. In determining how much insurance you need to cover your home, your agent will calculate the cost of rebuilding the structure at current construction costs. The cost of the land is not included in this figure.
Personal Belongings
In case of fire, hurricane or theft, your furniture, clothes, sports equipment and other personal items are covered. The coverage is usually 50% to 70% of the amount of insurance you have on your home. As an example, if you had $100,000 worth of insurance coverage on the structure of your home, you would have $50,000 to $70,000 worth of coverage on your belongings.
In order to calculate the proper amount of coverage you need for personal items you take an inventory of everything you own and be able to put an approximate price on those items. As part of your inventory take photos or videos of your items and place them in a fireproof safe. You can insure personal items at cash value or replacement cost. Cash Value will pay the cost of replacing your items minus depreciation. Replacement cost will reimburse you for the cost to actually replace them. If you have jewelry and silverware, there are usually limits to their coverage in your homeowner policy. If you want to insure them for full value, speak to your agent about a floater policy or rider with no deductible.
Liability Coverage
This is to protect you against lawsuits in the event someone is injured on your property. There is also a provision that will cover an event in which you, your children or pets accidentally ruin property belonging to a neighbor. It is advisable that you purchase at east $300,000 worth of liability protection.
Loss of Use
If you suffer a covered disaster such as a fire or storm, this part of your policy will pay the costs of living away from your home. It will pay hotel, restaurant and other expenses you incur while your home is uninhabitable. This coverage is typically 20% of your home insurance.
Is it possible to use the $8,000 tax credit as a down payment when you purchase a home?
Although this has not been the case to date the situation may soon change.
In a recent speech, Secretary of Housing and Urban Development, Shaun Donovan mentioned that the FHA is currently working on a proposal that may allow home buyers being able to use the $8,000 tax credit as a down payment. Speaking to The National Association of Home Builders, he stated the Federal Housing Administration (FHA) will allow home buyers to apply the $8,000 first-time home buyer tax credit toward the purchase of FHA-insured home.
Previous to this announcement, families could only access the tax credit after filing their tax returns with the IRS. According to new statement, FHA rules will allow state Housing Finance Agencies and certain non-profits to "monetize" up to the full amount of the tax credit (depending on the amount of the mortgage) allowing borrowers immediate access to these funds for use as a down payment. Home buyers who use FHA-approved lenders will be able to apply the tax credit to their down payment in excess of 3.5 percent of appraised value of the home or to their closing costs. The FHA's new mortgagee letter explains the details.
This addresses one of the major hurdles to the purchase of a home - coming up with the down payment with a solution of tapping into the tax credit early. You can do this with an advance from an FHA approved lender or nonprofit; however, you will likely have to repay the money soon after getting your tax refund. The advance cannot be used for the 3.5 percent down payment that is required by FHA but it can be applied to closing costs or to increase the size of your down payment.
With the advent of this down payment program certain entities may come forward who will claim to be able to "help you" get these funds. Of course, this type of help will have a price attached to it. Be very careful to always deal with a qualified lender and check with a tax consultant.
The National Association of Realtors has put out the word warning consumers about a recent property rental scam.
Using listing photos of vacant properties acquired through Realtor.com and other online real estate sites, these phony landlords are running ads promising to lease homes at very reasonable rates.
Typically, a consumer sees an ad for a rental home on Craigslist advertising an attractive property at a low rental and reasonable security deposit amount. Included in the ad there will be a contact email address. When consumers contact the address they will receive an email back explaining the situation. The responses are usually varied forms of the following (actual response):
"Thanks for the email...I own the House and also want you to know that it was due to my transfer to (West Africa, Nigeria) that makes us to leave the House and also want to give it out for rent and looking for a responsible person and God fearing person who can take very good care of the house in our absence. We are not after the money for the rent but want it to be clean all of the time and the person that will rent it to take it as if it were its own. So for now, we are here in West Africa and will be staying here for the next 4 years in our new House and also with the keys of the House for rent, we try to look for an agent that we can give this documents and the keys before we left but could not find, and we as well do not want our House to be used any how in our absence that is why we took it along with us. I and my Wife came over to Africa for a missionary work, so I hope you will promise us that you will take very good care of the house. So get back to me if you know you could take care of our house or perhaps experience you have in renting home. Hope you are okay with the price of $1000 per month and the security Deposit is $400. Get back to me for the rental application. You can go and view. Here is my contact number..."
The scammer will then send a bogus rental application out to the renter and will request the application to be filled out and the first month's rent and security deposit to be wired through Western Union. Sometimes a key is actually sent to the consumer but it does not fit any property. The end result is the loss of the money as well as a theft of the personal information provided in the application.
Some of the scam listings refer to a "Residential Lease Package" which is a document prepared by NAR (The National Association of Realtors.) NAR denies any involvement with the document and is encouraging anyone who has been affected by this scam to file a complaint. You can file online at Internet Crime Complaint Center which is sponsored by the FBI and the National White Collar Crime Center.
According to the National Association of Realtors, pending home sales rose in March. The pending home sale index rose 3.2 percent to 84.6 from 83.7 in March 2008. It was also up from February's reading of 82.
It has been a good year for first-time home buyers who have seized the opportunity with low interest rates, low prices and the government's $8,000 tax credit program which will be in place until the end of this year.
According to chief economist, Lawrence Yun,
"We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around. This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit."
The pending home index measures contracts signed and not yet completed. The up-turn in the index may indicate that home prices have fallen enough to encourage buyers to get off of the fence and into the market.
Looking for the Bottom
Economists are expressing the fact that things look a bit brighter than they did at the beginning of the year. However, with 10 months of inventory currently in many markets, we are looking toward a market with six to seven months of supply to begin a return to normal conditions.
An April Gallup Poll reported that 71% of Americans thought it was a good time to buy a house. And, with houses going under agreement at a more rapid pace, buyers are feeling more of a sense of urgency to put in an offer and go through with a purchase now. The perception is that the market is close to or at a bottom.
"Investors believe the worst of the downturn is behind us," said Mark Zandi, chief economist at Moody's Economy.com. "The economy is still in a recession. But the rate of decline is moderating, and a bottom for the housing market and the overall economy are coming into view."
If you have begun the process of searching for a home you have probably learned that the first step in this journey is obtaining a pre-approval from a bank. A realtor may have suggested that you get "pre-approved" and this step is vital in today's home buying market.
What, exactly, is a pre-approval?
You may have started the process by going to on-line sites like Lending Tree to put bids out to receive competitive programs that fit your needs or Bankrate.com which has all of the current mortgage rates.
The actual pre-approval is a letter from a lender stating that you are pre-approved to purchase a home for a certain price and with a particular loan amount.
It begins with you contacting a lender and laying out your particular financial situation as well as any special circumstances you may have. The lender will collect data from you such as tax returns and other relevant information to support the income you are claiming. They will also want to see W-2 forms for the past two years, pay stubs for the three months and bank and brokerage statements from the last three months.
Additionally, you will be asked to provide information about your current living situation (buying or renting), job history, social security number and will run a credit check to get your FICO score (also known as your credit score).
By checking the basics of your employment, financial statements and credit score, the bank can develop a picture of who you are as a credit member of society. Do you have late payments or do you consistently pay on time? Have you been steadily employed for at least two or more years? Do you have a pattern of savings? Are you relatively debt-free or have a high debt ratio?
At this stage the bank will use this information to obtain approval for a specific amount and will provide you with information about the monthly payments on the loan as well as projected closing costs.
The mortgage lender will then submit the paperwork through an "Automated Underwriting" process. With this process, an answer to your application is typically received within minutes of submission. Once the paperwork is approved, the lender will issue a pre-approval letter that outlines the terms of the mortgage.
What is so important about a Pre-approval?
In terms of your home search, the pre-approval sets the tone and price range which will allow you to intelligently begin the home search process. It also allows your buyer broker to be more effective in helping you.
As a buyer broker, I help my clients to connect with bankers to find the best rates and programs available. I, then, step aside and let the lender and my client do their work in private. A person's personal finances are often closely guarded and I respect that. My only need is the final pre-approval letter to ensure that my client is qualified to purchase the properties we are viewing together.
The pre-approval letter is a key component to the home buying process. Although it is not a final loan commitment, a pre-approval can provide you with an advantage when bidding on a home. It demonstrates your financial strength and proves your ability to go through with a purchase. In a competitive situation it makes a great difference in your purchasing power.
Once armed with a pre-approval from a qualified lender, you are ready to begin the search for your new home.
Although the sales of single family homes have picked up recently, one category of the market continues to suffer - vacation homes and investment properties.
The market share of homes purchased for investment was 21% last year, unchanged from 2007 while another 9% were vacation homes, compared with a 12% market share in 2007.
Tighter lending standards and a struggling economy are factors that are being blamed. It is not unexpected that vacation home sales would decline given the impact of the current financial environment. A large share of the investment home sales that have taken place are the result of foreclosures or the deep discounts that have been caused by the foreclosure market and increased inventory of homes.
The current concern that many people have about their own potential job loss has also been feeding into the lack of second home sales.
For those who do have the desire and the fortitude to pursue a vacation home purchase, this may be the time to do so. The median price of vacation homes fell 23 percent in 2008, to $150,000 and this part of the real estate market is expected to be lagging for at least another couple of years.
Even with this economy, the size of the second-home market is still significant. According to NAR, there are 8.1 million vacation homes in the United States, compared with 75.5 million owner-occupied homes.
While some homebuyers have been complacent in taking their time to find a home to buy, I recently noticed a trend of more and more homes quickly going under agreement. This has been occurring with more frequency as home sales have unexpectedly surged.
Sales had been expected to fall this season; however they have, jumped 5.1 percent to an annual rate of 4.72 million as of last month. Here in the Northeast, sales rose 15.6% to an annualized rate of 740,000 units and are down 14.9% from a year ago
Nationally, the increase in sales has been the largest increase since July 2003.
The inventory of homes on the market is now approximately a 9.7 month supply which is still well below the 11.2 month supply in November.
Although existing home sales remain at lows that have not been seen in more than a decade, economists have been buoyed by recent housing news which has helped to fuel the stock market this week.
One of the factors that may be driving the escalation in sales is the record number of foreclosure properties which have encouraged bargain hunters to enter the market looking for their dream deals. The discounts on foreclosure properties have also caused the regular housing inventory to lower its prices inducing an even deeper buyers' market.
Record low mortgage rates have also been a motivating factor. Interest rates on 30-year fixed-rate mortgages have remained below 5% this week, falling to the lowest level since mid-January and skimming all-time lows, according to a survey by Freddie Mac.
The latest report comes at the same time as the government has announced its plan to buy more than $1 trillion in assets - a move that is intended to drive rates on mortgages down further.
Interest rates on mortgages hit an all-time low of 4.96% in January and have continued that trend, enticing homeowners to refinance and home buyers to enter the market. In the wake of the Fed's announcement this week, rates are expected to fall even further. These lower rates along with declining home prices are presenting more opportunities to home buyers.
As entry-level buyers seek out bargains, move-up buyers are also searching for opportunities that may not come again soon.
The Obama administration recently announced details on its $75 billion plan to help 9 million homeowners.
This plan may benefit more than 100,000 Massachusettshomeownerswho have, up to now, been unable to refinance at current low rates due to falling property values.
Under the new plan eligible borrowers with loans held by Fannie Mae and Freddie Mac will be able to obtain new mortgages at currently lower rates, regardless of the amount of equity they have in their homes. Even homeowners who are somewhat underwater, that is, the value of their home is less than what they owe on the mortgage, may be able to refinance.
The home you want to refinance is your primary home.
Your loan is controlled by Fannie Mae or Freddie Mac and must be a conforming loan. You can call Fannie at 1-800-7FANNIE and Freddie at 1-800-FREDDIE or submit online form at Fannie or Freddie.
You must be current on your mortgage payments (you haven't been more than 30 days late on your payments in the last 12 months.)
Your loan-to-value ratios (LTV) should be above 80 percent but not more than 105 percent.
You must have sufficient income to support a new mortgage.
There are a growing number of homeowners in Massachusetts who were sensible borrowers but their homes have plummeted in value. In the face of any loss of income, they are at risk of foreclosure. The current plan is a serious attempt to stop the wave of foreclosures and halt the decline in home values.
According to The Warren Group, a quarter of a million borrowers in Massachusetts fit the profile of not having enough equity in their homes to refinance. About half of them hold loans that are guaranteed by Fannie or Freddie. Across the country, more than 8.3 million mortgaged properties are underwater, according to a report released by First American CoreLogic.
The goal of the Obama plan is to help homeowners avoid foreclosure by restructuring or refinancing their mortgages. The program is currently scheduled to run until June of 2010.
In a time when state and community budgets are being stretched beyond limits, is it a good idea to think about regionalizing public health services?The MetroWest Community Health Care Foundation thinks so.
In a preliminary stage of exploration, eight of the area's smaller towns have been invited to meet with officials to discuss the possibility of health care regionalization as a way to save money. To add another spark to the discussion, a new state law has recently reformed how regional public health districts are to be created.
Ashland, Holliston, Hopkinton, Sherborn, Sudbury, Wayland, Lincoln and Weston have been asked to participate in a March 17 meeting to see if there is adequate interest in pursuing the possibility of regionalization. It seems that in a time of state and local budget constraints, perhaps having one board of health for each town could be considered as overkill.
Rather than having each individual town taking on the responsibility and expense of every health concern, the idea is to pool the efforts of a number of towns, particularly on matters such as restaurant inspections and nurse's services. Another issue for consideration is how a regional health agency could have staff on call 24 hours every day of the year.
Additionally, there are concerns about preventative kinds of activities such as smoking cessation and curbing substance abuse that could have positive effects and improve the public health.
A law that was recently passed allows towns to join an existing regional health district which is something they could not do in the past. It also gives local boards of health voting power on creating a regional district. Previously, only Town Meetings could vote on the idea.
At the present time, the longest standing multi-community collaboration is the NashobaAssociated Boards of Health (NABH) which was created in 1931 and serves fourteen municipalities located in the central part of the state.
Perhaps it could serve as an example of something more to come.
While some home buyers have been spurred on by current prices, low interest rates and a huge inventory, there is now another reason to pull the trigger on a home purchase this year.
As of March 26, 2009 there is a new economic stimulus tax credit that is providing a great opportunity for first-time home buyers.
A first-time homebuyer is defined as anyone or their spouse who has either never owned a home or has not owned a home for at the past three years.
Although there is much debate about whether or not the 2009 American Recovery and Reinvestment Act will actually stimulate the economy, this portion of the plan can help to make it more affordable for some homebuyers to get into the market.
Qualifications:
To get the full credit you will need to live in the home for three years.
Ownership of a vacation property does not disqualify you.
The limit on your modified adjusted gross income is $75,000 for a single taxpayer and $150,000 for married couples. Above those limits some partial tax credits are available.
You must use the home you buy as your principal residence rather than a second home or investment property.
The home must be purchased between January 1 and December 1 of 2009.
Benefits:
An $8,000 tax credit or $10% of the purchase price of your home.
Unlike the previously offered $7,500 credit which was actually a low interest loan, the current tax credit does not have to be paid back.
If you have been holding back from making a home purchase this is a chance to put $8,000 back into your pocket in the process.
Couple that with The Buyers' Counsel's 20% cash back rebate and you have further inspiration to check out what this current housing market has to offer.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
Several weeks prior to your closing, you should start the process of shopping for homeowner's insurance. It's a good idea to begin looking soon after your offer has been accepted. There are dozens of carriers available so making choice can be difficult. Get recommendations from friends, co-workers or your Buyer Broker. 
Is it possible to use the $8,000 tax credit as a down payment when you purchase a home? 
The National Association of Realtors has put out the word warning consumers about a recent property rental scam. 
Is the housing meltdown coming to an end? 
If you have begun the process of searching for a home you have probably learned that the first step in this journey is obtaining a pre-approval from a bank. A realtor may have suggested that you get "pre-approved" and this step is vital in today's home buying market. 
Although the sales of single family homes have picked up recently, one category of the market continues to suffer - vacation homes and investment properties. 
While some homebuyers have been complacent in taking their time to find a home to buy, I recently noticed a trend of more and more homes quickly going under agreement. This has been occurring with more frequency as home sales have unexpectedly surged. 
The Obama administration recently announced details on its $75 billion plan to help 9 million homeowners. 
In a time when state and community budgets are being stretched beyond limits, is it a good idea to think about regionalizing public health services? 
While some home buyers have been spurred on by current prices, low interest rates and a huge inventory, there is now another reason to pull the trigger on a home purchase this year. 
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