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How to make cramped space feel more open
Small rooms feel larger if they're staged correctly. The key is a minimum amount of clutter and furniture, light colored walls and, if possible, large mirrors.Read More.
Late HOA payments may soon affect credit scores
Starting in Oct., a buyer's credit score may drop after a late homeowners' association payment the same way it drops if a mortgage payment arrives late. Read More.
Survey: Real estate is the best investment
When asked the best place to put money in hopes of future returns, 35% of Americans surveyed said real estate. Only 22% said stocks or mutual funds while 17% said gold. Read More.
Foreclosure uptick in reverse-mortgage homes?
Homeowners with a reverse mortgage risk foreclosure if they fall behind on real estate taxes or property insurance - and many of them are. Read More.
Buyers: Look for the signs of a bad moving company
Homebuyers often consider the selection of a mover easy after the rigors of house hunting and closing, but not all companies provide top-notch service. Read More.
TODAY'S TOP STORIES
Flood insurance solution takes big step forward
The U.S. House passed a bill that makes it easier for owners to get private flood insurance or return to national coverage without penalty. It now goes to Senate.Read More.
Citizens takeout owners get side-by-side comparisons
If a private insurance "takeout" targets an owner with Fla.-owned Citizens property insurance, he must now be given a rate comparison of his options. Read More.
6 Things You Need to Know When Buying Home Insurance
Whether you've just begun searching for a new place or you're waiting to close on your dream home, one important aspect of moving you can't ignore is insuring your investment.
Enter the homeowner's best friend: the homeowners insurance policy.
Just like any other kind of insurance, there's no such thing as a one-size-fits-all policy. Home insurance policy costs typically depend on the home's location and age, the size of the deductible, and the coverage level. You'll have to look at these and other variables to figure out what kind of home insurance is right for you-and how much you'll shell out for it.
To make sure you purchase the perfect policy that fits your budget and coverage needs- and to avoid potential pitfalls-we've pulled together a list of the most important things you should consider. Let's take a look.
1. It's all about location, location, location
Along with size, construction type, and overall condition of the house, location plays a big role in the cost of insurance and types of policies available. But unlike home buyers, insurance companies aren't checking out school districts, awesome nearby restaurants, or your commute time.
But others factors do come into play. Homes located near highly rated, permanently staffed fire departments (and even fire hydrants), for example, may cost less to insure, says Loretta Worters, vice president of communications for the Insurance Information Institute.
And of course, proximity to the coastline is also weighed heavily. You're likely going to pay a pretty penny for that idyllic spot near the coast.
"Because of the increased risk of catastrophic weather events resulting in claims, it will generally cost more to insure," Worters says.
On top of a higher policy cost, coastal home insurance policies could include a separate hurricane or windstorm deductible based on the fees to rebuild a home.
2. You might want flood insurance-even if you think you don't need it
Damage from flooding isn't covered by typical home insurance policies. Any home located in an area prone to flooding requires separate flood insurance to cover these kinds of claims. (Flood insurance is available from the federal government's National Flood Insurance Program as well as a handful of specialty insurers.)
Don't live in a flood zone? Don't assume you're off the hook. Flood insurance may be a smart option for any homeowner, regardless of zoning-and if you're not in a high-risk zone, you can probably snag some lower premiums.
"Ninety percent of all natural disasters in the U.S. involve flooding," Worters says. "However, 25% to 30% of all paid losses for flooding are in areas not officially designated as special flood hazard zones."
3. That goes for earthquake insurance, too
Californians aren't the only ones who have to worry about earthquakes-in fact as many as 39 states have experienced tremors, according to data from the Insurance Information Institute. And the resulting damage usually isn't covered by traditional home insurance policies.
Homeowners need to purchase an addition to their home insurance policy to cover
any earthquake-related claims. The cost varies by location, insurer, and the type of structure being covered as well as age of the building, Worters says.
4. Have a pool? Dive into extra protection
Ahh, your new home has a fabulous swimming pool and hot tub. Yay for you! We'd love to come over-but before we do, you should look into bumping up your liability insurance.
Liability coverage is the part of a home insurance policy that may pay court costs or other expenses if you're found responsible for an accident, such as someone drowning or suffering a serious injury after doing a cannonball into the shallow end of your pool.
Another option: You can purchase an umbrella liability policy to provide a level of protection not typically available with standard home insurance policies.
5. Your home's claim history matters-even from when you didn't live there
Whether you've just begun your home search or lived in your home for years, it's never too late to get familiar with your home's claim history-and how it might be affecting your homeowners insurance rates.
It's all summed up in a nifty database called the Comprehensive Loss Underwriting Exchange, or CLUE. Essentially the equivalent of a credit report for your home, the CLUE contains all kinds of records of insurance claims on the house.
That's important to know because a claim filed for the property in the past five years could cause your rates to inch upward, even if you didn't own the home at the time of the claim.
But take heart, dear home buyer-not all prior claims have a negative effect.
"Some recent claims can have a positive impact, because replacing a roof damaged by a windstorm could make the house more desirable to an insurance company," Worters says.
If you're looking to buy a home and want a copy of the CLUE report, check with the sellers (only the owner of a property may access its CLUE report). There's no guarantee they'll fork it over, but there's no harm in asking. If you already own the home, you can get a free report from database giant LexisNexis.
6. A high deductible can really pay off
It should come as no surprise that you'll want to shop around before committing to a policy. Compare the rates, deductibles, and coverage options of at least two to three companies to make sure you have adequate coverage for your situation.
Pro tip: Pay close attention to the size of your deductible.
"It's recommended to opt for the highest deductible you can afford because most people only file a claim every eight to 10 years," Worters says. "A higher deductible saves money year after year and encourages only using insurance in catastrophic situations when it's truly necessary. And that also helps keep your costs affordable."
Gina Roberts-Grey has been covering real estate news since 2000. She also enjoys writing about celebrities and their homes, pop culture, antiques, bichon frises, insurance, and NASCAR.
A Homeowner’s Perspective
Writer Jason Zweig recently wrote a forward-looking letter to his grandchildren for The Wall Street Journal that documents the joys of home ownership and what many young adults may miss out on if they continue to be lifelong renters. Zweig writes that it took him decades to learn the true value of home ownership, beyond the advantages of equity building. Zweig reminisces in the letter as he and his brother help to move out their 87-year-old mother from the place she called home for half a century. The home contained memories for the family – where the family grew up and even where her husband died in 1981.
Their mother had turned the home almost into a museum of family treasures over the years. As the mother told her sons: “I have no emotional attachment to the house; I never liked it physically. But everything important that ever happened in our life as a family is here, and I can’t just leave all that behind.” Zweig’s letter talks about the true treasures of owning a home and the difficulty in saying goodbye to a place you call home for so many years. “A home is more than an investment,” he writes. “It is the place that helps shape who we are. Your generation may well be thankful that you don’t have to bear the burdens of owning one – the mortgage, the maintenance, the pain of pulling up roots that run decades deep. My generation, and my mother’s, are thankful we had the blessings.”
Source: NAR & The Wall Street Journal
The 1960's ranch home? It's back
In some areas, demand is high for one-story homes, but there are fewer listings because builders have been constructing more two-story homes on smaller lots.Read More.
Buyers need a Realtor to compete in seller's market
Potential homebuyers will have more trouble finding a Fla. home thanks to a meager 4.5-month listing inventory - and they should expect a bidding war if they do. Read More.
How scammers hack into your transactions
The FTC worked with NAR to post an alert on its website about scammers hacking into a real estate agent's or a lender's email to steal closing funds. Read More.
First-time buyers want to bypass starter home
BofA report: 75% of first-time buyers would prefer to move into homes that meet their long-term needs; another 35% plan to retire wherever they buy. Read More.
Fla. cities at top of luxury home list
In a nationwide list of home sales worth over $5M, Fla. has five cities in the top 20 list; for home sales over $10M, Fla. has seven cities, and most are in South Fla. Read More.
Kitchen remodeling projects that pay off
Which projects offer the best return on investment for owners considering a home sale? Amped up appliances help, as do new countertops and a cabinet face-lift. Read More.
Court upholds homestead exemption restrictions
A three-judge panel ruled last week that a couple could not claim two homestead exemptions even if one solely owned their Fla. home and the other their Ind. home. Read More.
5 uncommon ways to come up with a downpayment
Many people put a little money away each month toward a downpayment on a home "some day," but additional options may help get them there faster. Read More.
Trends: More Americans heading south
Census Bureau: For almost 100 years, relocating Americans tended to move toward the Pacific, but a shift finds them moving to Fla., Texas and the Carolinas. Read More.
NOW YOU KNOW
5 home fixes not worth it at resale
A new roof and refinishing hardwood floors are worth every penny at resale, but other projects like a bathroom addition or closet redo don't pay off. Read More.
Got flood insurance? Rates go up today
On April 1, flood rates move incrementally higher as required by law - an average 9% nationwide - but the impact on any single property varies greatly. Read More.
U.S. responds to flood insurance cost complaints
Voice-controlled devices: The downside
Tips to Save for Your Down Payment:
1. Limit spending on luxury or non-essential items.
2. Spend less on entertainment.
3. Cut your clothing budget.
4. Postpone a vacation.
5. Avoid an unnecessary purchase.
6. Think about a second job.
Real estate Q&A: HOAs must allow satellite dishes
Main Street holds up as Wall Street struggles
4 Cleaning Solutions You Never Heard Of
What does 'energy efficient home' mean?
See What Buyers Want
According to a recent survey, Fla. has a home sale edge: The top reason (52%) people would consider moving is for a better climate or better weather. Read more.
Fla. poised to be 2016 real estate 'hot spot'
2016 Florida Real Estate Trends: Economists say this year will look a lot like 2015 - rising demand, good fundamentals and positive momentum for the state's real estate markets.Read more.
Some real estate ideas sound right but aren't
Forbes lists top investment cities - 7 are in Fla.
Subprime loans are back - but with changes
Floridians' confidence stable as economy improves
Floridians seem to think the U.S. economy faces challenges but it won't affect them: The U.S. economic numbers dropped but personal outlook numbers climbed. Read more.
Walkable neighborhoods: Demand up but supply low
Closing with cash? Not always a good idea
Home staging evolves
U.S. consumers more upbeat in Jan.
A guide to home seller etiquette
Fla. is the best state for retirement: 6 reasons
A seller's goal is to sell, but sometimes an owner says things that short circuit the process. The following are top comments sellers should keep to themselves. Read more.
Stocks have taken a hit so far this year, but bad news shouldn't deter buyers and sellers. There's little bubble risk as jobs expand and mortgage rates stay low. Read more
Real estate Q&A: When the home doesn't appraise
A buyer with a signed contract found out that his bank won't loan the full amount needed after an appraisal comes in short. What are his options? Read more.
Global woes and sinking stocks don't mean recession
A plunge in stocks fueled by China fears and oil prices left investors alarmed. Some wondered if it signaled a recession. The answer, most analysts say, is no. Read more
Florida Legislature passes comprehensive water bill
TALLAHASSEE, Fla - Jan 15, 2016- The Florida House overwhelmingly approved a statewide water-policy bill strongly backed by Florida Realtorsheading into the 2016 legislative session Read more
More Americans say it's a good time to sell
Is rent-to-own a solution to the rental crisis?
Florida tops list of most-desirable states
NEW YORK – Dec. 18, 2015 – For the first time since 2001, Florida – the nation's 27th state – is back on top as Americans' most desired state to live.
When asked where they would most like to live (excluding their current state), Florida landed at the top of the list. Overall, sunshine and waterfront acreage were consistent themes among the most popular states, with California (2) and Hawaii (3) rounding out the top three. However, non-beach states Colorado (4) and New York (5) closed out the top five states.
This year's top five were, for the most part, also top-five honorees the last time this question was asked in 2013, Harris reports. The sole exception is New York, which edged into the top-five after a sixth place showing. Texas, meanwhile, dropped out of the top five to No. 6.
The remaining 9 states on the "top 15" list include diverse geographies, though most do fall within a few general categories:
The coasts are well represented: Along with Florida, the Carolinas – North (7) and South (12) – and Georgia cover most of the southeastern United States beachfront. Meanwhile, Oregon (9) and Washington (14) make for full west coast coverage (when combined with California). Perhaps for some it's not the coast but the warmth, which takes precedence, as landlocked-but-sunny states Arizona (8) and Tennessee (10) also make the list.
Many states have both admirers and detractors, according to Harris.
California may be 2nd on the list of states Americans would like to live in, but it also tops the list of states where Americans would least like to dwell. New York and Alaska may both be top 15 performers when Americans say where they would like to live, but they also round out the top three states where Americans would not want to live (2 and 3, respectively). Mississippi (4) and Texas (5) complete the top 5 for the dubious list, with Alabama (6), Florida (7), Illinois (8), Michigan (9) and the District of Columbia (10) completing the top 10.
Favorite and least favorite cities
Americans continue their love/hate relationship with New York City, which has topped The Harris Poll's list of cities where Americans most want to live for well over a decade – but it also tops the list of cities they'd least like to live.
California and Florida are well represented among the top 10 most desired cities, with San Diego, Los Angeles and San Francisco nabbing the 2nd, 4th and 6th spots for the Golden State, while Miami andOrlando bring the 5th and 10th spots home to the Sunshine State.
Denver, CO (3) fills in the lone gap in the top five, while Honolulu, HI (7); Atlanta, GA (8) and Seattle, WA (9) fill out the rest of the top 10.
The top three cities Americans would least want to live in have remained the same since this question was first asked in 2010 with New York, followed by Detroit (2) and Los Angeles (3). Chicago repeats in 4th place, while Dallas, Texas (5) rounds out the top five. Miami (6); San Francisco (7); Houston (8); Washington, D.C. (9) and Las Vegas (10) complete this less desirable top 10 list.
The Harris Poll surveyed 2,232 U.S. adults online between Nov. 11 and 16, 2015.
© 2015 Florida Realtors®
- Ocala: 11 low-risk zip codes, 2 medium risk; 1 high risk; and 1 very-high risk
- Pensacola-Ferry Pass-Brent: 3 very low; 9 low; 2 medium; and 1 each high and very high
- Deltona-Daytona Beach-Ormond Beach: 17 very low; 3 low; 1 medium; 3 high
- Tampa-St. Petersburg: 90 very low; 16 low; 9 medium; 9 high; 5 very high
- Lakeland-Winter Haven: 11 very low; 9 low; 4 medium; 2 very high
- Jacksonville: 35 very low; 7 low; 1 medium; 2 high; 1 very high
- Miami-Fort Lauderdale-West Palm Beach: 147 very low; 18 low; 4 medium; 4 high; 2 very high
- North Port-Sarasota-Bradenton: 33 very low; 5 low; 1 high
- Orlando-Kissimmee-Sanford: 67 very low; 6 low; 1 medium; 1 very high
- Cape Coral-Fort Myers: 27 very low; 4 low; 1 medium
- Naples-Immokalee-Marco Island: 16 very low
- Palm Bay-Melbourne-Titusville: 19 very low; 5 low
- Port St. Lucie: 15 very low; 1 low; 1 medium
Real estate's impact from spending and tax deal
- Florida families will permanently gain the ability to deduct sales taxes from their federal income taxes under the bill. The benefit applies only to states without an income tax and has applied in recent tax years. However, the temporary benefit becomes permanent when the new bill becomes law.
- Several business tax breaks will be extended, including one for the purchase of small business equipment. The bill also extends a tax deduction for "bonus" depreciation of business property purchases, along with television and film production.
- Green energy gets a boost from a tax break extension for energy from renewable sources – solar, wind and geothermal, for example – and biodiesel fuels and electric cars.
- The bill creates new rules for the visa waiver program. Under the program, citizens of 38 countries can travel freely to the U.S. with only a passport; but after the new bill becomes law, citizens from these countries who have visited terrorist-identified countries such a Syria or Iraq in the past five years will be denied a visa waiver.
- The EB-5 visa won't be affected. In early versions of the omnibus bill, lawmakers considered changes to a visa program popular in some areas of Florida – the EB-5. Under the program, foreigners may obtain a U.S. green card if they invest $500,000 in projects that create American jobs. However, the FBI noted some problems with the program. In the end, though, a proposal to change the EB-5 visa was backed out of the bill.
- The bill creates a new REIT provision. After passage, companies in most cases won't be allowed to spin off property they own into a real estate investment trust (REIT).
- More money goes to low-income housing. The National Low Income Housing Coalition (NLIHC) praised the bill, saying funds still remain "wholly inadequate to meet the housing needs of low-income Americans," but "the bill does not raid the National Housing Trust Fund … This will allow HUD to implement the National Housing Trust Fund in 2016 with funds from a modest assessment on the annual volume of business of Fannie Mae and Freddie Mac."
- The bill prohibits disposition of taxpayer-owned stock in Fannie Mae and Freddie Mac for two years. That timeframe will give Congress more time to consider housing finance reform.
Fed finally lifts key interest rate from near zero
Fed rate hike ? Borrowers need not worry
WASHINGTON – Dec. 15, 2015 – The Federal Reserve is expected to hike interest rates this week, but historic patterns suggest there is no reason for homebuyers to panic.
In the early 2000s after the tech bubble popped, the Fed lowered its benchmark rate to 1 percent. Then, in the summer of 2004, it began raising it by 0.25 percent. At the time of the first increase, interest on a 30-year fixed mortgage was about 6.3 percent; by the last increase in 2006, the mortgage rate had climbed to only 6.68 percent – less than half a percentage point, even though the benchmark rate had climbed from 1.25 percent to 5.25 percent.
Mortgage rates could possibly follow the same course this time as economic uncertainty in the global economy continues to put downward pressure on long-term rates.
The Mortgage Bankers Association (MBA) predicts that the fixed home-loan rate will be roughly 4.8 percent at the end of 2016, an increase of less than 1 percent.
"At some point, you could get to a level of rates, 6 to 6.5 percent, that would really begin to crimp affordability and then that would be a real negative," says MBA chief economist Michael Fratantoni. "But at this point, it's going to be just a very modest headwind. Most of the other fundamentals are suggesting a very strong housing market in the year ahead."
Source: Washington Post (12/15/15) P. A13; Orton, Kathy
Forecast: Fla. home sales to rise 8-10% in 2016
Doing it alone: FSBO sellers’ costly mistake
Study: Stellar credit scores add up to savings
HIGHLAND HEIGHTS, Kentucky – Dec. 7, 2015 – For every 10 point increase in credit scores, borrowers can expect to receive a lower mortgage interest rate, according to a new study soon-to-be-published in the Journal of Housing Economics by researchers at Northern Kentucky University.
For each of those 10 point score increases, loan applicants receive discounts ranging from 24 to 117 basis points for mortgage loans with loan to value ratios (LTVs) below 60 percent. They receive discounts of 22 to 115 basis points for LTVs between 60 and 70 percent, and discounts of 13 to 87 basis points for LTVs between 70 percent and 80 percent, according to the study.
Credit scores, however, have been falling to their lowest levels in recent months, according to Ellie Mae. The average FICO score on all closed loans dropped to 722 recently. The average FHA refinance FICO score dropped 7 points to 654 and the average VA purchase loan FICO score dropped to 705, its lowest since April.
LTVs, on the other hand, have barely moved and range from 69 to 70 for conventional purchase loans and 96 to 95 for FHA purchase loans over the past year.
Therefore, "a conventional borrower with a median LTV of 70 for a conventional loan should expect to save up to 115 basis points, or 1.15 percent, if he has a high end score," Real Estate Economy Watch reports on the study.
Source: "New Study: Great Credit Makes for a Great Rate," Real Estate Economy Watch, (Nov. 21, 2015)
© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688
Some home renovations can raise tax bills
WASHINGTON – Dec. 3, 2015 – Homeowners tackling a remodeling project may want to consider how their renovations could impact what they pay on their taxes. Renovations can increase a home's assessed value – and assessed value is used to determine the property tax that owners pay.
The improvements that can increase a property's reassessment vary considerably by location. If they want to avoid surprises later on, homeowners may want to ask their city in advance about a specific improvement and its potential impact on their home's assessed value.
In general, however, remodeling projects that increase living space tend to increase property taxes. Also, finishing space that an owner already has – such as an attic, garage or basement – also tend to increase the property tax bill.
"Anything that increases the square footage of the living space is likely to increase the value of the home, and therefore the assessed value," says Tom Shaer, deputy assessor for communications with the Cook County Assessor's Office.
Also, large renovations – such as adding a bathroom – likely will prompt a reassessment of a home. That's because an "additional bathroom allows more people to live in the house," therefore increasing its value, says Pete Sepp, president of the National Taxpayers Union, a pro-taxpayer lobbying group.
Kitchen renovations can be one gray area, says Michael Kapp, public information officer for the Los Angeles County assessor's office.
"If they're replacing countertops and not extending them, it would probably not [trigger a reassessment]," Kapp says. "If they add additional cabinets or move a wall, for example, that would trigger reassessment" even if the square footage does not increase.
Some owners may be surprised at what will trigger a reassessment. For example, adding a garden shed could potentially trigger a reassessment, Sepp says. Also, in-ground pools, a very large deck or even re-grading the lot to improve its drainage could potentially increase the property tax bill too.
Source: "Home Renovations That Add Value – and a Heftier Tax Bill," realtor.com® (Nov. 27, 2015)
Renters miss the real value of homeownership
Jason Zweig recently wrote a letter to his grandchildren in The Wall Street Journal that documents the joys of homeownership and what many young adults may miss if they continue to be lifelong renters. He says it took him decades to learn the true value.
Zweig wrote the letter after working with his brother to move their 87-year-old mother from the place she called home for half a century. The home contained memories. It was where the family grew up and even where her husband died in 1981. Their mother had turned the home almost into a museum of family treasures over the years.
“I have no emotional attachment to the house,” Zweig’s mother told him. “I never liked it physically. But everything important that ever happened in our life as a family is here, and I can’t just leave all that behind.”
“A home is more than an investment,” Zweig writes. “It is the place that helps shape who we are. Your generation may well be thankful that you don’t have to bear the burdens of owning one – the mortgage, the maintenance, the pain of pulling up roots that run decades deep. My generation, and my mother’s, are thankful we had the blessings.”
Source: “The Real Value of a Home,” The Wall Street Journal (Nov. 27, 2015)
Did you Know?
Average Mortgage Rates
Florida dodges hurricane bullet – again
Holiday shopping can kill a closing
- Don't apply for new credit or accumulate new debt. It's tempting to apply for a new store credit card that offers a discount above and beyond existing sale prices, but just filling out an application could be risky for your clients' credit profile. Opening a line of credit requires a credit inquiry, which could not only stall their mortgage loan application but also impact their debt-to-income ratio, making a lender believe they're a greater risk than they originally appeared.
- Don't transfer large amounts of money. Homebuyers need to keep their money in one place as they await closing. Shuffling money between accounts can send red flags to lenders and make them worry about undocumented funds or money troubles that they may not have spotted beforehand.
- Watch the gift money. If families offer cash for holiday presents, buyers need to be aware that this may put their mortgage applications at risk. Lenders will scrutinize their accounts and look for unusual deposits, such as those that are 50 percent or more of their monthly income. They also look for any unusual withdrawals. Buyers may need to be prepared to explain any large deposits or withdrawals.
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*Information added to original article to clarify HGTV's schedule change.
Download images of Little Gasparilla Island at:
Charlotte Harbor Visitor & Convention Bureau
- Listing agents and sellers are not legally required to disclose that there are other offers
- Sellers are not obligated to negotiate with the first buyer who makes a bid
- Sellers don't have to accept full-price or cash offers
- Counteroffers can be made over the phone, but only written agreements are binding
- Sellers can legally tell a buyer what a competing bidder offered because neither they, nor their agent, owe a duty of confidentiality to the buyer
- Buyers should realize they don't have the right to change their mind once a seller accepts their offer in writing
- If buyers reject a seller's counteroffer, the counteroffer is no longer open for acceptance
NEW YORK – Nov. 2, 2015 – To finance a home purchase, some buyers reach deep into their savings. Others rely on the Bank of Mom and Dad.
In 2014, about one-fifth of borrowers sold stocks or bonds, or borrowed against their retirement accounts to pay for a home purchase, according to the National Association of Realtors®.
"There are no hard and fast rules regarding if and when to cash in stocks to make a home purchase," The Wall Street Journal reports. But many financial planners would caution about borrowing from a retirement plan since homeowners risk penalties and an income-tax bill if they don't follow the loan repayment terms.
As an alternative to selling stocks, some borrowers get a loan secured against their assets. For example, Bank of America Merrill Lynch offers a "loan-management account" that offers borrowers a line of credit based on their Merrill Lynch taxable brokerage portfolio holdings. The funds can go to several uses, including a downpayment to pay for a home. But there is a risk: If the stock market drops significantly, borrowers may have a margin call and be forced to pay the difference between the required collateral amount and its current market value, says Mike McPartland, head of investment finance for Citibank Private Bank North America.
Advice for borrowing against savings:
Don't wait until the last minute to cash in stocks because you hope values will rise. Stocks could drop instead and affect a borrower's ability to qualify for a loan. Also, buyers could risk delays on the home closing since the sale and money transfer can take several business days, says Peter Grabel, managing director of Luxury Mortgage Corp., based in Stamford, Conn.
Lenders tend to value cash in a bank account higher than stocks or mutual funds when determining whether the applicant qualifies for a mortgage. Lenders usually value a portfolio at 70 percent of its current monetary value, Grabel says.
Capital-gains taxes could lurk. Borrowers who have had stocks appreciate significantly likely will face the tax when they sell their holdings, which could then end up adding to the cost of the home.
The "Bank of Mom and Dad"
New research from the Federal Reserve Board helps confirm reports that homebuyers today rely more on loans and gifts from family and friends to secure a downpayment.
The use of loans and gifts rose sharply during the recession – from 8 percent of homes bought in 2007 to 21 percent of homes bought in 2009, according to the Fed's 2014 Survey of Household Economics and Decisionmaking (SHED). The share has since declined to 13 percent in 2014.
Homebuyers are turning to loans and gifts due to climbing home values, slow income growth and a tight credit market.
The Fed report underscores the challenge younger homebuyers face securing a suitable downpayment, as well as their resourcefulness.
Source: "Selling Stocks to Buy a Home? How to Do It Right," The Wall Street Journal (Oct. 21, 2015); "Homeownership Help: The Growing Importance of the Bank of Mom and Dad," RISMedia (10/25/15) Terrazas, Aaron
© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688
Fla. says all state insurers OK for 100-year storm
TALLAHASSEE, Fla. – Oct. 28, 2015 – Even if Florida gets blasted by four hurricanes in one season as it did a decade ago, 67 Florida-based insurance companies tested by the state have enough of a financial cushion to handle the damage, according to a new report touted by the state's top financial regulator Monday.
Although the report contains little specifics for customers to compare carriers, the state's chief financial officer Jeff Atwater praised the results. He said the report, which shows every Florida-based insurer passing every "stress test" scenario, should inject a new level of confidence in Florida's rebounding insurance industry.
"Consumers deserve to have confidence in their carrier, and we'll continue to share information that shows the processes that are undertaken to test their financial strength," Atwater said in a statement to the media.
The new report comes as state-run Citizens Property Insurance Company continues to aggressively depopulate itself by pushing customers toward private insurance carriers – often through tactics that Atwater himself has worried are close to "scare tactics." Since 2012, about one million customers have been ushered out of Citizens, with another 130,000 slated for removal by the end of the year.
Atwater said he called for new aggressive stress testing of insurance companies partly because he knew homeowners were being led toward private companies that many may have never heard of and may have questioned if they could sustain a major catastrophe. He said the last thing Floridians need to be anxious about during hurricane season is whether or not their insurance provider will be there after a major storm.
The new testing ran all 67 insurance companies through storm models that are based on three past historic storm seasons: a 1947 Fort Lauderdale storm, a 1921 Tampa Bay direct hit, and 2004's season in which four storms struck Florida, leading to 1.6 million insurance claims.
In the 2004 models, even after having four storms hit, the report says all 67 companies passed – meaning they had enough surplus equal to 10 percent of their liabilities after payouts from all the storms were accounted for.
But the report shows some companies performed significantly better than others. Nine companies emerged from the test with a remaining surplus between 110 percent and 140 percent of what is required. But 30 emerged from the test with more than 500 percent of the required surplus. Which companies performed better or worse is not spelled out.
Copyright © 2015 Miami Herald, Jeremy Wallace. Distributed by Tribune Content Agency, LLC.
Of America's 100 biggest metro areas, Florida is home to all five markets with the greatest percentage of July cash sales: West Palm Beach-Boca Raton-Delray Beach, at 53.2 percent; Miami-Miami Beach-Kendall, at 52.2 percent; North Port-Sarasota-Bradenton, at 50.1 percent; Fort Lauderdale-Pompano Beach-Deerfield Beach, at 48.4 percent; and Cape Coral-Fort Myers, at 47.9 percent.
Bundling insurance helps – but not so much in Fla.
Did You Know?
There's no 'required' Fla. seller disclosure form. Sellers must disclose problems and Fla. law addresses sinkholes, but a form isn't a legal requirement.
What should homebuyers know about Oct. 3 changes?
WASHINGTON – Sept. 18, 2015 – The Consumer Financial Protection Bureau (CFPB) released new online tools for its Know Before You Owe initiative yesterday to help consumers navigate mortgage process changes that occur on Oct. 3, 2015.
The Mortgage Bankers Association issued a separate consumer-friendly set of instructions last week.
"Homebuyers will ask their Realtor about the mortgage disclosure changes – what they should expect," says Margy Grant, Florida Realtors vice president and general counsel. "And while Realtors must understand the impact on closings – such as the dates when certain documents must be submitted to close on time and changes to some Florida Realtors forms – a mortgage is still an agreement solely between a buyer and his or her lender."
The CFPB offers help to buyers in a number of ways, including brochures, videos and infographics. In addition to explaining the new disclosures, CFPB includes a step-by-step overview of the mortgage process, a tool to help homebuyers decide how much they can afford to spend, and samples of the new Know Before You Owe mortgage forms, the Loan Estimate and the Closing Disclosure.
"Realtors play an important role in keeping consumers educated about changes in the home buying process, and that includes rules related to the Know Before You Owe initiative," said National Association of Realtors® 2015 First Vice President-Elect Elizabeth Mendenhall, who joined CFPB Director Richard Cordray to announce the new tools.
"The journey to homeownership begins with Realtors, and CFPB's new online tools are a great resource for agents to help clients shop for a mortgage and prepare for the changes coming their way," Mendenhall said.
The Loan Estimate includes early estimated loan and closing costs so buyers can compare different lenders offers. The Closing Disclosure, which arrives within three days of closing, details the final transaction numbers. The three-day time period allows consumers to confirm that they're getting what they expected, ask questions and negotiate any changes.
The Loan Estimate and Closing Disclosure also mirror each other, which CFPB says will help buyers compare their initial estimates to the final loan terms.
The CFPB first launched "Owning a Home" in January but recently added new tools to help consumers navigate the mortgage experience.
© 2015 Florida Realtors®
Fla. asks FEMA for flood insurance rate info
TALLAHASSEE, Fla. – Oct 5, 2015 Florida Insurance Commissioner Kevin M. McCarty wrote to Craig Fugate, administrator of the Federal Emergency Management Agency (FEMA).
Did you Know?
"You can help curb your own annual home insurance costs with a little-known option called "cosmetic damage exclusion."
The American Association of Insurance Services created the cosmetic damage exclusion in 2013. Its goal is to protect consumers from scammers and attempt to keep home insurance rates more affordable by making cosmetic damage coverage optional.
Homeowners can then decide if they want to pay for cosmetic-only wind and hail damage. If the damage impacts the safety or structural functionality of the home, the home insurance policy kicks in.
By adding this exclusion to cosmetic damage, homeowners stand to save money on their annual premiums – anywhere from $100 to $200 or more, says Troy Thompson, an independent insurance broker with Pinnacle Insurance Agency in Coon Rapids, Minn.
Hail and wind damage claims alone contribute to about 40 percent of all home insurance claims in the last five years, according to the Insurance Information Institute. And many of those claims may be for minor cosmetic repairs, such as a few nicks in the siding that homeowners may be told are more urgent than they actually are.
Homeowners who remain covered for cosmetic damage may submit a claim, but they may also have to pay applicable deductibles, insurance agents say.
Source: "The Money-Saving Home Insurance Option No One Will Ever Tell You About," realtor.com® (Sept. 23, 2015)
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