An Overview Of Umbrella Insurance: How It Works

An Overview Of Umbrella Insurance: How It WorksAccidents can happen from time to time, which is why it is important for people to have insurance. While you might be able to fix some accidents on your own, others can lead to a significant amount of financial stress. This is why people must have insurance. Insurance is supposed to help individuals and families pay for catastrophic expenses; however, what happens if the insurance policy is not big enough to cover the expenses? That is where umbrella insurance can be helpful. What is umbrella insurance, and how does it work? Learn more about how umbrella insurance might be able to help you.

Umbrella Insurance: A Definition

Umbrella insurance provides extra liability that goes above and beyond the limits of other existing policies. If the policyholder is at-fault for damages and the existing insurance policies are not enough to cover the damages, the umbrella insurance kicks in. In addition, umbrella insurance provides coverage for other items, such as legal fees, that other policies might not cover. Umbrella insurance can cover a wide range of issues that could provide important financial protection.

What Does Umbrella Insurance Cover?

Umbrella insurance acts as a fail-safe to protect you and your family against lawsuits that are directly related to accidents that could result in a personal injury lawsuit. Furthermore, umbrella insurance can cover landlord liability, defamation, and a number of other tricky financial situations, depending on how your policy is structured. Your umbrella policy will have a liability limit; however, your policy might continue to cover associated legal costs above that specific limit, depending on the wording of your policy. Because details and exclusions can vary between policies, you should ask a professional for help if you have questions.

What Umbrella Insurance Does Not Cover

Unlike some insurance policies, umbrella insurance will not cover the damages and injuries of the policyholder. This means that if you sustain property damage, your umbrella insurance policy might not cover this. In addition, there are limits to umbrella insurance with respect to breach of contract cases. Finally, umbrella insurance also does not cover intentional acts or criminal issues. It is critical to read the policy carefully to understand what is covered and what is not.

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What To Do Before Interest Rates Rise

What To Do Before Interest Rates RiseMortgage rates are still low, but they are going up. This is creating a rush of people looking to buy homes before interest rates rise again. While it is difficult to predict when rates will go up again, it is hard for rates to go any lower. Homeowners and buyers need to act now before rates go up. What should homeowners do before rates rise?

Sell Now While Rates Are Low

Anyone who is thinking about selling their house should make every effort to do so now before rates go up again. Because there are so many people who are looking for houses, sellers can get top dollar for their homes, maximizing their profits. This is a great opportunity to move into a larger house to accommodate children, sell a home and downsize, or even sell and move somewhere else with work conditions changing. Interest rates will probably rise in the next few years, forcing buyers out of the market. This could make it harder for sellers to get top dollar for their homes in the future.

Refinance Now While Rates Are Low

In addition, now is a great time to refinance a current mortgage. Homeowners who have been in their homes for a few years might be able to refinance their loans to lower interest rates. This could allow homeowners to lower their monthly payments, pay their homes off sooner, or access equity in their homes to complete an expensive repair process or renovate a portion of their homes. Instead of having to move to a new home, homeowners might be able to upgrade their current living situations by accessing equity through a refinance. Even a small change in interest rates could have a significant impact on the monthly payment.

Act Now While Interest Rates Are Low

These are just a few of the moves homeowners need to make before interest rates rise again. Because interest rates are still low, there are many people looking to buy a home and many others looking to refinance. Even if interest rates rise slightly in the future, this can have a massive impact on the market. All homeowners and buyers need to take advantage low interest rates before they rise. This includes moving up, refinancing, and downsizing.

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The Process Of Buying A New Construction Home

The Process Of Buying A New Construction HomeBecause the housing market is so competitive right now, many buyers are looking at alternative options. Instead of looking for a resale home, some buyers are considering a new home. What is the process of taking out a loan on a new construction home? There are several factors buyers should consider.

Pricing On A New Construction Home

Many buyers are used to negotiating with sellers to get the best deal possible. On a new construction home, it is still possible to negotiate for a better price. Most homeowners are going to be negotiating for better items in the home than the purchase price. For example, it might be possible for buyers to negotiate for better counters, cabinets, floors, or appliances instead of asking for a discount on the price. It is also possible for buyers to negotiate for better options if they are the first or second people to move into the new community. Homes usually go up in price after the first homes in the community sell.

A New Home Is Often A Better Investment

Buying a new home is often a better investment than purchasing an older home. Newer homes tend to appreciate faster immediately after they are built. Many people like to buy a home that has had only one owner because items in the home are less likely to break. Therefore, homes with only one owner are often in higher demand, which can lead to higher property values on new homes.

Understand The Financing Process

Typically, prospecting homeowners need to put down a building deposit for the project to start. This is usually three percent of the projected sale price of the home; however, it can be higher or lower depending on the price of the home and the builders. In addition, homeowners need to be aware that they will need to secure financing when the building project nears its completion date. The lender might require a certain percentage down in order to finance the home.

Do Not Hesitate To Ask For Help

Buying a new home does have a few differences when compared to buying an existing home. Homeowners should reach out to professionals for help with this process to make sure they get the best deal possible.

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What To Know About Home Loans for Renovation Projects

What To Know About Home Loans for Renovation ProjectsWhen people are looking for a home, they are often looking for something that is move-in ready. While this might make the process easier, this can also make the home much more expensive. It is still possible to find a dream home even if the house requires a bit of renovation. This is also a great opportunity for homeowners to customize the home to meet their needs. What do potential homeowners need to know about taking out a mortgage to renovate a fixer-upper when compared to a conventional home loan? Take a look at some helpful information below.

When Buying A Fixer-Upper Is The Right Decision

There are several situations where buying a renovation project might seem like the logical decision. Remember that these projects are going to take time and money, so homeowners need to have both of these resources to complete the project. Of course, these projects are going to require a lot of construction skills, so it is important to either have the equipment and expertise or be willing to hire someone to do this. Furthermore, it is critical to look at the value of the property once the project is done. What type of return should homeowners expect after they finish the project? It should meet the needs of the homeowner while also providing a significant return.

Understanding The Financing Options

Homeowners are unlikely to have the cash to pay for all of these out of pocket, so it is important to take a look at a few financing options. An FHA 203k Mortgage is often a great option for those with a credit score of 580 or higher. These loans can cover a diverse array of construction projects.

There are also Fannie Mae HomeStyle Renovation Loans, which allow people to borrow up to 50 percent of the total value of the home for the project. Homeowners can also borrow against projected equity instead of having to wait to take out a traditional cash-out home refinance. This loan requires a credit score of 680 or higher and the renovation must be completed in less than 12 months.

These two loan options could be helpful for those who are looking to complete a home renovation project.

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FHA Cash-Out Refinance – Are You Eligible?

FHA Cash-Out Refinance – are you Eligible?If you have equity in your home, you may wonder how you can access it. You don’t want to sell your home, but you know you’ve earned a profit from it.

We have many options to secure your home’s equity, one of which is the FHA cash-out refinance. Unlike the FHA streamline refinance, you don’t have to be a current FHA borrower. As long as you meet the requirements below, you can use an FHA loan to cash into your home’s equity.

Qualifying for the FHA Cash-Out Refinance

Like an FHA purchase loan, the FHA cash-out refinance has simple requirements:

  • Minimum 600 credit score
  • Maximum 43% debt-to-income ratio
  • Proof you’ll occupy the property as your primary residence
  • Stable income and employment for 2 years
  • Over 20% home equity
  • Make at least 12 months of timely payments on your current loan

How Much Can You Borrow?

The FHA cash-out refinance allows you to tap into your home’s equity, but you must leave 20% untouched.

Here’s an example: 

Your home is worth $300,000 and your current mortgage is $150,000. With a new FHA cash-out refinance, you can borrow up to $240,000, but first, you must deduct the amount of your outstanding mortgage.

This leaves you with $90,000 in equity.

$300,000 x.8 = $240,000
$240,000 – $150,000 = $90,000

If you can afford the payment without going over the 43% debt-to-income ratio requirement, you could take out $90,000 from your home’s equity, leaving $60,000 untouched.

How to Use an FHA Cash-Out Refinance

The nice thing about the FHA cash-out refinance is you don’t have to justify how you’re using the funds. You earned the equity and it’s your right to withdraw it, but here are a few common uses:

  • Home renovations, repairs, or additions
  • Debt consolidation
  • Pay for college or prepay for a college education
  • Consolidate a first and second mortgage
  • Save as an emergency fund

How to get an FHA Cash-Out Refinance

Securing an FHA cash-out refinance is simple using these steps:

  • Complete an application and get pre-approved by a lender, compare your options and see if you qualify for any other cash-out loan including a conventional cash-out refinance
  • Decide which loan you want, including if you want a fixed-rate or ARM
  • Provide the documentation required including paystubs, W-2s, tax returns, asset statements, and proof of employment
  • Arrange an appraisal time with the appraiser (you’ll need a new appraisal)
  • Work with the loan officer to clear your conditions
  • Close on the loan and receive your cash

Bottom Line

If you’re thinking about tapping into your home’s equity, an FHA cash-out refinance can be a great option, especially if you have less-than-perfect credit. FHA loans have flexible guidelines and allow borrowers to get the money they need to complete their life goals.

You’ve worked hard to earn your home’s equity. If you need it for other purposes, let us help you access it. We’ll discuss your options, go over the costs, and make sure it’s the right option for you!

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Homeownership And The American Dream: Is It Changing?

Homeownership And The American Dream: Is It Changing?There are a few parts of American culture that people believe define this country. One element is the dream of homeownership. There is a strong belief that people need a place to call home. Therefore, since the dawn of this country, the government has tried to incentivize people to purchase a home.

At the same time, there are some people who are looking at the younger generation, wondering if this American Dream is starting to change. Is homeownership still a part of the American Dream?

Americans Still Believe In The Idea Of Homeownership

Hard work and owning a home appear to be inseparable. There is still a belief that as long as people work hard and save money, they can fulfill the American Dream by buying a home. Real estate professionals regularly take surveys that show that people still want to be a homeowner for the sake of owning a home. While it is true that owning a home provides more control and creates investment opportunities, owning a home still has an allure to people that is undeniable.

Millennials Want To Own A Home As Well

Millennials appear to believe most strongly in owning a home, indicating that this is still a part of the American Dream. Even though some people thought that millennials were simply going to rent forever, this is not the case. The reality is that many young adults have not purchased a home because they could not afford one. Student loans and a lack of wage growth compared to housing increases simply made it harder. With interest rates lower than they ever have been in the past, many young adults are ready to make the jump to purchase a home.

Homeownership Is Still A Part Of The American Dream

Ultimately, many millennials simply put off the idea of getting married and having children, so they put off the idea of homeownership as well. Now that this milestone has arrived, there are many young adults who are looking to purchase a home for the first time. This indicates that owning a home is still a key part of the American Dream.

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Taking A Closer Look At Affordability: Renting And Buying

Taking A Closer Look At Affordability: Renting And BuyingThere are many people who are looking at the housing market wondering if now is the time to make the jump from renting to owning. At the same time, is it more affordable to rent a home? Or, is it a smarter move to buy a home? Even though many people like the comfort of renting because it is someone else’s problem if something goes wrong, waiting too long to purchase a home could be costly. Here are a few of the most important points you need to keep in mind when it comes to renting versus buying a home.

Renters Spend A Higher Percentage Of Their Income On Housing

First, renters usually put a higher percentage of their income toward housing than homeowners. When looking at the numbers, people may believe that the percentage is higher for renters purely because people who own homes make more money; however, this is not necessarily the case. People who rent still spend a greater percentage of their monthly income on housing than people who own a home.

Renters Often Have Trouble Investing In Other Assets

One of the major advantages of owning a home is that it is going to appreciate over time. Not only is a house an investment, but because homeowners spend less of their money on housing, they have money to invest in other assets. For example, someone who spends a lot of money on rent might not be able to invest in retirement accounts, such as a 401k. Homeowners are not only building equity in their homes but also investing money elsewhere.

Rent Goes Up While Mortgages Stay The Same

A lot of homeowners decide to take out a 30-year fixed mortgage, which means that their mortgage payments are going to stay the same throughout the life of the loan. Renters are more vulnerable to cost increases. Whenever someone renews a lease, rent payments usually go up. Therefore, this projects vastly different economic futures for homeowners versus renters. With a home loan, the only expenses that might go up are taxes and insurance. In contrast, renters are subject to the supply and demand laws of the rental market.

Now might be the time to make the jump to homeownership.

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Why An Emergency Fund Is Important

Why An Emergency Fund Is Important

There’s almost a guarantee that at some point in the future you’re going to face an emergency. Like most things in life, that emergency is going to require money to solve. You can’t assume that you’ll have the funds to face the emergency when it happens. You can’t even assume that you’ll have enough on your credit cards to pay for it. The only safe way to plan is to have an emergency fund.

What Is An Emergency Fund?

An emergency fund is a reserve of cash set aside for emergencies only. It’s not a savings account, because you’re not saving up for anything in particular like a new sofa or a dining set. It’s strictly money on hand to be used in an emergency.

What Constitutes An Emergency

As a homeowner, you could face any number of emergencies regarding your property. An emergency is something unexpected and urgent. In other words, you couldn’t foresee it happening, yet it needs to be taken care of right away. Examples of homeownership emergencies are:

  • Basement floods and needs to be drained and contents cleaned
  • Tree falls on roof, and you can’t wait for insurance check
  • Furnace dies in the middle of winter
  • Central air system dies and there’s a high deductible on your insurance policy
  • Water tank gives out a week before your big family holiday

How To Manage an Emergency Fund

The key thing about an emergency fund is that it needs to be instantly accessible. Instantly accessible means you should only have to use your debit card or write a check to use it. You shouldn’t have to sell stock or transfer money out of your retirement IRA. It should also be kept separate from other funds, so it doesn’t get confused with the Christmas gift fund or the college fund.

Why Have An Emergency Fund?

Emergencies shouldn’t cause catastrophic damage to your finances. With consistent, small saving habits, you can build up an emergency fund so you can easily and readily take care of maintaining and repairing your home. This is part of good homeownership. When you have an emergency fund, you know that you can always keep your home in tip-top shape.

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Down Payment Assistance Programs May Make Homeownership More Affordable

Down Payment Assistance Programs May Make Homeownership More AffordableThere are many people who are currently looking to purchase a home while interest rates are relatively low; however, there are many homeowners who feel like they do not have a strong level of financial understanding when it comes to the process of purchasing a home.

If homeowners don’t have the financial knowledge base to effectively evaluate their options, they might have trouble figuring out what they can truly afford. For example, how much money do homeowners need to save for a down payment? There are a lot of down payment assistance programs available at local, state, and regional levels.

Resources Are Available For First Time Homebuyers

There are many down payment assistance programs that have been made available specifically for first-time homebuyers. Many people who are buying a home for the first time might not be able to put 20 percent down when lenders ask for it. That is why down payment assistance programs might be able to help homebuyers bridge the gap between what they have and what they need. At the same time, there are other programs available as well.

There Are Programs Available for Non-First Time Homebuyers As Well

There are also down payment assistance programs that are open to people who aren’t first-time homebuyers as well. For example, many people are thinking about relocating because they work from home. They might want to stretch their money farther and purchase more space. Some rural areas have USDA loans that do not require a down payment. USDA loans might even be available in the suburbs. These loans might be easier for homebuyers who might not have a large chunk of money saved up for a down payment. Reaching out to these down payment assistance programs could be a smart move.

Understand All Options Available For Down Payment Assistance

Ultimately, there are a lot of down payment assistance programs that could make it easier for potential homebuyers to purchase a home. With many homeowners looking to purchase a home now before interest rates rise, it is important to explore all options available. This includes looking at down payment assistance programs that might make it easier for homeowners to afford a home.

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The Younger Generation is Looking To Buy Houses

The Younger Generation is Looking To Buy HousesThe current housing demand is unparalleled and because of this demand, home prices are skyrocketing. Nonetheless, people continue to shop for homes. Low interest rates and high demand combined with supply chain issues are stunting the homebuilding industry, creating a perfect storm for an unprecedented housing market. In addition, there are many millennials who are looking for homes right now as well. Why is this the case?

Interest Rates Are At Record Lows

One of the biggest reasons why so many younger people are looking to buy a home is that low-interest rates make them more affordable. As a result, people are able to stretch their dollars farther. There is no question that buyers want to take advantage of low-interest rates; however, this is also driving up the price tag of homes. What some home buyers might save in interest they could have to pay extra in principle.

Young Homebuyers Want To Grow Their Wealth Through Homeownership

Owning a home is an investment, and young buyers see it that way as well. Right now, millennials and gen Z adults are looking to purchase homes for the first time. During the next year, these numbers are only going to increase. A lot of young adults realize that they may never see a market like this again; however, the lack of supply in the housing market continues to remain a challenge.

Inventory Is Historically Low

Now is a smart time to buy a home for everyone, including young adults; however, the challenge is finding one. There are many buyers who are looking to purchase homes right now and there are not that many houses for sale. Therefore, some buyers might eventually give up and wait for the market to cool down; however, it might require a spike in interest rates to make that happen. This is leaving many homebuyers confused about what to do next. That is why it is important to work with an experienced real estate professional.

Help Is Available

Buying a home is a major decision and it is important to get this right. That is why it is a smart idea to work with an experienced real estate professional who can help buyers make the right decisions.

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