It can be perplexing—and not least because it’s one of the least-discussed details you run into when buying a home. The issue is flood insurance, and it’s sometimes first brought to the fore when you are buying a home in Evansville that you would not have thought was on a “flood plain.” If it is, it’s going to require flood insurance before the bank will sign off on a loan.
As we only see from time to time, devastating floods can strike when and where least expected: sometimes, in areas where that ruinous flooding is unprecedented. In 2005, when FEMA paid out over $17 billion in flood claims, it once again became clear why flood insurance is absolutely necessary. Here’s what you need to know about flood insurance if the home you are looking at is in a flood plain.
The Zone Matters
FEMA assigns different zones within a single flood plain. For example, homes that are located on the bank of a creek may be assigned to Zone A, ( floods highly likely). Homes that are further away from a water source may be assigned to Zone Z, (lower risk). Naturally, Zone Z premiums are a good deal more affordable than premiums for Zone A. In fact, if your home is in a Z zone, you may even qualify for a special price break for two years before full premium goes into effect.
Figuring Out the Cost
Unlike car or home insurance, you won’t find a better rate on flood insurance by shopping around. The federal government sets flood premium rates based on factors like the zone, the home’s value, and the value of its contents. You may choose to insure the home only, but it’s seldom a good idea to leave contents without coverage. Any local insurance agent specializing in flood insurance will be able to assist you in determining the cost of the policy; they will also answer any questions you may have about the process.
Making Your Decision
Buying a local home that turns out to be on considered within a flood plain means factoring in some added insurance expense, and possibly even potential risk to your personal items. But when the house is right, and your heart is absolutely set on the property, it’s a dollars-and-cents calculation. I’m always at the ready to help my clients clarify this and all other the other details that go into buying a home in Evansville. You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com
January presented us with major changes to mortgage lending rules. These new guidelines aim to curb some of the excesses that occurred during the sub-prime years—hopefully resulting in a lower risk of default and foreclosure by borrowers and a healthier real estate climate for everyone.
QM: “Qualified Mortgage”
This all came about as one offshoot of the Dodd-Frank legislation that went into effect in 2014. It creates a new category, “Qualified Mortgage.” Lending institutions are required to document each loan they deem to be a QM; when they do, they benefit by being able to sell them to Freddie Mae and Fannie Mac, and are protected from legal action in the event of a future default.
The reason that these changes won’t keep most borrowers from getting a loan is that loans that don’t qualify (“Non-QM” loans) will still be offered by some banks—they’ll simply keep them on their own books.
The bedrock requirement for a QM is an evaluation of the borrower’s debt-to-income ratio. That’s the projection of debts divided by income on a month-to-month basis — especially important when getting a loan with a variable interest rate. If it seems to you that this calculation makes common sense for any loan—I’m in your camp! The reason a bank might choose to issue a loan that does not meet the letter of this requirement could be their analysis that the percentages dictated by the rules are too strict for a particular borrower.
A Qualified Mortgage can’t have any of the risky factors that were hallmarks of the mortgage meltdown. Included are “no” or “low-doc” loans; loans with terms longer than 30 years, interest-only loans, and those with minimum payments that don’t keep pace with interest rates, causing the loan balance to increase.
So: what’s the bottom line for buyer’s intent on getting a loan this year?
The good news: most loans will go through as before (estimates are about 95% of them). But more paperwork and longer processing times are likely, and since fees and charges for a QM cannot exceed 3% of the mortgage, getting a smaller loan might become more difficult if banks determine they can’t make a profit.
In any case, coming prepared is still the best insurance that your loan goes through as smoothly as possible. If you’re looking to buy a home in Evansville this season, I’ll help make sure your preparation is first-rate! You will be able to take advantage of my extensive network of different mortgage providers in order to make the purchase of your new home as seamless as possible. You can reach me on my cell phone at 812-499-9234 or email Rolando@RolandoTrentini.com
For many homeowners, it sounds more like a pipe dream than a carefully thought-out investment: getting your own vacation home—a refuge where you can put your feet up, relax, and tune out the stress of daily life.
True, if you look only at the cost of a second home, it sounds like a pretty costly indulgence. But in many cases, stepping back to take in the bigger financial picture, it could wind up being one of the shrewdest financial decisions you can make!
1.Vacation savings. Using your vacation home more than once or twice a year can easily result in annual six-figure savings. The resort hotels and eateries’ loss is your gain when you and grateful relatives and friends are able to enjoy your vacation getaway.
2.Extra income. One of the motivating factors for many local vacation home owners is the possibility to create a new source of some extra income. When you consider renting out your vacation home when you’re not using it, your occasional renters can cover some of the property’s mortgage and operating expenses. Also, renting your vacation house increases the proportion of time that it’s in use, reducing the kinds of maintenance issues that can develop when minor problems go undetected—especially during winter months.
3.Tax advantages. A vacation home can become significantly more attractive when you take advantage of the considerable tax advantages. Consult your licensed financial advisor to confirm the details: in general, if you rent your second home for 14 days or less, it qualifies for the mortgage interest tax write-offs you get for your primary residence. And if you rent it out for more than 14 days in a year, a proportional amount of upkeep expenses can be deductible, as well.
4.Retirement prep. If yourvacation home winds up becoming your home base for retirement, having acquired it early on as a vacation home now can be a terrifically wise move in the long run. By retirement, you will have built the kind of equity that reduces your mortgage debt, freeing up your retirement income stream for more pleasurable expenditures, like gambling, sumo wrestling, or even taking one of Richard Branson’s Virgin Galactic rocket rides to an asteroid.
Interested in investigating further?
Call me today! You can reach me on my cell phone 812-499-9234 or email: Rolando@RolandoTrentini.com
With cars, TVs—even watches—getting connected through WiFi and wireless telephones, it’s small wonder that “Smart Homes” are here, too. According to Forbes, companies offering smart homes technology will be a $35.6 billion industry within just three years. They already offer homeowners an array of connected appliances, security systems and even HVAC systems.
From what I’ve seen, their marketing has highlighted the convenience factor—but if that seems to be more sizzle than steak, here are some surprisingly substantial reasons why you might consider upgrading your own place into a smart home:
Your current security system gives you peace of mind whenever you’re out of town. But have you ever wondered whether you remembered to lock the back door? Smart homes let you click a function on your phone that commands the home to lock itself! The same app can also send you a live video feed of the interior and exterior of your home.
In addition to securing the premises, smart homes can help you prevent home accidents. Smart appliances can be controlled via mobile apps which allow you to turn off ovens, stovetops, microwaves and even washing machines from anywhere you establish a WiFi connection. This minimizes the risk of the kind of home fires which can be caused by unattended appliances. (If you’re thinking that homeowner insurance premium discounts may soon be offered for connected homes: the Wall Street Journal reports that they already are!)
Major manufacturers GE, LG and Samsung have introduced complete lines of connected appliances controlled via mobile phone, eliminating the need to physically get up to adjust settings. Think how, especially for the elderly and handicapped, this would meaningfully enhance their quality of life—maybe even extending their ability to live at home without assistance. For all age brackets, being able to effortlessly control lighting, heating and air conditioning at the touch of a device screen will inevitably result in practical energy savings; and that raises perhaps the most important selling point for smart homes technology—
Increasing the value of smart homes when they come up for sale. The practicality of smart homes is already especially appealing to the growing number of tech-savvy buyers.
If you’re comparing home upgrades prior to putting your own home on the market, I’m here to help you choose which (if any) are likely to add the most value. Call me anytime to discuss your short and long term plans! You can reach me on my cell phone 812-499-9234 or email: Rolando@RolandoTrentini.com
One of the unusual situations that sometimes crops up in real estate is one where the buyer purchases a house without ever seeing it. This may sound nuts—but there are circumstances (more than you’d think) where it can be the only practical solution.
Wholesalers and house-flippers, for instance, sometimes simply haven’t time to visit every property they suspect is a great buy. Other times, buyers might be relocating to Evansville from out of state (or even out of the country) under a timetable that doesn’t allow them an extra visit—or even a first visit! According to the latest full-year data from the National Association of Realtors®, home sales to foreign buyers amounted to $68 billion!
As you’d guess, the risks of purchasing a house sight-unseen when relocating to Evansville remain stark. Nonetheless, there are ways such buyers can protect themselves:
Adding a contractual walk-though contingency—one which allows a final walk-though before signing at closing—is the surest protection. Sellers aren’t obligated to accept such a contingency (and in a competitive market it’s less likely to be acceptable), but if it’s allowed, it’s also a sign that the property is likely to pass muster.
The odds of a good “sight-unseen” result when relocating to Evansville grow significantly better when you present your agent with a clear list of requirements. Some important factors outside of specific house metrics could be the quality of local schools, transportation links and commuting times, crime rates, shopping and entertainment and recreation area access.
It is especially important to hire a first-class home inspector. When you can’t visit the property yourself, your inspector can be the trained eyes that prevent your inheriting unneeded maintenance issues. If the listing doesn’t give you a clear idea of how the home is laid out, requesting a video of both interior and exterior of the property is a good idea. If one isn’t available, don’t be shy about asking your agent to make a walk-through video for you.
For anyone relocating to Evansville when a ‘sight-unseen’ home purchase is necessary, choosing the best-qualified Realtor and inspector couldn’t be more important. In that situation, they become your ears and eyes on the ground! Please feel free to call me at 812-499-9234 or email Rolando@RolandoTrentini.com and I will be more than happy to assist you with your real estate needs. Our motto is “With an Accent on Service”
Part of the recovery in Evansville’s real estate scene is the increasing likelihood of multiple offers on a listed property. This is every seller’s dream— but if you are one of the bidders, it’s important that you don’t allow it to become your nightmare.
There is one way— the only sure way—to keep the specter of competing multiple offers from upsetting your home buying prospects. Summed up in one word, it’s “preparation.”
Preparation starts with assembling a strong financial package. If your target property attracts multiple offers, you want yours to stand out. By the time you learn that other offers are at hand, it’s probably already too late to begin putting together documents—they should be in hand before you even identify a property. Getting pre-approval for your loan, having a letter that says so, and being able to show you have funds available can be persuasive.
When it comes to making the offer itself, although including “Subject to” clauses will protect you from unforeseen problems with the property, when multiple offers are on the table, the fewer contingencies the better. Again, only preparation will make this reasonable. If you’ve had an advance home inspection, and also made sure that there aren’t any right-of-way or easement issues, your offer can be significantly more attractive.
Personal preparation can be another positive. Visiting the property on several occasions at different times of the day should give you added confidence for what the home is truly worth to you…and when the listing agent and owner can put a face to your offer, it tends to strengthen its validity.
When multiple offers on a property occur, it’s possible that someone is going to bid more than the home is really worth. If you’ve done thorough research and know precisely what its value is in today’s market, that won’t be you. Having your bottom line number unshakably in mind means that in any bidding war, you’ll be able to sweeten your offer without hesitation. You can be creative, perhaps by offering to reduce the seller’s costs by picking up escrow fees, transfer fees or title policies; perhaps by offering the seller a few additional days to move without seeking financial compensation in return; perhaps by increasing the down payment or earnest money. When you know your bottom line, the arithmetic is uncomplicated (and your less-prepared competitors are more likely to throw up their hands!)
And then…should the bidding go over what you know it’s worth, you’ll be ready to walk away. There will be other properties to bid for – and I’m always here to help keep all your options open!
Market Watch January 2014
Before we talk about 2014, I think this is an excellent time to compare the real estate market in 2013 to the previous year. My ulterior motive is that from virtually any perspective 2013 was a great year!
Unit sales in our market increased just over 10% from 2012 to 2013, while the median price increased 2.2% over the same time frame. While these increases did not improve quite as much as our statewide increases of 13.6% in units and 4.2% in median sales price this was still an excellent year. If you remember Market Watch from a couple of months ago, I pointed out then that the decline in unit sales and median prices was not as great as the state as a whole so I did not expect the increase to be as strong either. 2013 was the best year we have ever had in sales volume. This was the first time that F. C. Tucker Emge Realtors closed over $400 million in sales volume.
In addition to the increase in both homes sold and in prices, there was even more good news. Both days on market and the list price to sales price ratio also improved. Homes are now selling, on average, about 100 days after they are listed, down from 122 days at the beginning of 2012. The final list price to sale price ratio averaged just under 96% for all of 2013. Both of these numbers are sustainable and are good indicators of a stable market.
One statistic that is outside the normal range is the number of homes currently for sale. As of mid December there were 2,326 homes for sale in our MLS. This is the lowest number of homes on the market since May of 2005. The message here is that if you are considering selling your home, get it on the market now. The spring selling season always starts sooner than most sellers think. On average, buyers look for 10 weeks before buying a home. Since it takes 30-45 days for a typical transaction to close, buyers who will actually move in April or May are looking for homes online today. Don’t miss the best time of year to get your home on the market, and keep in mind the most visited local website is FCTuckerEmge.com.
If you haven’t already registered to receive email notifications of new listings in you geographic area or price range give me a call and I can help you register. You can even help friends or family find what they are looking for. Give me a call if you have any questions about our market or specific questions about the value of your home. You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com