It's official: the Obamas are Washington homeowners

Former US president Barack Obama and his wife Michelle initially decided to stay in Washington once he left the White House so their daughter Sasha could finish high school.

Now, their presence in the US capital looks more permanent.

The couple paid $8.1 million to buy the mansion in Washington's swank Kalorama neighborhood that they have been renting since January, The Washington Post reported Wednesday.

The eight-bedroom, nine-and-a-half-bath home is in the same neighborhood as the home of President Donald Trump's daughter Ivanka and her husband Jared Kushner.

Other Kalorama residents include Secretary of State Rex Tillerson and Amazon founder Jeff Bezos, who also owns The Washington Post.

"Given that President and Mrs. Obama will be in Washington for at least another two and a half years, it made sense for them to buy a home rather than continuing to rent property," Obama spokesman Kevin Lewis told the paper.

The posh neighborhood has a long history as home to government ministers, Supreme Court justices, Treasury secretaries, and other powerful figures in government and business.

Other past presidents who have lived in the neighborhood located about two miles (three kilometers) from the White House include Woodrow Wilson and William Howard Taft.

Franklin D Roosevelt lived there before becoming president.

The Obamas have traveled a fair bit since leaving 1600 Pennsylvania Avenue, vacationing in French Polynesia and Italy.

Obama and his wife have signed a contract with Penguin Random House to publish their memoirs, reportedly worth more than $60 million.

source: news.abs-cbn.com

Upgrade Your Home, Insurance Policy Before Spring Storms Hit

Mother Nature's forces of wind, water and hail account for more than half of all homeowners insurance losses.


Standard homeowners and renters policies cover the damage wreaked by wind, hail, falling water or wind-driven rain, but not from rising water from any source, including a sewer or drain backup or sump-pump failure. The cost can be substantial: Mother Nature's forces of wind, water and hail accounted for more than half of all homeowners insurance losses between 2009 and 2013, with an average claim amount of $7,610, according to the Insurance Information Institute.


If you live in a federally designated flood zone, or if your house could be flooded by melting snow, an overflowing creek, or water or mud running down a steep hill, you can buy flood insurance from the National Flood Insurance Program (www.floodsmart.gov) by calling your insurance agent. The program covers homes for up to $250,000 of the cost to rebuild and insures contents for up to $100,000. The average premium is $700 per year, but rates depend on a home’s features and location.

Prevention pays. You can take steps to minimize the risk. Visually inspect your roof for damage, clean your gutters, and attach extensions to downspouts and regrade soil to divert water away from your home’s foundation. Test your sump pump and recharge its battery.


To avoid coming home and finding that a deluge has created a sodden (or worse, moldy) mess, install a remote alarm system, such as the Samsung Smart-Things Hub (about $300 with five water-leak sensors). It will notify you when the sensors—-placed where leaks or overflow are most likely to occur—detect water. Home insurers usually offer their biggest discount for a combination of approved protective devices, which may include a water-leak detection system. State Farm offers discounts of 10% on the ADT Pulse home-monitoring system ($636 a year) and the Comfort and Control Kit for the Iris by Lowe’s smart-home system ($339). Plus, State Farm offers customers a premium discount of up to 10% to 15% for the ADT system and up to 2% to 7% for the Iris.

If your home (or neighbors' homes) experience sewer backups, hire a plumber to install a sewer-backflow valve ($600 to $1,400) to keep pure nastiness from backing up through toilets and drainpipes into your home. The valve allows waste to flow out but closes when the flow reverses. You can also add, say, $5,000 of sewer-backup coverage to your homeowners policy for about $50 annually.

Fortify your home. Your roof is your home’s first line of defense against the elements. When it's time to replace it, strengthen it. You can install impact-resistant shingles that are rated for superior resistance to hail damage, and you may earn a premium discount.


Four coastal states—Alabama, Georgia, Mississippi and North Carolina—require insurers to give homeowners a premium discount of 5% to 35% for retrofitting a roof to meet the “Fortified” standards of hurricane resistance developed by the Insurance Institute for Business & Home Safety (see www.smarthomeamerica.org). Florida, Louisiana, South Carolina and Texas have similar programs.

Also consider storm shutters ($9 to $30 per square foot of openings) or impact-resistant windows ($50 to $70 per square foot). Florida requires insurers to discount premiums by 35% to 44% for storm shutters that meet code.

Wherever you live, check with your insurance agent or state department of insurance to learn about incentives for preventing storm damage.

source: kiplinger.com

4 Insurance-Policy Add-ons Worth the Money

A few inexpensive add-ons can add valuable coverage to your auto and homeowners insurance.

1. For your auto insurance, consider roadside assistance. For $3 to $12 every six months (versus $52 per year for AAA), you can get lockout service, towing, jump starts, and flat-tire fixes, says Cadie Patrizz, an independent insurance agent in Tarzana, California

2. Rental reimbursement can be worthwhile if you need a car while yours is being repaired (repairs must be due to a covered loss).
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Mercury Insurance, for example, charges $20 every six months to provide up to $40 per day for a rental car while yours is being repaired, for a maximum of 30 days.

3. Medical payments coverage takes care of medical and ambulance bills for you and your passengers. It may duplicate health insurance, but it can fill in some gaps if you have a high-deductible policy.

You’ll pay about $19 every six months for $5,000 in coverage, says Patrizz.

4. For homeowners, coverage for sewage backup is a big gap in most policies — leaving you to pay thousands of dollars to clean up nasty damage caused by water and sewage that backs up into your house. But you can often pay about $50 per year to get $10,000 to $25,000 in coverage.

source: kiplinger.com

The Equity Boom Might Be Making You Money

Have you ever checked out your bank account online only to discover you’re $50,000 richer than you were yesterday? That may sound like the sort of thing that happens only in fairy tales and lottery advertisements, but it’s happening right now to millions of homeowners across the nation.

How does it happen?


Homeowner equity is the largest source of wealth for many Americans, and as I speak, an equity boom is underway, raising homes values over the past three years as prices recover from the housing crash.The evidence suggests we’re still in the beginning phases of a boom that is unmatched in modern times. We may not even reach the halfway point for two years or so.

Following the housing crash in 2007, homeowners lost trillions worth of equity in their homes as prices, and then values, plummeted. Falling values pushed millions of homeowners “underwater” or into “negative equity” as their homes became worth less than the amount they owned on their mortgages.  When many homes became virtually worthless, owners defaulted on their loans—sometimes voluntarily. By the end of the Foreclosure Era, more than 5 million homes were lost—about the same number as all the existing homes typically sold in a year.

Is your home still underwater? Many still are. Luckily, the government has programs in place that can help. Learn more about HARP here.

Tracking home value increases


When the recovery began in 2012, the national median home price was at a multi-year low of $154,600 in January of that year. In November 2016, it had reached $220,300 and was still climbing.[1] That’s an increase of 42.2 percent. Sales price trends influence home values over time, so it’s a fair assumption that values are generally following suit and may be increasing much more than 42 percent in hotter Western markets.

Over the past three years, Homes.com has tracked price recovery on a market-by-market basis. By September 2015, 170 of the nation’s largest 300 markets, or 57 percent, had returned to the peak prices they achieved before the housing crash, including 53 of the top 100 markets.^[2]

The real estate data and analytics firm CoreLogic estimates that the number of mortgaged residential properties with equity at the end of the third quarter of 2015 reached approximately 46.3 million, or 92.0 percent of all homes with an outstanding mortgage, a decrease of negative-equity homes by 11.8 percent in 12 months. In Q3 2015 there were 37.5 million borrowers with at least 20 percent equity, up 7 percent from 35 million in Q3 2014.[3] Homeowners with 20 percent or more equity will find in easier to sell their homes, refinance or take out loans where their equity provides the collateral.

Price increases are expected to moderate in 2016, causing CoreLogic to move back is forecast for the date when the national median sales price will reach the peak level attained before the housing crash. Initially the firm predicted the peak would be reached in mid-2016; now it is forecasted for mid-2017.[4] The rate of increase in the CoreLogic Home Price Index is expected to slow to 4 to 5 percent during 2016 from about 6 percent in 2015.[5]

These medians, whether market-by-market in the Homes.com reports or CoreLogic’s national medians, represent only a midpoint among homeowners. Even in a market where the median price has reached the peak price half or more than half of homeowners could still below the peak. It will take several more years of price growth for the Equity Boom to fully reach a significant majority of homeowners.

What does this mean for you?


CoreLogic’s data only covers homeowners with a mortgage. If you are one of the 34.4 percent of homeowners who own their homes free and clear[6], the Equity Boom is putting money in your pocket just as quickly as your neighbor with a mortgage—and you don’t have to pay any of it back to a lender when you sell!

The Equity Boom is not occurring at the same pace by geography or by price tier. In general, the bulk of positive equity for mortgaged residential properties is concentrated at the high end of the housing market. For example, 95 percent of homes valued at $200,000 or more have positive equity compared with 87 percent of homes valued at less than $200,000.[7]

In general, those markets that are trailing in the race to regain peak prices lost the most value during the foreclosure crisis and therefore have the longest roads to travel to regain their peak prices. Those where demand is strong and prices are rising fastest are making the most progress to meet and exceed their peak price levels.

source: totalmortgage.com

How to Tell if Your Local Real Estate Market Is Healthy

At its simplest level, real estate economics is a matter of supply and demand. Too few houses for sale to meet demand and prices rise. Conversely, if the local for sale inventory exceeds demand, prices will fall.

If supply and demand are in balance, though, prices will stabilize and homes will sell at prices closer to their true values without the unhealthy side effects of an unbalanced market—bidding wars and prices so high that they shut out first-time buyers or so low that they suck away equity from homeowners.

During the current recovery, rapidly rising prices have created bubble-like conditions, threatening some Western markets and raising the specter of the crash that contributed to the default of more than 5 million families.

Markets can change quickly, but it is not hard to tell when supply and demand are so out of balance that they create abnormal changes in the market that make it difficult for buyer or sellers.

Here some ways to assess a market’s health.

Rapidly rising or falling prices.

These are the symptoms that the market is out of balance and is causing damage to either sellers, buyers, or move-up buyers. Generally, an annual increase of 5 percent is a very healthy rate of appreciation.

Prices above that level and prices that are depreciating on annual basis suggest that they market is out of balance. Over the past three years, national average price has risen about 20 percent, according to CoreLogic.

Months’ supply.

Housing economists track the balance between supply and demand with metric known as “months’ supply.” It presents how many months it would take to use up the current supply of homes at the current rate of demand.  It takes into account current inventory, rate of replacement and the rate of disappearance. A six-month supply is considered healthy.

Time on market or days on market. 

This metric is simply the median time that homes are selling in a market. For a specific listing, it’s the number of days a listing is active in a multiple listing service before a buyer makes an offer that the seller accepts.

It is less accurate than months’ supply because MLSs reset the clock tracking time on market if the property is delisted and then listed again, often by another broker. “Time on site” a similar measure, also can be confusing since it measures only the days a listing has been on an aggregator site like Zillow or Realtor.com. It might have been listed on its MLS for s longer period of time than on an aggregator site.

When days on market exceed 90 days, it’s a good sign that either there is something wrong with the property or it is priced too high for the market.

List-to-sale, sale-to-list, or list-to-close ratio.

This is a sales metric used by real estate professionals to measure whether homes are selling more or less than the asking price in the local market. To calculate the metric, divide the actual sale price by the property’s final list price and express the result as a percentage. It can also be calculated using recent sales prices in a market.

Buyers, sellers and real estate agents can use the ratio to determine a strategy for price negotiation. A ratio above 100 percent means that it is a strong sellers’ market and homes are selling for more than their list price, suggesting mufti bid situations. If a home’s ratio is below 100 percent, the property may have had serious repair issues or was overpriced initially. When the ratio is below 100 percent on a market-wide basis, it suggests demand is soft and still softening, forcing owners to lower their prices after they listed their homes.

The bottom line? There are plenty of ways to get a feel for the housing market in your area as long as you’re willing to do a little research.

source: totalmortgage.com

Is Minority Homeownership on the Rise?

Last year the national homeownership rate increased in three consecutive quarters for the first time since 2009. Many observers hailed it as a sign that the homeownership rate, which measures the percentage of homes that are occupied by the owner, has reversed course and now will continue to increase.

Less noticed, though, were signs of improvement in minority homeownership rates. Hispanic homeownership rose to its highest level since the third quarter of 2012. African-American homeownership rose and fell during the year and white-only homeownership—though still 20 to 30 points higher than minorities—ended 2015 lower than it has been in many years.

A Growing Minority Population

Some forecasters see the tide of minority homeownership changing for the first time since 2007. The coming decades will see rapid growth in minority households, particularly Hispanic households. Over three-quarters of household growth from 2010 to 2020 and 88 percent of the growth from 2020 to 2030 will be among minorities.

In both decades, the largest segment of that growth is predicted to be Hispanic households. From 2010 to 2020, whites are the second largest group at 23 percent. But in the following decade, whites are expected drop to 12 percent and the broad “other” category (Asians, American Indians, and people of other or more than one race) takes their place at 24 percent, followed by African Americans at 20 percent.

Out of the 22 million new households from 2010 to 2030, 9 million will be homeowners. More than half of the new homeowners are likely to be Hispanic, 11 percent black, and 29 percent people of other races. A 2014 study by the Urban Institute projects that Hispanics will account for 55.5% of new homeowners from 2010 to 2020.[1]

How Higher Prices Help Minorities Qualify

Though conventional wisdom maintains rising prices make it harder for some minorities to buy homes, a new study by two economists at the Federal Trade Commission suggests that higher prices mean better times for minorities.

This is, the economists argue, because they are accompanied by a loosening of lending standards. Rising values alter lenders’ judgments about acceptable levels of risk and rates of return. “This variation may then translate into changes in the outcomes experienced by minority borrowers relative to non-minorities,” the study said.

The study found that as the rate of home price inflation within a metropolitan area increases, the gap between African Americans and whites shrinks, suggesting that, in times (or places) in which real estate is booming, mortgage lending appears to be more equal than in times (or places) in which real estate is declining. A 10 percentage point increase in the rate of house price inflation, for example, tends to be accompanied by a 0.5 to 1 percentage point decrease in the gap between the African American denial rate and the white denial rate, on average. These magnitudes amount to approximately 5–10% of the overall mean black–white denial difference.

Could the levelling of the African American homeownership rates last year reflect changing lending standards? Lending standards, especially for the FHA loans widely used by minority buyers, have loosened significantly since November 2012, before the recovery began and October 2015. Median FICO scores are down from 704 to 654, loan-to-value rations are down from 95 percent to 81 percent, and debt-to-income ratios are up from 28/41 to 29/46.

Outlook: African Americans Face Barriers

While the number of African American homeowners will rise—their 11 percent share of new homeowners actually will exceed whites’ share by 2020—the black homeownership rate will decline fairly dramatically and the gap between the black and Hispanic population will widen. This trend has percent, versus 47 percent for Hispanic households. By 2030, only 40 percent of African American households will own their homes.

The declining African American homeownership rate does not just reflect differences in age—it reflects a failure of policy and market trends to address the African American homeownership gap, according to the Urban Institute.[2]

In every age group, current trends and policies are widening the ownership gap between African Americans and other groups. This gap reflects two fundamental factors:

First, African American homeownership was particularly battered in the housing crisis, sharply reducing household wealth among African American families and dramatically lowering the long-term prospects for recovery for black homeownership at all ages.

Second, African Americans continue to lag other races and ethnicities in employment, wages and income.

These factors together contribute to a bleak homeownership forecast for African American families without dramatic changes in policy.

source: totalmortgage.com

5 Can’t Miss Tips When Choosing A Realtor To Sell Your Home

Selling a home can be tricky and complex. One of the most important decisions that homeowners need to make when selling is who they will hire to sell their home.

A top notch Realtor® can make the difference between a home selling or not. Many homeowners take hiring a real estate agent too lightly, which can ultimately lead to a seller losing thousands of dollars and creating additional unnecessary frustration and stress.

If you’re planning on selling your home in the near future, it’s important you understand what it takes to choose a top Realtor.® Below are 5 can’t miss tips to help increase the odds of hiring the best to sell your home!


Know How To Interview Prospective Realtors

The first step to successfully hiring a top Realtor® is knowing how to interview. Some homeowners will actually skip the interview process and will hire a real estate agent because they are a friend, family member, or neighbor. While it’s completely possible their acquaintance is a top agent, it’s vital to make sure this is truly the case.

Once a homeowner decides which Realtors® to interview, they must prepare themselves for the actual interview process. It’s important to know what the top interview questions to ask a Realtor® are! Here are five of the best questions to consider asking:

• Are you a part-time or full-time agent?
• What is your list price to sale price ratio?
• What methods do you use to determine the value of a home?
• What methods of communication do you use with your sellers?
• How many homes did you sell last year while representing sellers?

These are just five of the best questions to consider. There are many more and it’s extremely important that a homeowner asks these questions. Some are more difficult to ask than others, but a homeowner will thank themselves in the future when they have a successful and enjoyable home selling experience!

Request To Contact Past Clients

One recommendation for homeowners who will be choosing a Realtor® is to ask if they can contact a handful of their past clients. It’s important to understand that some people will not allow or want a real estate agent to provide their information to prospective sellers, however, a top agent should have many past clients who would be willing to talk with prospective sellers.

If a homeowner gets the chance to talk with past clients, they should be asking some important questions. Below are five of the top questions a homeowner can ask a past client.

• How was your experience working with him/her?
• Did they deliver on what they told you they would do for you?
• Was there anything you felt they could’ve done better?
• How was their communication?
• Do you feel they earned their money?

Check the Realtor’s Sales History

The number of homes a Realtor® sells is not a guarantee that a homeowner will have a great experience, or a miserable one.

The reality, though, is that anyone who has sold fifty homes in a given neighborhood has more experience than a brand new Realtor® out of their local real estate academy. Three things to consider finding out about a Realtor’s sales history include:

• How many homes have you sold in my neighborhood?
• How many homes on average do you sell a year?
• What percentage of your business is repeat and referral business?

These questions can often shed some light into whether or not an agent has a solid sales history or not. Every agent starts at zero in their career at one point or another, but experience comes with time and transactions.

Find Out How the Realtor Plans to Market Your Home

One of the top three reasons why a home will sell or not is due to the marketing and exposure a home gets. It’s critical that homeowners find out exactly how a real estate agent plans on marketing their home.

Since all Realtors® run their business differently, they market their sellers homes differently. Some will literally place a sign in front of a home, enter it into their local Multiple Listing Service (MLS), and pray that it sells. These are sometimes classified as a post and pray Realtor® and are Realtors® that should be avoided at all costs.

Homeowners hire a Realtor® to sell their home should be aware of their web presence, first and foremost, and also what other marketing channels they plan on using. Five of the most important marketing questions to ask include:

• Do you have a website?
• What type of traffic does your website get?
• Is it local traffic?
• Do you have a real estate blog?
• Does your website and/or blog rank highly on Google and other search engines?

There are literally dozens of questions that homeowners should be asking a real estate agent when it comes to their marketing of their listings. In 2016, since the majority of buyers are beginning their home search online, it’s critical that their website ranks highly on search engines. The higher a Realtors® page ranks, the more exposure for a seller’s home.


For example, a seller in Rochester NY would love to put their home in front of anyone who is thinking of moving to Rochester NY, right? Of course they would! It’s huge if a Realtors® website is ranking within the first couple results for search terms such as “moving to Rochester NY” and other variations of this search term.

Don’t Choose a Realtor Because They Offer the Lowest Commission

Last but certainly not least, when a homeowner hires a Realtor® to sell their home, they should not do it based solely on the fact they offer the lowest commission. Commission is negotiable, yes, but it’s also important to be aware of the many home sale gimmicks and discount brokers that are out there.


If a real estate agent is offering the lowest commission, you need to be absolutely sure they are going to provide the same services that other Realtors® would. Four questions to ask include:

• Will you still pay to advertise my home in the newspaper?
• Will you send direct mailings to my neighbors?
• Do you have a top website?
• Do you pay to advertise on Facebook?

While it’s possible the Realtor® offering the lowest commission may be the best one for the job, it is important to proceed with caution.

Final Thoughts

Hiring the right Realtor® is critical. Not doing so can be a huge mistake, and a costly one at that! By following the 5 tips that are listed above, a homeowner will greatly improve their odds they will hire a top producing Realtor.

source: totalmortgage.com

6 Essential Skills Every Homeowner Needs

Owning a home definitely requires a different set of skills than living in an apartment.  If you’re feeling a little overwhelmed, here’s a short list of the 6 of the most important skills you should master.

Hanging things

No more landlord means no more finding creative ways to hang the things you want. Of course, that doesn’t mean you want to damage your walls, either. If you’re hanging something heavy, like a TV or large mirror, you’re going to need to find a stud first, or end up with a big mess.

Installing new locks

One of the first things you should do after that now-empty moving van pulls away from your new house is change the locks on your doors. You have no way of knowing who else has copies of the keys, after all.  But even if you’re not a brand new homeowner, locks can seize or break, and you should have the skill to deal with them.

The specifics of this can differ greatly depending on what kind of lock you’re dealing with, though. So remember to do your research first.

Cleaning the gutters

If you have trees anywhere near your home, then you’re probably going to need to clean out your gutters at least once a year. If you don’t, you can end up with gutters that don’t drain properly and put your roof at risk.

Unclogging a drain

Backed up sinks and showers definitely aren’t the fun part of home ownership, but they happen all too frequently. Depending on the drain and the type of clog, this can mean everything from chemical drain cleaners and plunging to unscrewing your p-trap.

Understanding a circuit breaker

When you overload a circuit—plug in too many electronics, try to vacuum and watch TV at the same time, etc—your circuit breaker fixes the problem by cutting off electricity to the circuit. This helps prevent damage to your system.

When this happens, you should first unplug a few non-essentials. Next head to your electrical panel and find the switch that has been tripped. It will be in the “off” position. Flip it to “on” and you’re all set.

Cutting your water supply
When a pipe bursts or a home repair job goes awry, you better know where you water cutoff is. If you don’t, you’re going to end up with a lot of water in places you’d prefer to keep dry. Most individual fixtures have their own valves, typically near where they connect to the wall.

A main shut off valve, though, can be a little trickier to find.  It can be inside or outside, depending on the house, and will be located where the water pipe enters the house, which can vary.  It’s usually a round brass valve.

source: totalmortgage.com

5 Ways to Pay off a Mortgage Loan Early

Although it can take up to 30 years to pay off a mortgage, there’s no rule that says you have to spread this debt over three decades.

An “estimated 20 million Americans own their homes outright,” reports Dave Ramsey, author of the best-selling book The Total Money Makeover. And if you’re looking to join this club sooner rather than later, adjusting the way you pay your mortgage can get rid of the loan quicker.

Now, this achievement may appear to be a far-off dream, but there are practical ways to make it happen.

1. Submit Bi-Weekly Mortgage Payments

Paying one-half of your mortgage payment every two weeks can shrink your term by six or seven years. Given how there are 52 weeks in a year, bi-weekly payments result in 26 half payments – the equivalent of 13 full payments or one extra mortgage payment a year.

Although a seemingly insignificant move, this extra mortgage payment decreases the amount of interest you owe over the life of the loan and ultimately shortens the length of your mortgage term.

Unfortunately, a bi-weekly schedule isn’t something you can do on your own. You’ll need to get permission from your lender to switch to a bi-weekly payment schedule, and most banks charge a one-time setup fee.

2. Make Higher Monthly Mortgage Payments 


A bi-weekly mortgage is an effortless way to pay down a mortgage faster, but not all banks offer this option. If your lender doesn’t allow this pay schedule, you can still pay off your mortgage early by sending one extra principal payment a year.

There are different approaches for submitting the extra payment. You can make a double mortgage payment once a year, and specify on the payment coupon that you want the extra amount credited to the principal only.

Another option is increasing each mortgage payment by 1/12, which might be more manageable than a double mortgage payment. Simply divide your regular payment by 12 months and then add this extra amount to each future payment.

For example, if you’re scheduled to pay $1,400 a month, increasing each payment by $117 results in one extra mortgage payment a year.

 3. Refinance Your Mortgage

If you’re only a few years into a 30-year mortgage term, refinancing to a 10 or 15-year mortgage is another strategy for paying off a home sooner. Shorter terms increase how much you pay on a monthly basis, but the increase may not be as high as you think.

Some people mistakenly assume that cutting a mortgage term in half will double their mortgage payments. However, shorter repayment periods typically justify a cheaper interest rate, and this lower rate can translate into surprising savings.

To illustrate: a $200,000 mortgage for 30 years with an interest rate of 4.25% comes to $983 a month, excluding taxes and insurance.

If you take the same mortgage and reduce the term to 15 years, you might qualify for an interest rate of 3.29%. Based on the second scenario, you’re looking at a mortgage payment of $1,409 – a difference of just $426 a month.

4. Reduce Your PMI

If you are homeowner who did not put down at least 20% as your down payment, you will have to pay what is called private mortgage insurance, or what is commonly referred to as PMI. PMI is added to your monthly mortgage payment until you get to 20% equity.

If you have to pay PMI, considering to make more than the monthly payment would be a good idea as the extra amount would go towards the principal, thus bringing the loan amount down and equity up quicker.

By doing this, you will pay off the PMI much faster than if you just made the minimum payment, which will save you money in the long run.

5. Switch to a Shorter Loan

Today, many homeowners have a 30-year fixed mortgage loan. One way to possibly help pay down your loan quicker is by switching to a 15-year mortgage.

If you can afford to make a higher payment, then this would be a great alternative as you would save years of interest compared to a 30-year loan.

One of the benefits of a 15-year fixed mortgage is that the interest rate is a noticeable amount lower than that of a 30-year fixed.

More often than not, if you are a homeowner who plans on paying off their mortgage early, it might be a good idea to consider a 15-year loan over a 30-year loan depending on your current financial situation.

Bottom Line

How you spend your disposable income is entirely up to you. And while you can probably think of a million other uses for the extra income, paying off your mortgage early has one undeniable, priceless benefit – peace of mind from knowing that you own the property free and clear.

source: totalmortgage.com

New Forms Can Help You Save on Closing Costs

In October, new forms designed by the Consumer Finance Protection Bureau to help borrowers better understand their closing costs went into effect. These are designed to make it easier for you to save by providing binding estimates far enough in advance of closing that you can shop for services yourself.

Officially called Loan Estimate and Closing Disclosure forms, but also known as “TRID” (for TILA-RESPA Integrated Disclosure), the new forms combine elements of two laws, Truth-in-Lending and the Real Estate Settlement Procedures Act. They eliminated duplicate paperwork and replaced it with just two forms on mortgage and closing costs—one that lenders must send borrowers within three days of applying for a mortgage and a second that is due three days before the closing data.


Estimate of all your closing costs

The first form details the kind of loan you’re taking out, including rate, term, monthly payment, fixed or fixed or adjustable rate. It will state whether there’s a prepayment or late payment penalty, whether the rate can be locked, whether you are paying points, and whether you’ll need to take out mortgage insurance. It will include taxes and other hard costs that will not vary.

The Loan Estimate also will include estimates for two kinds of closing services provided by third party vendors—those the lender choses, like the appraiser, and those you select, like title insurance and settlement services. These estimates must be accurate within 10 percent of the final cost, or the lender must make up the difference.

If you think the loan terms and closing costs are too high, this is your chance to shop around. Apply to a few other lenders to see how they compare. Some charge lower rates by making up the different in higher fees. Again, be sure you understand exactly what the estimates say. If rates, terms, payments or, loan types differ significantly, make sure you know why.

How to save: the basics

Once you have chosen a lender, focus your attention on the third party services that you can hire. You can shop for any of the services listed on section C of page 2 of your Loan Estimate form. Even though you will not be liable for paying more than ten percent of the estimates provided by your lender, your chosen lender may or may not have done a good job of finding a cost effective provider.

Along with the Loan Estimate, the lender should provide you with a list of approved providers for each of these services. You can choose one of the providers on the list. You can also look for your own providers, but check with your lender about any not on the list. There may be a reason your lender doesn’t recommend them.

For most borrowers, title insurance and settlement service are the two categories the greatest opportunities to shop and save.

Saving on title insurance

Lenders require you to take out title insurance to protect their interests. When shopping for title insurance, you should decide in advance whether you want coverage for yourself as well (see Do You Really Need Owners’ Title Insurance?). If you’re refinancing and bought ownership coverage when you first bought your home, it will still be intact and you don’t need to worry about buying ownership coverage again.

Title insurance is highly regulated at the state level and your opportunities to save will vary greatly depending upon where you live. In some states, you will find that insurers’ costs vary little one from another. In other states, you might be able to save by choosing a competitively priced product or a from an online title company.

In addition to title, settlement services include preparing all documents, signing, and post-closing review of the loan package. Often the same company will provide title and settlement services in the same package.

Choose your closing service providers and notify your lender so that the third party providers you choose can be included in his final calculation of all closing costs.

source:  totalmortgage.com

Tread Carefully when Buying or Selling a Short Sale Home

Short sale properties are sold for less than what’s owed on the mortgage loan. It’s a provision for homeowners who can’t afford their mortgage payment, and it’s a way for these borrowers to avoid foreclosure.

A short sale can also be advantageous for buyers. These properties are sometimes cheaper, so you can buy more house for your money—but don’t get excited too quickly. Whether you’re a buyer or a seller, there are definitely some reasons to stop and consider if you want to go down the path of the short sale.

 Buying a short sale home

Short sales are often fixer-uppers


Short sales are sold as-is, and in many cases, these homes need a lot of work. Because the previous owner had financial hardships, he probably didn’t have resources to keep up with home maintenance and repairs.

From a price point, a short sale can be an excellent deal, but you’ll need money to improve the interior and exterior of the home. This includes updating the kitchen and bathrooms, replacing the flooring, painting the walls and making other structural improvements. It’s the perfect property if you don’t mind some renovations, but if you’re looking for a move-in ready property, a short sale may not be the right property for you.

Not every house qualifies for a short sale


Some home sellers and real estate agents don’t fully understand how short sales work, and they might list the house as a short sale before getting permission from the bank.

Before bidding on a short sale, speak with your real estate agent so he can confirm that the seller’s bank is aware of the situation. There are rules for short selling a property. For example, the seller must prove there’s some sort of financial hardship, and they must have defaulted on their mortgage loan. Additionally, a seller cannot request a short sale if he’s filed bankruptcy. Don’t waste time bidding on a property that doesn’t meet a lender’s short sale qualifications.

Short sales have a lengthy approval time

Even if you’re pre-approved for a mortgage and ready to purchase, you’ll need to be patient. Buying a short sale takes longer than buying other properties. With a non-short sale property, you can realistically close within two to four weeks. Since there’s a lot of back-and-forth and red tape with short sales, it can take as long as 90 days to purchase these homes—that’s if the bank approves the sale. At the end of the day, you need the lender’s approval, and the bank can decide at the last minute not to approve a short sale, putting you back at square one.



Selling a short sale home

Short sales produce potential tax problems


What many people don’t realize is that if your lender allows you to sell your home at a loss, you may be liable for taxes on the losses incurred by the lender.  The IRS considers a short sale loan forgiveness.  Loan forgiveness is considered debt discharge income (DDI), and DDI is taxable.

If a lender forgives more than $600 of principal, they might send you and the IRS a 1099-c form, and you are required to report the loss as income.  In many cases whether you have a tax liability or not will depend upon your lender.  Some lenders will report the DDI to the IRS, others will not.


In addition to DDI, there can be other tax implications with a short sale


Take for example the case of someone who bought a $100,000 home.  The market did well and the property increased in value to $125,000.  At the peak, the borrower taps the home’s equity and took out a second mortgage for $50,000. Now the borrower has a house worth $125,000 and $150,000 worth of mortgages (first and second).

The market stagnates and they sell the house in a short sale for $125,000.  For tax purposes, they have actually made $25,000, despite being $25,000 shy of breaking even on their mortgages.  This is because the sales price exceeds the tax basis of the home.  Mortgage debts do not factor into gain-on-sale calculations.  This is in addition to the taxes that must be paid on $25,000 worth of DDI.  It is possible that the $25,000 gain may be excluded from taxes as a result of the federal home sale gain exclusion tax break.

Now take the example of a person who purchased a home (to be their primary residence) for $100,000, the market improves and the house appreciates to $125,000.  The homeowner borrows $50,000 against their home equity, and now has $150,000 worth of mortgage debt. Then the market declines and the house is worth $75,000 and is sold in a short sale. The borrower is left with $50,000 worth of DDI, but they have also incurred a $25,000 loss on the property.  The borrower may not deduct the loss.  This is because you may only claim losses on investment or business properties, not principal residences.

There are some circumstances where DDI can be exempt from taxes. If the debt write-off is deemed a gift, discharged in bankruptcy, or you were insolvent (have debts that are in excess of your assets) at the time the lender forgave your debt, your DDI may be exempt from taxes.

Consult an accountant, lawyer, and mortgage professional when undertaking a short sale

There are many benefits, but some downsides associated with short sales.  In addition to DDI taxes, increasing numbers of banks are making the borrower sign a promissory note for the lender’s losses or agreements that allow the bank to pursue the borrower for deficiency when selling a home in a short sale.

 Bottom Line

If you’re not in a hurry to purchase a home, a short sale might be the answer. On the other hand, if you’re looking for a quick and simple sale, and if you don’t have the patience for a lot of back-and-forth negotiations with the mortgage lender, you might do better skipping a short sale and buying a traditional listing.

source: totalmortgage.com

Is a Second Mortgage a Good Idea?

To many home buyers the idea of taking out two mortgages on the same house sounds frightening. However, a second mortgage—also known as a second trust junior lien—makes good sense in the right circumstances and can actually save you money.

A second mortgage is simply a loan secured against your property as collateral. The term “second” indicates that the loan does not have priority on your home in case you default. Should that happen, your first mortgage has priority and that loan would be paid off before any funds go towards the second mortgage.

As a result, second mortgages come with higher interest rates than first mortgages. Second loans require fees and closing costs, just like first mortgages. You may also be required to pay points (one point is equal to one percent of the loan value) which could make the loan less attractive. You’ll need a good credit score and documentation for enough income to make the payments.

Three popular ways buyers and homeowners save money with second mortgages:

Avoiding private mortgage insurance. Buyers lacking a large down payment can use a second mortgage to qualify for their first mortgage without having to pay expensive private mortgage insurance.

Staying within GSE loan limits. With prices rising in the nation’s more expensive markets, buyers can buy a home that exceeds the limits for a loan to be bought by Fannie Mae, Freddie Mac or Ginnie Mae without incurring the higher interest rates of a jumbo loan. That translates into a significantly lower rate of interest on the primary loan.

Consolidating high interest consumer debt. Some homeowners pay off high interest short term debt like credit cards with lower interest, long term debt through a second mortgage.

Additionally, taxpayers in higher tax brackets get to deduct the interest they pay on both mortgages on their federal and state returns.


However, second mortgages have their risks:

• By taking out a second mortgage, you are adding to your overall debt burden. Anytime you add on to your overall debt burden, you make yourself more vulnerable in case you then experience financial difficulties that affect your ability to repay your debts.
• If you cannot repay, you could potentially lose your home because you are using the equity in your home as collateral.
• If you are consolidating debt, it’s not wise to substitute short term debt for long term debt if you end up paying more over the life of the second mortgage.

 source: totalmortgage.com

Do Pets Reduce Your Home’s Value?

For years, Americans’ love of pets has turned many a renter into homeowner. “No pets allowed” was a standard clause in rental contracts until recently, when many landlords realized they could attract and keep tenants happy if they were willing to put up with cats and small pooches.

A recent survey by website Apartments.com found that 72 percent of renters surveyed said they are pet owners, a big jump from 43 percent in 2012.

Ultimately, though, there’s no place like a fireplace, a back yard, a nearby dog park, and a friendly suburban street for man’s best friend. But while a house can mean big things for your furry family members, in recent years the evidence has been mounting that pets—and specifically their by-products—can cost their owners big time when the time comes to sell or refinance.

Cats vs. condos

A cat owner’s condo reportedly sold for up to $30,000 less than it should have because of damage caused by the pets, a real estate agent told a national magazine two years ago. A Boston-based real estate agent was recently quoted to effect that pet hair and pet stink can do major damage to a home’s resale value. The agent specifically mentioned another condo that sold for $20,000 or $30,000 less than it should have because of cats.

Appraisal Institute, a professional association of real estate appraisers, weighed in with a news release two years ago, suggesting that bad neighbors including homeowners with annoying pets can significantly reduce nearby property values.

Get on your knees and pray

Said one blogger on a real estate site: “Basically, if you are ever faced with trying to sell a home and own a pet or two, you should ship off Fido to a kennel, fumigate your house and then get on your knees and pray potential buyers can’t detect any stray pet scents.”

Appraisers also say that the mere fact a pet is resident is no reason to penalize the homeowner.  It’s understandable, however, that permanent scents, deep scratch marks on the floor or doors, lawns pitted with brown pee spot and buried bones, or other lasting signs of animal damage would be a bummer to buyers and thereby a reason to chop a few hundred or even a thousand off a home’s value.

Pet haters forget that 47 percent of households own at least one dog and 46 percent own at least one cat, according to the American Human Society. This means for every potential buyer turned off by Fido’s claw marks on the door, there’s another who will opt for the home with a pet door in the kitchen and a fenced backyard.

Custom-built dog runs

Just as landlords are accommodating pet owners for purely financial reasons, there’s a silver lining awaiting homeowners who have made their properties pet-friendly. A survey conducted four years ago by Move Inc., operator of Realtor.com, found that many homeowners are rewarding their dogs with custom-built doghouses, deluxe dog runs, custom “doggy-doors,” pet-friendly landscaping, private patios with personal fire hydrants, and other features that add value to their master’s property with many buyers.

At the time, Realtor.com listed a Victorian dog house that matched a $10,995,000 California home, a heated doghouse with a deluxe dog run adjoining a $520,000 listing in Idaho, and a secluded cottage built just for dogs with a $524,000 house in Illinois.

“Pets have become important members of the family, and their needs are often high on the list of must-haves for many buyers, sometimes even higher than priorities of the two-legged members of the family,” says, Eileen Healy at Prudential Rocky Mountain Realtors in Colorado. “Calling out features or local pet-friendly amenities can make or break a buyer’s interest in a particular property.”

source: totalmortgage.com

Do You Really Need Owners’ Title Insurance?

Many home buyers are surprised to learn that the title insurance they are required to buy during the closing process doesn’t protect them if there’s a problem with their title. Even though the home buyer pays for the policy, it only protects the lender.

So it’s no surprise that after they have saved for their down payments and put a deposit in escrow, the last thing most buyers probably want to do is spend even more money on title insurance than they had planned.

Before making a decision, however, it’s a good idea to learn more about the risks involved should you have a challenge to your title.

What does a title challenge look like?
Title searches can uncover problems that consumers never see. Examples include forgeries in the chain of title, a claim by a previously undisclosed relative of a former owner, or a mistake in the records. Searches reveal liens that have not be cleared, disputed easements and rights-of-way, life estates, conveyance of air and subsurface rights, and future interests that the home seller may not even have known about.

Unknown to the lender or buyer, title companies find and fix problems with titles in 25 percent of their searches. However they are not perfect, which is why lenders insist on coverage.

Even when a property is resold quickly, or refinanced within a short period of time from the original purchase or most recent refinance, a new title search and title policy are needed because the owner could have taken actions that had an impact on his claim to the title, such as taking out a second mortgage or incurred a lien from unpaid taxes.

Is coverage worth it?
If there’s a problem with your title and you don’t have coverage, you could easily lose your home. It happens infrequently, but often enough to make the small cost of owners’ coverage worth it to many home buyers.

According to the American Land Title Association, in 2014 a Missouri family purchased a home for more than $400,000. The title search missed a lien on the property. When the lien was discovered, the title insurer paid off the lender, but since the family wasn’t covered, they lost their home.

In another recent case, a homebuilder sold and financed a home to a first-time buyer, but because the builder financed the sale and didn’t require title insurance, neither the lender nor the homeowner had title insurance. When there was a lien on the property, the family lost the home and the builder went under.

The bottom line?

Whether or not you get owners’ title insurance is your choice, but it can cost much less than lender’s insurance. When you select a title insurer for the lender’s policy, ask for the “simultaneous issue rate.” Usually title companies will write you an owners’ rate at the same time they prepare the lenders rate but tor considerably less. You can save as much as 50 percent of the cost of the second policy, if you shop around.

source: totalmortgage.com

Refinancing Redux: What Happens the Second Time Around?

Given persistent low-interest rates, some homeowners are asking if it’s worth it to refinance a second time before rates creep back up. Counting all types of refinances, Freddie Mac, the government-sponsored mortgage outfit, says the average loan refinanced in the first quarter of 2015 was about 5.6 years old, and homeowners cashed out a total of $7.6 billion.

Is it really advantageous to go through all that paperwork just to save a little bit each month? Here are five things to consider before any “redo-refinancing.”

1. Assess Your Penalty

Unlike the first time you refinanced, dipping back into the pool can come with special penalties. While you likely won’t have a no prepayment clause, the industry isn’t really set up for back-to-back refinancing. If you refinanced within the past 60 to 90 days, double check for any red flags. For example, an FHA Streamline refinance requires 60 days with the previous loan before you can refinance again.

2. Calculate Your Potential Savings

With any refinancing, it’s important to have a crystal-clear view of what you will save overall, not just in monthly payments. The general rule of thumb used to be that you refinanced when current interest rates fell two points lower than your loan. Today people are refinancing for less, so you really need to read the fine print. Some homeowners also refinance for a higher monthly note so they can pay off their loans faster.

3. Understand All Costs and Fees

You can’t get a decent picture of refinancing — once, twice or beyond — unless you understand every single cost and fee, like mortgage-recording taxes. Refinancing can reduce your principal owed, but it can also maintain the same loan amount. If you plan on moving any time soon, this is also a key consideration. Chances are you won’t recoup the costs unless you plan on sticking around.

4. Gather Documents

No matter how many times you choose to refinance, you still have to have all the paperwork ready to go. Required documents usually include driver’s license, pay stubs and tax returns. Unique situations, such as self-employment, may prompt a need for additional paperwork.

source: totalmortgage.com

How to Pay the Mortgage with a Credit Card for Free and Make Money Doing It

Back during the housing boom aka meltdown there were services that allowed homeowners to make their mortgage payments with a credit card.

These services charged fees for the convenience, and looking back, they were probably only offered because people couldn’t keep up with their mortgage payments.

Unsurprisingly, these services seemed to disappear as quickly as they surfaced, but there are still options to pay the mortgage with a credit card each month free of charge.

The difference today is that this method/idea is more about earning credit card points (or cash back) for paying your hefty mortgage payment, not so much about simply paying it.


Let me preface this by saying it makes no sense to pay your mortgage with a credit card if you can’t afford to pay it otherwise.

The only purpose of this method is to earn points and/or cash back as you would on other purchases made with a rewards credit card.

You Can Pay Your Mortgage with American Express Serve


Perhaps the easiest method I know of involves American Express Serve, which is referred to as a reloadable prepaid account.

In reality, it basically works like an online bank account in that you can transfer/load money to it and then pay everyday bills or make purchases with the associated prepaid card.

Let’s focus on that paying bills part. Your mortgage is a bill and it must be paid each month until maturity, just like other recurring bills.

But loan servicers don’t give homeowners the option to pay with a credit card (for good reason!) unlike most other bills.

The Serve method entails loading the account with a credit card, and then using the funds to pay your mortgage. I suppose you can use a debit card as well if it earns rewards.

The purpose of this is to get rewards on that large amount of money spent, so if the credit/debit card doesn’t earn rewards, there’s no point in doing this.

And you need to pay off your credit card in full each month to avoid any interest or fees to offset the benefit of doing it to begin with.

A couple warnings/issues with this method:

– You need to make sure your credit card issuer doesn’t charge fees to load Serve (American Express warns of this possibility on the website)
– The max you can load with a credit or debit card each month is $1,000 ($200 per day)
– The limit increases to $1,500 a month ($500 daily) if you get Serve with Softcard, formerly known as Isis Wallet
– You actually need to pay off the credit card charges to avoid interest/fees

As noted above, you can load your Serve account with a credit card, but even American Express warns that you could be charged fees by your card issuer for doing so.

I’ve used a Chase credit card and there was no fee or issue. It just showed up as a standard purchase.

But to avoid any mishaps, testing with a small amount or asking your credit card issuer to lower your cash advance limit to zero (or as low as possible) might be a good idea before giving it a whirl.

Once the necessary funds are in the Serve account, you’ll be able to see your available balance. Assuming it’s sufficient to cover your full mortgage payment, you simply select “Pay Bills” from the dropdown menu then add a payee.

While certain payees are already in Serve’s system, you’ll likely need to add your loan servicer manually, including their address and your loan number.

It should be the address where you would send a paper check because Serve is basically cutting a physical check on your behalf. It’s essentially a bill pay service. This is exactly why it works.

You’re not actually paying your mortgage with a credit card – rather, you’re funding an account with a credit card then sending those funds to your servicer via check, a much more accepted form of payment.

Once you save the payee information, you can make your mortgage payment via Serve each month. There’s even a memo section where you can write your loan number and any other details to ensure the payment is processed properly.

Note that payments can take several business days to process, so it’s not as quick as making a payment online. Fortunately, mortgage due dates are fairly flexible. But you’ll want to give yourself a cushion to avoid paying late if anything goes wrong.

The Downside to This (or Any) Method


While it’s kind of cool to pay your mortgage with a credit card, it does require some work, as noted above. And if you have a jumbo mortgage payment, this method probably won’t work very well given the low funding limits.

You certainly won’t want to send partial payments and find out that your loan servicer paid down your principal or simply returned your check.

Sure, you can load money from a credit card and bring in the shortfall from a checking or debit card, but at that point it might not be worth your time and energy.

After all, how much will you really “earn” from using a credit card. If your monthly mortgage payment is $1,000 a month, this method should work out okay.

But that would only equate to 12,000 points or miles annually, which is worth maybe $120 or slightly more if redeemed for travel or something more lucrative.

The earnings could also be used to pay down your mortgage a little bit faster if you put it toward the principal balance.

In that sense, it could be worth it. Just be careful not to miss a mortgage payment in the process.

source:  thetruthaboutmortgage.com

6 Reasons Your Mortgage Was Rejected

You might be eager to jump into homeownership. Unfortunately, several things can derail a home purchase.

A mortgage rejection is frustrating and discouraging, but it doesn’t mean you’ll never be able to buy your own place. Here’s a look at six of the biggest threats to homeownership.

1. Co-Signing loans

Whether it’s your child, your sibling or your best friend, cosigning a car loan, a student loan or any other loan for another person can threaten homeownership. This is because the loan shows up on your credit report and you’re listed as a joint borrower.

Understandably, you’re not the primary account holder. However, you are held responsible for the loan if the primary borrower defaults. Cosigning a loan increases your debt-to-income ratio, and unfortunately, the more debt you have in your name, the less you’re able to borrow when buying a home. And sometimes, cosigning a loan can push your debt-to-income ratio over the limit allowed by a mortgage lender, which means you’re unable to get a mortgage until this debt is no longer in your name.

2. Job hopping

You might be a free spirit who

3. Not having a large enough savings account

Nowadays, lenders don’t only ask to see paycheck stubs and tax returns. They also request bank account statements. They’ll look at your savings accounts and other assets to see whether you have enough funds for a down payment and closing costs. And unfortunately, if you don’t have a sizable savings account, a lender might reject your application until you’re able to build your fund.

4. Not enough credit activity

If you get a credit card to build your credit history, make sure the bank issuing your card reports to the credit bureaus on a regular basis. When applying for a mortgage, the bank will check your credit history. And if you have non-existent credit, this can be just as damaging as having bad credit. Before applying for a credit card or any line of credit, speak with creditors and make sure they’ll report your credit activity to the bureaus every single month.

5. Credit report mistakes

The worst thing you can do is fully trust your creditors to report accurate information on your credit report. Creditors make mistakes, and sometimes they report a late payment or a collection account in error. So you need to check your own credit report at least once a year for accuracy.

If you notice an error, contact your creditor immediately to resolve the issue, or file a complaint with the credit bureaus. Credit report errors can reduce your credit score. And depending on the severity of an error, your credit score might be too low to qualify for a mortgage.

6. Poor credit habits

Mortgage lenders have relaxed their guidelines, and you can get a conventional mortgage with a credit score as low as 620 and an FHA mortgage with a credit score as low as 500. But although lenders have lowered their credit score requirements, your recent credit activity must be positive. For that matter, some banks will reject your mortgage application if you have more than one or two late payments in the past 12 months.

The Bottom Line?

Buying a home is a major accomplishment. Instead of wasting money on rent every month, you can start building equity and increasing your net worth. However, several things can put the brakes on buying a house. If you can identify potential threats to homeownership, it’ll be easier to make decisions that will help you reach your goal.

loves to change jobs every six months to 12 months. But unfortunately, job hopping is a sign of instability. And from a lender’s viewpoint, you’re not stable enough to buy a home. Lenders want to see steady income and employment. Ideally, you should stick with the same employer for at least 24 months before applying for a mortgage. If you must switch jobs, remain in the same field. Additionally, your new income must remain the same or increase.

source: totalmortgage.com

3 Types of Insurances You Need as a Homeowner

Your home is your biggest investment, so it goes without saying that you’ll do anything to protect your property. This is why you have homeowners insurance to covers damage to your property and belongings in the event of theft, fire or natural disaster. Additionally, homeowners insurance provide liability coverage if someone is injured on your property.

If you’re financing your home through a bank, your lender will require homeowners insurance. And depending on where you live, you may have earthquake insurance or flood insurance. You might think this is all the coverage you need. However, if you really want to protect your investment, there are three other insurances to consider.

1. Life insurance

 

Some people put off purchasing life insurance, but tragedies can happen at anytime. If you have children, a spouse or other relatives who rely on your income, a life insurance policy provides your loved ones with financial support in the event of your untimely death.

At the end of the day, you want your family’s life to continue as normal as possible. If you’re the primary breadwinner or contribute to the household expenses, losing your income might force your family to move out of your home and they might struggle to make ends meet.

Life insurance policies can provide peace of mind. The death benefit can cover your funeral costs, pay off the house and other debts, plus provide your family with ongoing financial support. There are no hard or fast rules regarding how much coverage to receive, but some experts recommend purchasing a policy that’s eight to 10 times your annual salary if others rely on your income.

2. Payment protection insurance

 

In addition to life insurance, you can purchase mortgage payment protection insurance from your mortgage lender. Many lenders offer this supplementary insurance policy, which is similar to a life insurance policy, but the death benefit is paid to your mortgage lender. Mortgage payment protection pays off your home loan if you die.

Typically, you have to request payment protection when buying a house, but some lenders let borrowers add coverage anytime within the first three to five years after a purchase. Payment protection premiums are based on different factors, such as your age, whether you’re a smoker and the outstanding mortgage balance. Premiums are paid monthly and included in your mortgage payment.

3. Disability insurance

 

Take advantage of short-term disability insurance if offered through your employer, or look for a policy on the individual market. Disability insurance provides income if you’re temporarily unable to work due to an illness, injury or other medical reasons. This income can cover living expenses and help you stay current on your mortgage payment, which can alleviate payment problems and possible foreclosure.

The amount you’re eligible to receive varies depending on the insurer. For example, some insurance companies offer short-term disability policies that’ll pay up to 60 percent to 70 percent of earnings, whereas other companies only pay up to 40 percent to 50 percent of earnings. Unfortunately, you won’t find a disability policy offering 100 percent coverage.

Bottom Line:

 

Life insurance, payment protection insurance and disability insurance aren’t “only” for homeowners — anyone can benefit from protection. But as a homeowner, you can’t afford to skip coverage. Home is where you’ll raise your family and create memories for years to come. So you need to do whatever you can to protect your biggest investment.

source: totalmortgage.com

5 Options for Avoiding Foreclosure

Falling behind on your mortgage payments may mean that foreclosure is around the corner—something everyone wants to avoid. Foreclosure damages your credit and can keep you from owning another home for years.  Here are 5 options you still have.

1. Transfer the loan.

If you’re less concerned with keeping your house than you are with keeping your credit and financial history intact, you may want to check to see if your mortgage is assumable or not. If yours is, then you could transfer the loan to anyone who qualifies, allowing you to sell your home with minimal fees.

Even if your loan isn’t assumable, you may be able to take a name off of it, or refinance to change the name on it.

2. Try for a loan modification.

In 2009, the government created HAMP, or the Home Affordable Modification Program, to reduce the monthly payments of qualified homeowners to 31% of their monthly income. Often, this means stretching the loan over a longer term or changing the interest rate structure.

Of course, “qualified” is the operative word here, as not all lenders participate in the program and those that do have different qualification criteria. Often, you’ll have to provide documentation about your current hardship and prove that you will be able to afford a modified mortgage.

3. Short sell your home.

Short sales usually allow you to get out of your home with less damage to your credit than a foreclosure, but they do generally involve selling your home for less than the balance of your loan. Some lenders may be willing forgive the difference, but that will vary depending on your situation.

4. Get a forbearance.

You don’t hear about forbearances very often, but they can be very helpful if your financial hardship is temporary in nature. A forbearance suspends or reduces your payments for a set period, allowing you time to resolve your problems.

5. Rent out your home.

If you haven’t yet gotten too behind on payments—or if you see problems on your horizon—and want to keep your house, then you always have the option of renting out your house and finding a cheaper apartment somewhere else. Many homeowners find that that this temporary solution can provide free up enough money to make the mortgage payment.

source:  totalmortgage.com

5 Things Every Renter Should Know Before Buying

Buying a home can be financially rewarding, but it also has its challenges. Many renters can’t wait for the day when they’re able to get the keys to their own house. Ownership can provide a sense of stability, giving you full control to decorate and remodel as you like. But before buying, it’s important to know exactly what you’re getting into. Some people start the homebuying process with rose-colored glasses, or they feel the experience will be far better than renting—and sometimes, it is. At the same time, you need to be realistic and understand that buying might be more expensive and time-consuming than renting.

1. Profits aren’t guaranteed

Some people buy a home because they’re tired of wasting money on rent. Rather than put money in a landlord’s hand each month, they purchase a home to build their own net worth. Unfortunately, there’s no guarantee that buying a home will be financially beneficial.

If you purchase at the right time, your property may appreciate a little each year, which increases your equity, and you can earn a profit when you’re ready to sell. But sometimes, home prices go backwards. Rather than appreciate, property values depreciate. In a bad market, you could end up owing more than you paid for the house. And if you sell before home prices recover, you can lose money and pay out-of-pocket to sell the property.

2. Maintaining a yard takes time and money

If you lived in an apartment before buying a house, your landlord’s maintenance department likely handled the landscaping. As a homeowner, you’re responsible for your exterior, which involves mowing your lawn, pulling weeds, seeding, and fertilizing. Maybe you always dreamed of having a beautifully landscaped yard, but it takes money to maintain an outdoor masterpiece. You’ll also sacrifice your free time. According to the Bureau of Labor Statistics, the average American spends about 1 1/2 hours a week maintaining their lawns and gardens — but as a newbie, it might take you longer.

3. You might pay more for utilities

If you’re moving from an apartment to a single-family home, anticipate an increase in monthly utilities. The amount you pay for electricity depends largely on the size of the property. And if your apartment was smaller than your new home, you can realistically pay an extra $20-$30 every month. You’ll also pay more for utilities if your new home has natural gas, whereas your apartment was electric. Plus, homeownership means paying your own water and sanitation bills.

4. Your mortgage may slightly increase from year to year

Some people purchase a home because they’re tired of yearly rent increases. However, just because you buy a home with a fixed-rate mortgage doesn’t mean your mortgage payment will never change. Your property taxes can increase, which can increase the monthly payment a little each year, and if you file a claim with your homeowner’s insurance, your agency may raise your rate. Since both of these expenses are included in your mortgage payment, any increase or decrease affects your monthly payment.

5. Homeownership can slow your savings efforts

Saving money might be a priority, just know that buying a house can slow your efforts. Ownership can be financially beneficial in the long run, but in the beginning, you’ll drain your savings account buying the property, plus there’s ongoing repairs and maintenance which can cut into your disposable income.

If you’re ready to own your own place, buying can be rewarding and satisfying, but there are things you should know before you even think about starting the process. If you know what you’re getting into, you won’t have unrealistic expectations or be caught off guard.

source: totalmortgage.com