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June 15, 2017

Is Renting to Own a Good Idea?

With home prices and down payments on the rise, many prospective homeowners are finding a different path to homeownership. Some homeowners and landlords offer “rent-to-own” arrangements where tenants can buy the homes they are renting after a period.

A rent-to-own contract requires a prospective buyer to pay monthly rent to the homeowner plus a payment towards purchasing the home at a later date, usually three to five years in the future. The purchase price is set in advance.

For example, a house could be rented by its owner for a standard rent of $1,750 per month. But when negotiating the rent-to-own contract, the buyer and the homeowner can agree that that [...]

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June 8, 2017

How to Get Flood Insurance

Homeowners insurance policies do not cover damage from floods, yet flooding is the most common natural disaster in the United States, affecting every region and state. The damage from just one inch of water can cost more than $20,000.

The federal government provides flood insurance to homeowners, renters, landlords, and businesses through the National Flood Insurance Program, which is administered by the Federal Emergency Management Agency (FEMA). FEMA provides subsidized insurance to owners and renters, and encourages communities to adopt and enforce floodplain management regulations.

FEMA has identified flood zones according to varying levels of flood risk, reflecting [...]

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June 6, 2017

Why Jumbo Mortgages Cost More

By definition, jumbo mortgages are loans that are larger than limits imposed by Congress that restrict the size of loans that Fannie Mae or Freddie Mac can buy, package and sell to investors as securities. These “conforming” loan limits are set annually and vary by location. Currently, loan limits for a single-family home in the contiguous 48 states vary from $424,100 to $636,150, based on home prices in each county.

Jumbo loans cost more because it is more expensive for lenders to securitize loans on the private market than it is for Fannie Mae and Freddie Mac. Mortgage-backed securities created and sold by these government-sponsored enterprises, or [...]

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June 1, 2017

When and Why Home Values Go Down

Home prices and home values are often confused, but in fact they are two different numbers. Just as a piece of jewelry is valued by an appraisal and sold for less than the appraised value, a property’s sale price reflects trends in the local real estate market when it is bought and sold. Its value is determined by its inherent qualities, including size, age, location, condition and more.

In real estate, this distinction becomes important if you are using a mortgage to buy a home. Your lender will require an appraisal of the property and will not lend you more than the appraised value. Sometimes buyers and sellers agree on a price that is higher than the appraised value, [...]

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May 23, 2017

How to Set up a Rent-To-Own Situation, and More! – Cook’s Corner

Welcome to Cook’s Corner, where Steve Cook will seek to answer all of your pressing real estate questions. Want to submit a question for next time? Comment on this post!

How do I set up a rent-to-own situation with my landlord?

Here’s how rent-to-own, or lease purchase, deals work. Renters pay a certain amount each month to live in the house, and at the end of a set period — generally within three years — they have the option to buy the house. Each month of rent they pay is income for the seller, while a portion of it goes toward a down payment to eventually buy the home. The down payment is held in an escrow account. To buy the house, you must apply [...]

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May 12, 2017

Disasters That Your Homeowner’s Insurance May Not Cover

News coverage of hurricanes, tornadoes, and floods always features sad footage of wrecked homes and homeless families. As victims struggle to put their lives back together, you hope they have adequate insurance to cover their losses.

Unfortunately, many homeowners don’t. Some major disasters, including floods, landslides, and earthquakes are not covered under standard homeowners’ policies. The Federal Emergency Management Agency’s (FEMA) provides flood insurance to owners who live in flood prone areas. Homeowners must obtain additional coverage at additional expense from private insurers for damage caused by the movement of the earth. Damage from pests, such [...]

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May 8, 2017

Is Getting an Owner’s Title Insurance Policy a Good Idea?

Title insurance companies write two kinds of insurance policies. The most prevalent are policies that protect the interests of the mortgage lender should there be a problem with the title. Should the borrower default, lenders want to be able to foreclose and take possession of the property without worrying about outstanding claims?

What Title Insurance Covers

Title insurance policies also cover the cost of resolving (also known as curing) most title problems (also known as defects) uncovered during the title search. Common defects include, but are not limited to, the following:

Tax liens (for unpaid taxes) Construction liens, also known as mechanics’ liens (for [...]
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May 5, 2017

How to Save Hundreds on Title Insurance

Buying title insurance is low on the priority lists of most homebuyers as they prepare for a closing. However, every lender requires it in order to protect their interests should there be a problem with homebuyers claim to the property you are buying.

The recent “TRID” regulation that took effect last year created new closing documents to simplify the process of buying closing services. TRID, an acronym derived from the two laws that created it — Truth in Lending and Integrated Disclosure of the Real Estate Settlement Procedures Act, reorganized the process and redesigned the documents to help borrowers understand what they were paying for and to give them a chance [...]

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