Our area is full of sun and fun and an abundance of things to do. Southwest Florida boasts beautiful beaches, bustling downtown areas that offer activities from the local farmers market, to art shows and bike nights. There is truly something for everyone. Many people love it here so much, that they decide to invest in a secondary property to occupy on a seasonal basis or to use as an investment property.
When shopping for a home, it is important to think out the costs and criteria involved with respect to insurance. There are many factors to consider that will impact the cost of insurance:
- Seasonal – occupied at random times of the year not consecutive months
- Secondary basis-used for 6 months out of the year
- Rental Exposures – annual, vacation or seasonal rental
(For rental exposures, it is very important to disclose what type of sites the property will be advertised on such as Air B & B, Home Away or VRBO)
Age of Property
- New Properties (2002 and Newer) – will be less expensive to insure since they are built to the current stricter Florida Building Codes
- Older Homes (2001 and older) requires a wind mitigation inspection to get best rate available. Credits vary by home
- Homes over 30 years and older - require a 4 point inspection and a wind mitigation inspection
Flood- (A flood is a general and temporary condition where two or more acres of normally dry land or two or more properties are inundated by water or mudflow)
- Depending on the location of the home an elevation certificate may be required in order to get a rate
- The National Flood Insurance Program is no longer the only option available when securing flood insurance
- Private Flood Options are available and should be compared to what is available...
There has been some discussion recently on home prices in relation to mortgage rates. Some believe if there is a rapid rise of mortgage rates, home prices should decrease. Logically it makes the most sense for the price of the house to drop when interest rates are rising, but this is not always the case.
This theory of home prices decreasing is typically discussed by future home buyers. As a buyer you would like to think if you are paying higher rates on your mortgage, you should be able to see a decrease in cost somewhere else. Unfortunately, these rates are rising because the economy is in better shape. As the economy succeeds, incomes rise, rates go up, as well as the price of the home.
A recent study by the John Burns Real Estate Consulting found mortgage rates have very little impact on the cost of the home. The housing market and price increases are affected by things like job growth in the area and rising wages. Coincidentally, these same factors are causing the rise in the mortgage rates since people can afford to take out more.
As the economy progresses and strengthens, mortgage rates and home prices will fluctuate. It is a misconception as rates increase, home prices will decrease. Advances in the economy have shown that rates and home prices are more likely to increase together.
It is easy to become overwhelmed when you enter the home buying market. Friends, family, colleagues, and even acquaintances will give you their opinions if you are a first time home buyer. While most of them are looking out for your best interest, they are not fully aware of what is happening in the housing market.
It is important for you to be prepared and have your own questions ready. No matter what other opinions you are getting, you are the one buying the home and your comfort level will help make your final decision. Here are three important questions to ask before you purchase a home.
1. Why am I Buying a Home?
Regardless of the finances, it is important to think about what made you want to buy a home in the first place. Usually the reasons don’t have to do with money. Instead, home buyers are focused on how the house will impact their family in the future. A study done by the Joint Center for House Studies at Harvard found there are four reasons people buy a home. Those reasons include schools for your children, a safe environment, more room for your family to grow, and control of your own space.
These factors are the most common reasons people look to buy a new home. When you ask yourself why you are looking to purchase a home, do any of those factors come up? Spend time with your spouse or family members who are involved in this decision and determine why you want a home in the first place. Creating this list will help when searching for a home and can help your real estate agent find the best home for your needs.
2. What is the Trend with Home Values?
Our current economy and housing market is strong. That means home values and mortgage...
Potential homebuyers are always cautioned to be aware of mortgage lending standards and the difficulty they might face when trying to obtain a mortgage. Credit availability is expanding, making it easier to get a mortgage now than it was a year ago. The market is still tight however, and homebuyers should be prepared to shop around until they find a lender who is offering something that will meet the needs of their family.
Mortgage lending companies have high standards so it is important to make sure you and anyone else who will be included on the mortgage have their credit in check. The mortgage market is strict because lenders do not want to be put in a situation where they are forced to repurchase loans that are not paid on. They also do not want to end up in a litigation situation due to loan issues.
What Has Happened to the Number of Mortgages?
Due to the strict nature and requirements of the lending companies, the number of mortgages given out has significantly dropped. A report by the Housing Financial Policy Center at the Urban Institute showed that about 6.3 million fewer mortgages were given out between 2009 and 2015. The reasons behind this statistic are strict regulations and policies. These mortgages would have been granted if the lending standards where more reasonable.
Mortgage companies rely on calculations to determine if a home buyer will become delinquent on their payment. They will not give you a loan if you are too much of a risk for them. Credit history has a huge impact on this decision since lenders can see how often you pay back your debts. The history they receive is extensive. This view into your financial past causes lenders to take less risk when lending to you for your mortgage.