What is a conforming loan?

A conforming loan is one that conforms to Fannie Mae and Freddie Mac guidelines. Fannie Mae and Freddie Mac are giant government-chartered mortgage companies that buy loans from lenders, allowing lenders to have more flexibility to make new housing loans.

Most everyone who gets a mortgage has a conforming loan.

How much you can borrow to conform:
Conforming loans are generally limited to $424,100, although there are higher limits in areas where housing is very expensive. The conforming loan limit can go up to $636,150 in specific housing markets, such as certain counties in California and New York, among others.

Loan-to-value ratio:
Your down payment has to be equal to 20 percent or more of the home’s value, but buyers can qualify for an FHA loan with as little as 3 percent down. With a down payment of less than 20 percent, buyers have to pay Private Mortgage Insurance, which can be expensive.

Credit score:
A conforming loan requires a FICO credit score of 620-640. However, an FHA loan requires a credit score of 580. A lower credit score than that requires a higher down payment.

Debt-to-income ratio:
Your debt-to-income ratio can be no more than 41 percent (although there may be exceptions that raise this percentage) of your gross income.

A non-conforming loan, by contrast, goes over the loan limit and the requirements are stricter. Credit scores must be 680 or higher. The down payment must be 15 percent or higher. Debt-to-income ratio must be 43 percent or less. Generally, the borrower shows high cash reserves, according to the Lenders Network.

 

Negotiation: Tips for buyers and sellers

At the most basic level, home sellers and buyers want the same thing: A good price and a smooth deal.

But between price and smooth, there is a lot of wiggle room and emotion.

The key points for a seller, according to Zillow.com:
– A full price or higher
– A pre-approved buyer
– Smooth timing for a move
– Sellers may also want buyers to either waive an inspection or be responsible for any repairs.

Before negotiations, the best idea for sellers is to carefully calculate what they need from a buyer.
– Minimum amount of money you’ll need, considering outstanding mortgage, any debt you want to clear up, or money for a down payment on another house.
– Decide what personal property you want to go with the house and what you don’t want to include in the deal.
– Know how much it will cost to stay in the home during any transition time. This can help in negotiations since a buyer who wants to quickly take possession might save you money. Or, on the other hand, a buyer who will work with you on timing might be preferable. These considerations can help you choose between offers.
Key idea: Know exactly what you need and don’t rush into a deal if you don’t have to.

Negotiation tips for buyers:
One key idea to remember: Don’t start negotiations too low.
Case in point: Heirs are selling a 40-year-old home on wooded acreage. The home will need treatment for mold, new carpets, deep cleaning, and some new fixtures, but the bones are good. The sellers have priced it on the low-end for comparable homes. The listing agent quickly gets two offers. One for $5,000 less than the list price, and one for the list price. It’s October and the heirs want to sell quickly. They don’t want to take the chance of maintaining the home through the winter when home sales are slow. The buyer offering full price is ready to move in immediately and agrees to do so. The sellers accept the full price, rejecting the lower one without negotiation. The unsuccessful buyers lost the home they wanted over a mere $5,000, which on a 30-year loan amounts to just a few dollars a month.

According to credit.com, going in with a too-low offer accomplishes nothing. While a potential buyer can’t always know how their offer will be accepted, it’s probably not a good idea to offer a lower price if the property is already priced reasonably. The exception may be a foreclosure or a slow market, when sellers might be highly motivated to sell.

 

Small business risk: Fire ranks high

Going into business is heavy with financial risk but, once in business, natural disasters or unforeseen problems can create catastrophe.
Fire ranks high as a potentially devastating risk for business.
More than 75 percent of companies that experience a serious fire go out of business within three years of reopening, according to Phoenix Fire Protection.
Proper insurance can cushion destruction of assets and business interruption costs, but it won’t stem loss of customers, employees and data.
Of these three risks, data loss may be the easiest to mitigate.

* Daily off-site backups are key. On-site backups may seem sufficient unless a fire begins on the weekend or a holiday.

* Check backups regularly.

* Make sure at least two people know how to retrieve backups.

Make a pre-fire or disaster plan: Some of the questions you can ask:

* How can you protect IT equipment from fire or other disasters? If you can’t protect equipment, how will you replace it after the emergency?

* How will you retrieve data? Who will do it?

* Where will you operate? Will you need a generator for electricity? If so, where will you get the fuel to power the generator?

* What are the steps you will take to replace inventory? Is it necessary or possible to insure inventory? What is the worst-case scenario if it isn’t insured?

Michelin’s 3-D printed tire could be the future

Flat tires, blowouts, and even putting air into tires could one day be obsolete if Michelin’s concept for a new tire makes it to the mainstream. According to Engadget, the company has designed a prototype of a tire that can be printed in a machine, retreaded without replacement after it gets worn down, and is made using sustainable materials. All of these factors would lead to a tire that is cheaper, safer and more versatile for the consumer than the products currently on the market.

With the new design, there is not a separate wheel and tire but rather one object constructed with a web-like pattern of rubbery material that supports the exterior tread. Because of this feature, the tire does not require any air and will be impervious to nails and other objects that can easily cause a flat with today’s vehicles. Although it is a long way off, this concept paints a bright future for the auto industry’s lessened impact on the environment.

Is it better to buy or rent a home in retirement?

The kids are gone, the house is paid for, and you are ready for retirement. The question is whether keeping the house is the best idea.

According to USA Today, as many as 46 percent of seniors aged 65 or older are deciding to rent a home rather than buy a new house or keep their previous one.

There are pros and cons to each option.

For someone who already owns their own home with no monthly mortgage payment to worry about, it might seem an obvious choice to keep the house. According to the Motley Fool, this house can be used as a source of income in retirement through a line of credit or a reverse mortgage if there is a sudden need for extra money. On the other hand, annual upkeep eats up as much as 1 percent to 4 percent of the value of the house each year. These expenses can add up quickly on an older home. Then there are property taxes and homeowner’s insurance. Meanwhile, it is entirely possible that a housing market crash could erode the value of the home right when it is needed the most.

On the flip side, selling a home near or during retirement when the market is priced right could add a lot of cash flow and savings to draw from in the event of an emergency. The idea here is that cash can be invested and might be worth more over time than the house’s appreciation.

Kiplinger’s took a look at several scenarios involving home ownership, selling, and renting to decide which option made the most financial sense. They determined that in the short run renting was the better choice while buying a new home was more profitable after ten years or more. They also noted that it could be possible to pay yearly rent with interest gained from investing profits from the sale of a home.

Remember too that retirement is also about freedom. Separate from the financial aspects, renting a home could allow retirees to move around to different parts of the country more easily rather than worrying about having to sell or maintain a house from a distance.

How to buy a home when there aren’t many on the market

In economic parlance, many describe today’s housing market this way: demand is high and supply is low. In practical terms, this means there are more buyers than homes for sale. While this isn’t true in all areas of the country, it is true in many areas.

According to USA Today, there was a 4.3 month supply of homes nationally in August of 2017. That means it would take a little more than four months to run out of homes for sale if no other homes came on the market. This number was down from earlier in the summer when there was a 4.6-month supply. The normal number of homes for sale is a 6-month supply.

Why is supply of homes for sale so low? Baby Boomers don’t want to sell, according to USA Today. A recent realtor.com survey showed that 85 percent of Baby Boomers aren’t selling but 60 percent of millennials are.

In this market, sellers may easily get the price they want, but buyers must have all their shingles in a row these days.

Here’s how you have the best chance of snagging the house you want:

*Get your financing ready
First get pre-qualified for a loan. This is an informal process where you visit with various lenders, giving them an overview of your financial situation. The lenders can then give you an idea of how much you can borrow and an idea of interest rates. But, beware, this is not a promise to loan you the money. It merely gives you working numbers.

*Shop around
The good thing about pre-qualification is that you can start shopping around before you are ready to buy. You can get an idea of what you can afford and what you want in a house. Even if this isn’t your first time in the market, don’t skip the growing period, according to USNews. If you have been out of the market for more than a year, then you don’t know what is out there.

*Get pre-approved
When you know you want to take the plunge, get pre-approved for a loan. At this point, you should have an idea of which lender you might want to use. The lender checks your credit, verifies employment, and confirms your ability to qualify for a mortgage. With a pre-approval in hand, you are ready to make a credible offer when you find the home you want.

Never use a Roth IRA as an emergency fund

Roth IRAs are unique retirement tools in that they allow the owner of the account to withdraw their original deposits from the account at any time without penalty. Because the accounts are funded with after-tax money, Uncle Sam doesn’t have to worry about getting a cut as money moves in and out of the IRA. This feature could lead some people to use their Roth IRA as a sort of emergency fund if they have no other savings to draw from.

According to The Simple Dollar, however, it is not a good idea to use the account in this way because most of the gains will be lost with a withdrawal and only so much can be contributed over a lifetime. Say that a 25-year-old deposited the $5,000 yearly limit and wanted to see how much this would turn into when they retire in 40 years. At 7 percent interest compounded annually, there will be $74,872 when they turn 65. Taking that $5,000 back out when they are 30 to cover an emergency will result in only $21,489 over the same time frame. Taking money out early might sound good in the short term, but it will be disastrous for long-term financial security.

Besides Insurance, How Can a Business Prepare for a Hurricane?

Besides Insurance, How Can a Business Prepare for a Hurricane?
By M Wyzanski

Any insurance professional will stress the importance of a good commercial policy that includes wind and hail as well as flood coverage in relation to protecting your business from the elements. Case in point is the fact that many stricken by current hurricanes do not even own flood insurance.

We won’t get into the implications of damages and losses recovery in regard to this unfortunate set of circumstances. Suffice it to say, in wake of the destruction, these home and business owners have to deal with the financial stress on their own, save for whatever government assistance they can get.

Besides having a proper insurance plan in place, businesses can prepare for the worst weather scenarios by doing the following.

Review your company’s impact study:
• Make a tally of what type of losses you may incur.
• Consider the amount of risk loss and severity probability that may impact your business.
• Look over your business process flow agenda: Should one portion of your company become unworkable, assign another unit to take over.
• Choose which operations are vital for continued survival and recovery.
• Ensure all records of sales and customer-base, as well as tax data and documents are stored in a secure off-site location.
• Assign others to take over executive management if those in place are not able to carry out duties.

Partner with Other Businesses
• Have vendors ready to outsource services in case of a hurricane disaster.
• Mark down important vendor and business partners and store this info in an off-site multiple employee-accessible location.

Make Alternate Plans for your Facility
• Contemplate the use of other locations in the event your main office is rendered inaccessible or inoperable.
• Plan for security of people and property.

Ensure Payroll Efficiency
• If it is pertinent, ensure the vendors you will deal with understand how to continue with payroll.
• Partner with your vendors to ensure employee info is stored securely in an off-site location.

Team up with Other Operations
• Group together with other corporations at your building site to prepare for continued business in a weather-induced crisis.
• Reach out to emergency personnel and power companies to show them how your operations are conducted.
• Devise a plan together with your suppliers, shippers and others you rely on so that you will know how to carry on in the event of an emergency.

Keep Up with Your Protection Plans
• Review your plans on how to deal with an emergency situation yearly. Revise them if you feel changes need to be made.
• Conduct consistent emergency drills.
Risk control is part of any major insurance company’s policyholder’s benefits. Contact an independent agency that does direct business with many of the leading providers for more information on how your company can protect itself from a hurricane or other natural disaster.

Article Source: https://EzineArticles.com/expert/M_Wyzanski/2158115

Flood Insurance, Even in a Non-Flood Zone? You Bet

By M Wyzanski

Record breaking flood waters have emerged following one of the most devastating hurricanes the US has come to know. In fact, in the southeast areas of the lone star state, the majority of homeowners do not even own flood insurance. And who can blame them? There was never a precedent in the locality. Although hail and wind storms are a constant concern for property and business owners, no one imagined that rain waters would contribute to enormous damages as those suffered and broadcast throughout the country in recent days. Surely not the home mortgage companies, for they do not even require it from borrowers!

But now that the toll has risen among the dead and those forced out of their homes seeking shelter, one thing remains clear. When things eventually do settle down, home owners and people in the commercial sector will have to deal with the epic losses and damages on their own because of a lack of related coverage.

For homeowners without flood coverage the facts are uncomfortable, as they are painful: a standard home insurance policy does not protect from floods and the damages related to them. The insurance industry stresses in no uncertain terms that compensation is only provided to those who had the foresight to acquire flood insurance in the event of water damage emanating from atmospheric conditions like a hurricane, a tropical storm or other inclement weather.

A little history about Flood insurance:
The year was 1968 when the US Congress mapped out its flood program. Designed to help assist home and business property owners from the financial ravages of a damaging flood, its policies are offered in all communities that are involved in the rules of participation.

Flood coverage shields property owners or renters from building damage and contents damage.
This includes the following:
• The structure, as well as building foundation
• Electric and plumbing systems
• Central air conditioner, furnace, water heater
• Refrigerator, stoves, and any installed appliances, like a dishwasher
• Carpet that has been installed over bare flooring
• Personal clothing and electronics
• Drapery
• Transportable heaters and air conditioners
• Carpeting other than what is included in the property coverage
• Washers and dryers

Typically, flood recompense claims include:
• Replacement Cost Value: up to eighty percent of the amount needed to replace property damages in a single-family, primary residence
and
• Actual Cost Value – replacement costs at the time of loss reduced by physical depreciation

Note: The flood program always uses actual cost value to determine reimbursement of personal property.

Article Source: https://EzineArticles.com/expert/M_Wyzanski/2158115

Note from InsureUS: As a result of Hurricane Harvey and the horrific devastation caused by flooding in Harris and surrounding counties, floodplain maps will likely be revamped in the near future, which means rates for flood insurance could be on the rise. If you believe your home may be in a period that will be on the new floodplain map, NOW is the best time to act on it as the rates will go up after the new maps are created. Call InsureUS today at (281) 640-8888 for your quote.

Visa campaigns for cashless small businesses

Money talks to small business and one credit card company is speaking loudly.

Earlier this year Visa unveiled a campaign to encourage small business food service owners to stop taking cash as payment. The effort highlighted the continued move by merchants to make it easier for customers to pay with credit cards, and now even digital currency, like Bitcoin.

For Visa’s campaign, small business food service owners who committed to join its 100 percent Cashless Quest could be awarded up to $500,000.
According to Visa, 70 percent of the world’s people, or about five billion, will have a connected mobile device by 2020.

That is an “incredible opportunity to educate merchants and consumers alike on the effectiveness of going cashless,” Visa noted.

The card company’s campaign was a call-to-action for small business restaurants, cafes, and food truck owners to describe what cashless meant for them, their employees, and customers. It also highlighted the opportunities for small business merchants.

Visa found that if businesses in 100 cities switched from cash to digital, their cities stood to gain $312 billion of savings, largely in the form of labor costs.

Small food service businesses already have been making the move away from cash with the explosion of easy ways to accept with credit cards. Now that tide is even turning as people take advantage of digital currency, like Bitcoin, to make their purchases. The number of ways for merchants to accept digital currency is growing, as Bitcoin, and other types of cryptocurrencies, shed their negative reputations.