When is home insurance a requirement?

Anyone that lives in the Cypress, TX area should consider purchasing their own home. When you are a property owner in this area, you can benefit a range of different ways. While there are a lot of advantages that come with buying a home, you need to understand your insurance requirements. There are several situations when you will need coverage. 

When Taking out a Mortgage

One situation when you will need to get home insurance is when you pledge your loan as collateral to another party. If you take out a mortgage, a home equity line of credit, or another type of loan, the lender will want to make sure that their collateral is secure. The best way that they can do this is by ensuring you have home insurance at all times. It is important to work with your lender to fully understand their home insurance requirements.

When Moving into an Association

Another situation when you will be required to take get a home insurance policy is when you are going to move into an area that has a home association. If you move into an area with an association, the local document and regulations will require that you carry insurance at all times. This will provide assurances to the association that you can handle any liability claims and repair your home when necessary.

Ultimately, picking a new home insurance policy is always going to be a big decision. For those that are in the Cypress, TX area, and are looking for insurance, InsureUS is a great company to contact. The team at InsureUS excels at helping property owners understand all of their needs and options. This will help ensure you have a guide that can allow you to pick a policy that provides you with the right coverage. 

Millennial buyers want the “goods” delivered!

Millennials are buying homes, and it’s probably fair to say, they would like that deal delivered.
Those people born between 1980 and 1999, made up the largest share of home buyers last year (37 percent), according to data from the National Association of Realtors. Of those, 86 percent of younger millennials and 52 percent of older millennials were first-time homebuyers.
Millennials want different things from previous generations. While previous generations might have wanted to get away from the city, millennials are just as likely to want to be in it. So, if the city has spread out toward your once-suburban home, don’t be afraid to emphasize the location. Millennials want short commutes. They don’t like lines. They want everything delivered and that includes all the services of the city from groceries to fine dining or even fast food. They want lots of choices in restaurants and bars, and nearby entertainment.
According to the National Retail Federation, millennials are in a hurry. Millennial buyers don’t house shop casually. They are internet savvy and accustomed to doing research online. More than 80 percent of millennials look for a home on a mobile device.
Millennials are less likely to care about square footage than other generations. They prefer home features: Garages that double as recreation rooms, designer laundry rooms, and walk-in pantries that hold food, wine, and appliances.

Mortgage rules for condo buyers

No, for the buyer, the same rules that apply to any mortgage apply to a condo buyer. Keep in mind that in calculating your debt-to-income ratio for the loan, lenders will count your condominium fees as part of your total monthly expenses.
A condo mortgage is different because the building itself has to qualify for the loan.
Generally, lenders won’t make a loan on a condominium that is in poor financial shape or poorly maintained. It has to be a properly run residential building.
The lender looks at the condo association records to make sure it is sufficiently insured, isn’t being sued, and residents are paying their dues (no more than a 15% delinquency).
Lenders also want to make sure the building is residential, with at least 50% owner-occupancy. They don’t want to see stores or hotel rooms. They don’t want to see condo units sold as time shares.
Finally, at least 90% of the units have to be occupied.
If the condominium project is established and known to meet guidelines, and you are a credit worthy borrower, you will probably have little difficulty getting a conventional loan.
You might want to do a little extra research, however. Remember that when you buy a condo, you are buying into the Homeowners Association and you are sacrificing some privacy for convenience. It’s a good idea to take a look at the minutes from the HOA meetings to see the sorts of issues being discussed.
When the building qualifies and you find the property suitable, financing a condo should be much the same as a conventional home.

What is a lease-to-own, and is it a good idea?

A lease-to-own, also commonly referred to as a rent-to-own or a lease option, is an arrangement between a buyer and a seller in which the seller leases a property for a set period of time, at which point the buyer typically has the option to purchase the property outright (sometimes a contract legally obligates the buyer to purchase).
Nearly everything in this type of contract is negotiable. Often, the seller agrees to set aside a portion of the monthly payments toward a down payment or equity in the home.
It’s also important to note that this is commonly used as a short-term agreement — a few months to a few years — and that, at the end of the lease period, the buyer needs to obtain a traditional loan.
So why would either side consider a rent-to-own scenario?
A buyer may need time to put away money for a down payment and/or to build up their credit. Perhaps they’re self-employed, for example, and need a few years’ worth of tax returns to demonstrate income stability to a traditional bank. Or they have less than stellar credit and simply need time to repair it.
A seller might like the idea of locking in a purchase price and collecting monthly payments along the way. Say the two sides agree to a three-year term with a purchase price of $170,000. If the buyer pays $1,000 a month, the seller collects $36,000 and still sells for $170,000 at the end — which, even after expenses, can net the seller a nice profit.
A lawyer who’s well-versed in real estate law is usually the best person to review, if not draw up, the contract. And buyers should keep an eye on building their reserves and credit so they can qualify for a mortgage that will allow them to take ownership at the end of the term.

Tips for managing contractors

As much as we love our home renovations, there’s no denying that the process can nevertheless be a stressful one. Some of that is due to the myriad of details, ranging from large choices like siding color and style to the smallest, like door stops or light covers.
And a good chunk of the stress can come from working with contractors. From personality styles to deadline stress, the homeowner-contractor relationship can be a tricky one.
To keep a project running smoothly and to reduce stress, consider these tips for working with a contractor:

  • Communicate clearly and in detail. From the first walk-through to the final check, make sure you are clear in your expectations and goals. Put it all in writing, from the paint finish and number of coats to the projects a contractor needs to complete before getting that next check.
  • Speaking of milestones — never get ahead on the money. In other words, pay the contractor enough to cover materials and some of the early work, and then draw up milestones that serve as a carrot. This is fair to both sides: the contractor isn’t working for free, and you aren’t in a position to lose money should a worst-case scenario happen, and the contractor stops showing up.
  • Get referrals and visit construction sites. Any reputable contractor will gladly hand over referrals and welcome you to their job site. This gives you a look at finished projects as well as their style with in-progress work.
  • Get multiple estimates. This may not be necessary with a small project — you probably don’t need three estimates for someone to install a toilet — but you should always get estimates from multiple contractors for mid-sized to large projects. Not only do you get a better idea of the price, but you could be surprised at how differently contractors may visualize the same job.

What to consider when getting out of a rental and taking a mortgage

You have many factors to consider in your journey to home ownership.
Here are some basic considerations:

  • If you can make a down payment of 20 percent, whatever mortgage you choose, you won’t have the cost of mortgage insurance added to your monthly payment. Many buyers can’t come up with the large down payment, but mortgage insurance is only charged by mortgage companies until equity reaches 20 percent.
  • Many conventional mortgage lenders ask for 5 percent to 10 percent down.
  • What is your credit score? To qualify for a conventional mortgage, you need a score of 620 to 640 or higher. But if your score is at least 580, you can still quality for an FHA mortgage.
  • The big advantage of an FHA mortgage is its low down payment requirement, just 3.5 percent. They account for 30 percent of all mortgages today. But if you have to move in very soon, beware, it takes a longer time to get one.
  • If you have a credit score lower than 580, you still might be able to get an FHA loan with 10 percent down.
  • How long will you stay in the house? If that might be for just a few years, an adjustable rate mortgage might be a good choice. Consider it if you are in the military, your job requires you to move every few years, or if this is just a “starter house” for you.
    If you plan to live in the home for a lifetime, a 30-year fixed rate, or a 20-year fixed rate, would be better. Or, if you can afford the higher payments on a 15-year fixed rate mortgage, you’ll get the best interest rates of all.
  • The VA loan is for service members or (this is important), for former service members.

How did the rate cut affect mortgages?

Technically, The Fed’s decision in July to lower interest rates by a quarter-point doesn’t directly affect mortgages. In reality, there are usually some things to keep in mind with any rate decrease or increase.
The Federal Funds rate is a measure of short-term borrowing, or the rate that banks use to lend money to each other. Mortgages are long-term notes.
If you have an adjustable-rate mortgage, you’ll probably see your interest rate go down when there’s a cut. To put that in perspective, a Bankrate article said that a HELOC (home equity line of credit) of $100,000 rises or falls about $250 a year with every change of 0.25 percent in interest rate, up or down. That works out to about $21 a month.
Additionally, variable-rate mortgages usually adjust annually, on their anniversary dates, and some don’t adjust at all for the first two to seven years.
However, this could be a good time to refinance into a fixed-rate mortgage and lock in the historically low rates. The average rate on a 30-year mortgage fell to 3.75 percent, down from a high of almost 5 percent in 2018.
Do a little math to figure out your savings over time, as well as closing costs, to determine whether this is a good move for you.

Hot trend: Build to rent

An interesting real estate trend has cropped up in recent years: while demand for rents has stayed strong, consumers have also turned their attention to single-family homes.
Renting is like having a home without the commitment. Or living in a home but retaining the agility to up and move quickly.
As prices of single-family homes have risen and lending remains strict, down payments and loans have become harder to come by. Add in Millennials, a generation of buyers with sometimes staggering student loan debt but growing families, or Baby Boomers, who don’t want the headaches involved with homeownership.
Flexibility and mobility have become the driving force.
Now, builders and investors are building single-family homes with the intent to rent instead of sell. In one of the bigger moves nationwide, Toll Brothers announced earlier this year that it had committed to invest $60 million in a $400 million venture that would build homes for rent in seven major U.S. cities.
An article in CNBC this summer called the built-to-rent (or B2R), the fastest-growing trend in real estate. Last year, about 43,000 single-family homes were built for rent, it said. And the built-for-rent share of housing starts is also rising, to nearly double its recent historical average from 1992-2012.
In Pradera, a gated community of three- and four-bedroom homes in San Antonio, Texas, the rents are $1,800 to $2,300 a month and the community includes a pool, fitness center, community kitchen and party space, plus dog park and dog-washing station. Interestingly, the average annual household income in Pradera is more than $100,000 — meaning many of the tenants can afford to buy but have chosen not to.

Should you refinance your mortgage?

With mortgages still at historically low rates, many people consider refinancing to save money. But is it a good idea? Maybe, maybe not.
Refinancing involves a number of moving parts and some understanding of amortization, so make sure to do your homework. Lenders vary on how long you have to wait to refinance, but you can sometimes do so within a year of purchase.
First, remember that refinancing involves closing costs, which can run into the thousands. So before anything else, calculate how long it will take you to recoup that amount and whether you’ll stay in the house that long.
Do the long-term math. If you are 10 years into a mortgage and refinance for 30, you could very well wind up paying many thousands more over the lifetime of the loan. This is of course a personal decision; sometimes it’s worth it to free up the cash on a month-to-month basis. Just understand the numbers.
Some homeowners refinance and increase their monthly payments — on purpose. You might consider refinancing from a 30-year loan to a 15-year loan to pay off the balance sooner. It’s often surprising how little it takes per month to make this happen.
Another good reason to refinance is if you’re in an adjustable rate mortgage and want to refinance into a fixed rate. This often occurs when rates are rising and you want to avoid the higher costs; if rates are low, it might not be worth the trouble.
Other folks refinance in order to pay off other debt, like credit cards or student loans, or to pay for a renovation project. Again, it’s time to do the math and consider the scenario. Although credit cards usually involve high interest rates, there isn’t much to lose if you default; transferring that debt to your mortgage, however, puts your house on the line.

Sell or rehab? The homeowner’s dilemma

If you are debating on whether to sell or renovate, first ask yourself some questions and then do some math.
First the questions:

  • Do you love or hate your home? If you hate it, will remodeling really make you love it or just hate it less? If you’ll just hate it less, sell.
  • Do you love the neighborhood or hate it? If you hate it, remodeling won’t help. Sell.
  • Do you want more improvements than are reasonable for the neighborhood? Carpet, kitchen, bath, and landscape all recoup costs. But if you want fixtures and amenities that will make your home cost way more than others in the neighborhood, consider moving. You probably won’t recoup the costs at your eventual sale.
    If you decide to remodel, calculate how much a renovation or rehab project will cost. Or should cost.
    Whether you’re debating on hiring vs DIY or deciding between competing contractors, it’s a good idea to understand what you get for the money as well as what constitutes a fair price.
    A few rules of thumb can help, so here are some tips on how to estimate your rehab costs:
    Be wary of finding overall estimates online and assuming they work for you. The cost of materials and labor vary by region of the country, so make sure you’re comparing like with like.
    Know the cost of materials. This is one of the easiest things you can do to prepare. Create a file and visit your local home stores to find the prices of lumber, windows, flooring, paint, and the like.
    Understand the time involved. Have a basic idea of how long it should take to replace a roof or install a window so you can better understand the contractor’s quote. (An entire roof can be done in a day or two, while an uncomplicated window install can be done in a half hour.)
    Accessories add up. Remember to budget for things like cabinet knobs, door hinges, trim, and the like.
    Think in terms of function, not space. If you’re undertaking a larger project and are the one drawing up a Scope of Work, it’s more accurate to calculate by category of professional. A plumber will take care of your kitchen sink as well as your bathtub, for example. This also helps with the flow of a project, as each of these contractors does their work at different stages.