Top 3 Ways to Reduce Your Homeowner’s Insurance

Originally posted 2009-01-26 09:24:21. Republished by Blog Post Promoter

The premium for home owner’s insurance is influenced by your credit and the replacement cost for the home.  Since your home owner’s insurance can be part of your mortgage payment it is important to know ways to decrease the premium to lower your  mortgage payment.   There are three ways to decrease you home owner’s insurance:

• Since it may take some time to improve your credit, a reduction in replacement cost is one way to decrease your home owner’s insurance.  Some insurance company can decrease your replacement cost to 80% of the replacement cost.  For instance, if the replacement cost is $100,000 it can be decreased to 80,000 as long as it is enough to pay off the mortgage and help you start over if the home is total loss.  Incidentally, this is not recommended for a long term solution to the increase in mortgage or insurance premium.
• Another way to decrease your premium is to increase your deductible.  Remember on homeowner’s insurance you do not pay the deductible before a claim is paid it is simply deduct from the claim.
• Still yet another way is to decrease your liability coverage.

There is an often overlook way to combat an increase in premium that is to find out what your home owner’s insurance when it is three months before your one year anniversary of the purchase of your home.  Your insurance agent should have your renewal premium amount.   If it is more than one hundred over your previous year premium shop for new insurance by calling other companies and get quotes or ask for the above changes to your present premium.

History Behind a Midwest Town

Originally posted 2009-01-11 10:37:49. Republished by Blog Post Promoter

Did you know that an industy or company could develop a community or city?  In most of the Midwest this was a common practice, hence the development of the community of East Chicago, Indiana.

The city has a history of being described as the “Twin Cities”.  This description was due to the city being divided into as east and west sides by the citizens at the time of inception.  The east side was known as Indiana Harbor and the west side was known as Sunnyside.

East side was comprised of Inland Steel and several other industries, and the west side was comprised of 140th Street North, south of Columbus Drive, west of Alder Street, and east of Cline Avenue.

The city grew and it 1920 had a population of approximately 36,000.  It was in 1920, that the section of Sunnyside was developed as a new community in Indiana Harbor.    This new community was comprised of 100 duxplexes that still stand today.   The homes were owned and rented to Inland Steel employees.   The rent was reasonable, so there was always a waiting list.

As times and financing changed, so did the ownership of the development, in 1963 the Purdue Calumet Development Foundation took over operation of the development.  The Development decided to sale the duplexes in 1969 with Inland employees getting first choice on the purchase of the homes.

With the sale of most of the homes, there was a need to develop more homes in the area.  In 1970, 38 homes were built.  With another eight homes being added to Evergreen Estates in 1974.

With the growth of Inland Street, the company committed to renovating the 100 duplexes in 1971.  This renovation was named the largest renovation in Midwest history.  The homes received many upgrades at the time to include upgrades to the plumbing, electrical wiring, and heating.

In those days, the companies were involved in your life to make your life better on and off the job.  I think that we may be headed by to those times.  Remember history has a habit of repeating itself.

Your Next Closing Maybe Different

Originally posted 2009-02-12 07:00:25. Republished by Blog Post Promoter

At the next closing you attend, you will see a new HUD-1.  The HUD-1 is the 8 by 14 paper that the seller, buyer, and the closing agent all sign to transfer ownership of a property.

The reason for the changes to the HUD-1 was done to allow the consumer the ability to understand the differences between the good faith estimate received at time of application and HUD-1 received on the day of closing.  There are other changes that the HUD-1 will receive, but it is estimated that it may take as long as a year to complete all the updates.  Other changes include:

• improvement to the HUD-1 to make it easier for a consumer to determine the yield spread premium that is to be paid to the mortgage broker
• Still yet, another change will prevent mortgage brokers from changing certain costs that are stated on the good faith estimate. 

Remember to read all documents that you sign when you orginate your mortgage and make sure that you understand your good faith estimate.  The new HUD-1 will help you to easily see if any cost have changed since the orgination of your mortgage so compare the good faith estimate to the figures on your HUD-1.

What is a Land Trust?

Originally posted 2009-01-29 08:00:49. Republished by Blog Post Promoter

Changes to Fannie Mae’s Financing Criteria Affect Investors

Recent changes to Fannie Mae’s financing criteria have created a need for investors to reconsider how they take ownership of their new investor property.   Those changes are affecting investors who finance the property in their portfolio and have those properties under the entity, limited liability corporation (LLC). 

Freddie Mac backs many of the conforming loans on the secondary market, so any changes in the rules is very important and should be headline news; hence, this news release. 

 

The changes are as follows:

• Freddie Mac will no longer approve refinance for any property that has been under a limited liability corporation entity for the previous six months. 
• Freddie Mac is limiting the number of properties the investor can have financed to four not ten as in years passed.

 

Land Trust is Answer to Recent Fannie Mae Changes

  

The ownership option that will combat the change to the financing institutions’ criteria changes is taking ownership of the new investment property under a land trust.  What is a land trust?

 

A land trust is a method of real estate ownership in which the trustee has legal title to the property.   The beneficiary, though, has full power to control the property to include disposing of the property and management of the property. 

 

The trustee for the land trust can be an attorney, law firm, or a bank.  Remember, the trustee holds the legal title.  However, whether the trustee is an attorney, law firm, or a bank, those entities can not act without the written consent of the beneficiary who has full power to control the land trust.

 

 

Benefits of Land Trust

 

The land trust is not only the solution to the changes for financing, but the land trust also has great benefits such as:

• Privacy
• Succession
• Litigation
• Probate
• Flexibility
• Financing
• Asset protection

A land trust is considered to be superior to most business entities such as corporations, limited liability corporation, etc because the land trust has the added benefit of privacy.  The land trust does not have to be registered that means there is no public record of the officers, directors, shareholders, or beneficiary.  The trustee must keep the beneficiary and trust records in a secure location, and the trustee can not reveal the information unless subpoena.

 

Along those same lines, it is recommend that at time of purchase that of the new investment purchase for it to be conveyed directly to the trustee to avoid the owner’s name ever being part of public record.   There is other reasons anonymity or privacy is beneficial.  It can prevent unfair price increases on purchasing of property.  For example, when the land was accrued for the Disney World, Walt Disney used a land trust to disguise his intentions for the usage of the land to prevent increases in the price of the land. 

 

Still yet, another advantage to a land trust is asset protection.  The beneficiary is protected from judgments and liens.  The land trust prevents the judgment to automatic be attached to the real estate owned by the investor since the title is not in beneficiary’s name.

 

However, it is important to note that because the investor maintains control of the trust, the control or interest can be subject to creditor’s claim.  To avoid creditor’s claims, the trust needs to be irrevocable not revocable.   

 

The land trust is flexible because it allows for ease of multiple ownership.   Even though there are multiple owners all owner do not have to sign for the acquisition of a new property just the trustee who has written instruction from the owners sign the documents for acquisition of the new investment property. 

 

The land trust does can not be partition when one of the owners’ part, but the parting owner can transfer part of his or her interest in the trust.

 

The best is advantage of the land trust is ease of succession.  If the beneficiary of the land trust passes away, the interest in the trust is simply transfer via the previous written instructions to the trustee.  This eliminates the need for probate and the lengthy and costly process involve with the probate proceeding. 

 

The beneficiary of the land trust can be an individual or an entity, so if you have a limited liability corporation the LLC can be the beneficiary. 

 

The cost of the land trust may vary, but the investor may be charged as little as $100 to open a trust and $75 a year to maintain the trust for an investment property valued at $250,000.

 

Remember, the land trust is a legal document that must be review by an attorney to ensure that all of your interest is address.  If you have a LLC make sure your LLC has instructions in it as well for your beneficiary interest in the land trust. 

 

 

Learn about the Buying Process (Video Series)

Originally posted 2009-01-20 19:11:27. Republished by Blog Post Promoter

Learn about the buying process through the purchase agrement.

If you are looking to purchase a home, email snorbrown@yahoo.com to get your free list of home for sale in Northwest Indiana and Chicagoland.

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Is a Short Sale The Answer?

There is a Formula to Whether Your Short Sale will be Approved

I have fifteen short sales that I am working on of those fifteen all of the lenders are stating that they need to net a certain amount.  I was beginning to think this was an isolated case until I came across the article at http://latimesblog.latimes.com. 

I discovered from this article that if the seller has a FHA loan, the lender “requires a net of 82% of current market value.  I was relieve to find out it is a formula that the lenders use.

The article went on to state that VA loans are required to net 88% of the current value.  Still yet, the conventional loans are required to net between 78% to 85% of the current value. 

As a homeowner who needs to sell it may be helpful to understand this formula.  Remember, a short sale can save your from a foreclosure as long as the lender can yield enough money from the sale.

Reducing Cost is It a Sin

Recently, I did several post on appealing your property taxes assessment.  Well, today I found an informative podcast at http://www.pepperpodcasts.com/pepper_podcasts/2008/11/pursuing-realestate-tax-assessment-appeals-in-a-down-economy.html that recommend pursuing property tax re-assessment for businesses in this market.  This is along the lines of what I was recommending for your residential properties.  However, I did not mention business properties and the advantages to pursuing a re-assessment of those property taxes.   Sharon and Dusty give great pointers for business owner to help them determine if a re-assessment is necessary for them.    They go on to explain what is a good sign that the owner should consider a property tax re-assessment.

Sharon and Dusty further explain how businesses, industries, and apartment owners need to consider their vacancies and the environment to determine if they need to do a re-assessment.

Lastly, Sharon and Dusty explain how to go about doing the re-assessment.

Good vs Bad in the Real Estate Market

Real estate has had several changes in the last couple of years.  Are those changes for the better or worse?

In most cases, those changes have been for the better.  Despite the tighten of mortgage qualification for getting a loan, a homeowner can rest assure that they can afford the home that they have chosen.   In other words, the lender is ensuring that the income to debt ratio is not dispropositioned to what you can afford to pay.  In the past, only the items on your credit report were considered when purchasing a home not the part of your income you use to run the home ie utilities, grocery, etc.  Now, with the crack down all of that information is considered.

Another way that the changes in real estate has improved real estate is that the value will never again get so over-inflated that individuals can not own a home.  In recent years in some states the only way an individual could own a home was to have an interest only loan.  Those loans are not the best choice if you do not know how they work.  Those loans have negative amortization.  With negative amortization, the homeowner will be forced to make a balloon payment to catch up the prinicipal payment some time in the life of the loan. 

Another important change that this change in real estate has brought is education of the consumer.  Never before has there a need for a revolution to educate the consumer on mortgages, real estate, and even insurance.  This has always been needed, but now more professional are using it.  It has been a  long time practice of mine to include that because an educated consumer can make an educated decision about a purchase that may be the largest one that they make in his or her life time.  It is our responsibility as professionals to empower the consumer with knowledge and not keep things behind closed door.   Thinking about the financial health of my clients have not only made them my clients, but my friends and lifetime clients. 

Lastly, all in all the negative of this time far outweigh the bad, but I wanted to reflect on the good.    Before you take out a loan review your credit, learn about the market, ask questions, and above all read what you are signing.

Does Governor Daniels Have A Reform for This?

Indiana is finally taking steps to help homeowners that are dealing with foreclosures.

What prompt the state to consider legislature for homeowners facing foreclosure is the alarming increase in foreclosure in Marion County.   The foreclosure rate in Marion County increase by 13 percent to a record high of 10,116 properties.  Consequently,  this is only one county statistics it states to reason that the rest of the state’s foreclosure rate has increased by that much or more. 

Even though it seems to be late in the game the state is taking a strong and forceful stand against further damage from the exponential amount of foreclosure through the state.  The state is proposing changes such as,

• notification timelines for renters of properties that are undergoing foreclosure
• avoid companies that acting on the behalf of the mortgage company to foreclosure
• enforcing mediation between the homeowner and mortgage company before the property goes to foreclosure

The above changes to legislature is a welcome and much needed change to help homeowners stay in their homes.  The changes in and of themselves will not solve the problem overnight it will take alot to turn this crisis around.

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