What You Must Know About Insurance When Buying a Home

 

Purchasing a home involves getting to know a lot of financial terms and processes that most first-time homebuyers have never been exposed to. One of the most confusing is insurance. If you've never owned a home before, your familiarity with insurance most likely centers around auto insurance, health insurance, life insurance and, perhaps, renter's insurance.

 

Even then, your level of familiarity may be minimal, if you are like most Americans. In fact, a mere 14 percent of those who have health insurance understand even the most basic insurance jargon, such as deductibles, co-payments and co-insurance, according to a study published in the Journal of Health Economics.

 

The various types of insurance required in the average real estate transaction are even less understood, so let's take a look at them and get you up to speed.

 

 

Title Insurance



Title insurance comes in two varieties: a lender's policy and an owner's policy. If you take out a mortgage to purchase the home, your lender will require that you purchase a lender's policy. This protects the lender from anyone else who thinks he is the rightful owner or otherwise has a claim against the property.

Depending on where you live, you may also be required to purchase an owner's title insurance policy. In other areas, the purchase is voluntary.

The issuance of either policy is based on research of the property's title, or the "chain of title" as it is known. The examiner will look at public records, such as deeds, wills and trusts to ensure that the wording is proper and that the names on the documents are correct. She will look for outstanding mortgages, judgments and any liens against the property. She will check easements, look for pending legal action against the property and more.

Should the examiner find problems on the title, they will need to be remedied before the purchase can be completed.

Once the policy is in place, the lender (and you, if you purchase an owner's policy) is insured against unknown heirs coming forward claiming ownership, forged signatures on the deed, mistakes in the public records, and other hidden hazards.

 

 

Private mortgage insurance is something most homebuyers and homeowners would love to get rid of, but it's a necessary evil. Without it, many buyers would not be given a mortgage and thus not be able to purchase a home.

 

PMI is required of borrowers whose down payment is less than 20 percent. Because these borrowers are considered higher risk, the lender needs assurance that it will get its money should the borrower default on the loan.

 

Because the borrower pays the premium (typically added to the monthly mortgage payment), it seems that the lender is the only party that benefits. Keep in mind, however, that without PMI, lenders would demand a 20 percent down payment. Therefore, the cash-poor borrower reaps an enormous benefit.

 

The good news about PMI - at least for those with conventional loans - is that you can request a cancellation of the insurance once your loan balance reaches 80 percent of the original value of the home. Unfortunately, borrowers with an FHA-backed loan are locked into paying mortgage insurance premiums for the life of the loan, if they put less than 10 percent down. Borrowers who pay more than 10 percent, but less than 20 percent, can cancel the mortgage insurance in 11 years.

 

The best people to speak with if you have questions about any type of insurance required during the home-purchase process are your lawyer, your real estate agent and your insurance agent.

 

 

Wow! The Dothan MLS had a good October

October was good enough to bring us within in one sale of 2013 YTD. Hope the trend continues.

 

Market Comparison Report by Price
Dates: 10/01/2014 to 10/31/2014
  10/01/2013 to 10/31/2013
Property Types: Single Family
Areas: ALL

 

  Oct 1 - Oct 31, 2013 Oct 1 - Oct 31, 2014 Difference Percentage
Price Range Units Dollars Units Dollars Units Dollars Units Dollars
0 - 29999 4 65,892.00 5 81,500.00 1 15,608.00 25.00 23.69
30000 - 39999 6 211,915.00 3 107,151.00 -3 -104,764.00 -50.00 -49.44
40000 - 49999 2 93,200.00 8 349,026.00 6 255,826.00 300.00 274.49
50000 - 59999 5 271,674.00 3 159,500.00 -2 -112,174.00 -40.00 -41.29
60000 - 69999 4 263,500.00 3 194,500.00 -1 -69,000.00 -25.00 -26.19
70000 - 79999 2 147,000.00 4 294,900.00 2 147,900.00 100.00 100.61
80000 - 89999 3 245,000.00 6 503,500.00 3 258,500.00 100.00 105.51
90000 - 99999 2 185,500.00 4 378,500.00 2 193,000.00 100.00 104.04
100000 - 119999 6 653,280.00 8 868,170.00 2 214,890.00 33.33 32.89
120000 - 139999 11 1,418,576.00 8 1,036,800.00 -3 -381,776.00 -27.27 -26.91
140000 - 159999 10 1,469,152.00 16 2,405,650.00 6 936,498.00 60.00 63.74
160000 - 179999 8 1,344,869.00 8 1,337,300.00 0 -7,569.00 0.00 -0.56
180000 - 199999 2 369,900.00 5 953,800.00 3 583,900.00 150.00 157.85
200000 - 249999 9 1,976,523.00 10 2,221,885.00 1 245,362.00 11.11 12.41
250000 - 299999 7 1,807,000.00 9 2,429,806.00 2 622,806.00 28.57 34.47
300000 - 399999 7 2,419,183.00 6 2,098,400.00 -1 -320,783.00 -14.29 -13.26
400000 - 499999 3 1,255,500.00 2 852,000.00 -1 -403,500.00 -33.33 -32.14
500000 - 749999 0 0.00 2 1,175,180.00 2 1,175,180.00    
750000 - 999999 0 0.00 0 0.00 0 0.00    
1000000 - 1249999 0 0.00 0 0.00 0 0.00    
1250000 - 1499999 0 0.00 0 0.00 0 0.00    
1500000 - 1999999 0 0.00 0 0.00 0 0.00    
2000000 - 2999999 0 0.00 0 0.00 0 0.00    
3000000 - 99999999 0 0.00 0 0.00 0 0.00    
Totals: 91 14,197,664.00 110 17,447,568.00 19 3,249,904.00 20.88 22.89

 

 

Typically you will first pre-qualify for a mortgage, then get pre-approved before you purchase a home. What is the difference?

  * Pre-qualification: An informal determination by a lender or mortgage broker stating how much mortgage you can afford.

  * Pre-approval: A guarantee in writing by a lender to grant you a loan up to a specific amount.

Find all the homes listed with the Dothan MLS here.

 

September Numbers

Appears the final numbers for September are in. The Dothan MLS sold 18.10 less homes for 25.91 less dollars in September this year than we did in September last year.  I also checked to see how many homes are available for sale in the Dothan MLS and we currently have about almost 14 months of inventory available. Thinking about putting your home on the market? We tell more people your home is for sale. Find your homes value in todays market.

 

 

The chart below shows year to date home sales in the Dothan MLS compared to same period last year. With interest rates below four percent looks like a great time to buy. Currently we have 1187 homes available to choose from.

Market Comparison Report by Price
Dates: 01/01/2014 to 9/30/2014
  01/01/2013 to 9/30/2013
Property Types: Single Family
Areas: ALL

 

  Jan 1 - Sep 30, 2013 Jan 1 - Sep 30, 2014 Difference Percentage
Price Range Units Dollars Units Dollars Units Dollars Units Dollars
0 - 29999 43 864,189.00 46 850,366.00 3 -13,823.00 6.98 -1.60
30000 - 39999 45 1,515,843.00 28 951,849.00 -17 -563,994.00 -37.78 -37.21
40000 - 49999 36 1,594,776.00 29 1,267,120.00 -7 -327,656.00 -19.44 -20.55
50000 - 59999 30 1,656,863.00 33 1,805,665.00 3 148,802.00 10.00 8.98
60000 - 69999 26 1,694,150.00 31 1,989,249.00 5 295,099.00 19.23 17.42
70000 - 79999 31 2,335,642.00 32 2,408,476.00 1 72,834.00 3.23 3.12
80000 - 89999 29 2,485,550.00 38 3,240,495.00 9 754,945.00 31.03 30.37
90000 - 99999 26 2,467,665.00 42 3,999,189.00 16 1,531,524.00 61.54 62.06
100000 - 119999 84 9,224,501.00 76 8,382,444.00 -8 -842,057.00 -9.52 -9.13
120000 - 139999 94 12,202,607.00 90 11,607,780.00 -4 -594,827.00 -4.26 -4.87
140000 - 159999 88 13,189,000.00 71 10,694,325.00 -17 -2,494,675.00 -19.32 -18.91
160000 - 179999 68 11,522,426.00 64 10,863,253.00 -4 -659,173.00 -5.88 -5.72
180000 - 199999 38 7,165,600.00 40 7,533,203.00 2 367,603.00 5.26 5.13
200000 - 249999 78 17,225,325.00 69 15,587,159.00 -9 -1,638,166.00 -11.54 -9.51
250000 - 299999 50 13,498,412.00 65 17,454,776.00 15 3,956,364.00 30.00 29.31
300000 - 399999 38 13,015,459.00 28 9,598,314.00 -10 -3,417,145.00 -26.32 -26.25
400000 - 499999 13 5,635,400.00 12 5,291,729.00 -1 -343,671.00 -7.69 -6.10
500000 - 749999 9 5,273,000.00 9 5,114,750.00 0 -158,250.00 0.00 -3.00
750000 - 999999 2 1,619,000.00 0 0.00 -2 -1,619,000.00 -100.00 -100.00
1000000 - 1249999 0 0.00 0 0.00 0 0.00    
1250000 - 1499999 0 0.00 1 1,300,000.00 1 1,300,000.00    
1500000 - 1999999 0 0.00 0 0.00 0 0.00    
2000000 - 2999999 0 0.00 0 0.00 0 0.00    
3000000 - 99999999 0 0.00 0 0.00 0 0.00    
Totals: 828 124,185,408.00 804 119,940,142.00 -24 -4,245,266.00 -2.90 -3.42

 

 

I understand a seller renting out a home they own for the income. I can also understand why they rent them to assist with paying the mortgage. Most buyers are looking for a home to live in and are not looking for a home that will not be available for months. I would recommend if the seller wants to rent their home and keep it on the market for sale they rent to the tenant on a month to month basis. Sure this does not provide the security for either party. It does however keep the home available for sale. This month I have found a home for four different buyer's they would have liked to make an offer on. They would not because the homes were under lease for several months.

Dothan MLS homes sold July, 2014

The chart below is a comparison of the homes sold in the Dothan MLS by price for the month of July. Thankfully we sold a few more than last year for the month. YTD we are slightly behind production for last year.

 

Market Comparison Report by Price
Dates: 7/01/2014 to 7/31/2014
  7/01/2013 to 7/31/2013
Property Types: Single Family
Areas: ALL

 

  Jul 1 - Jul 31, 2013 Jul 1 - Jul 31, 2014 Difference Percentage
Price Range Units Dollars Units Dollars Units Dollars Units Dollars
0 - 29999 8 170,080.00 8 137,770.00 0 -32,310.00 0.00 -19.00
30000 - 39999 5 170,850.00 1 30,000.00 -4 -140,850.00 -80.00 -82.44
40000 - 49999 1 44,550.00 4 184,900.00 3 140,350.00 300.00 315.04
50000 - 59999 2 106,000.00 4 212,000.00 2 106,000.00 100.00 100.00
60000 - 69999 2 130,000.00 2 128,600.00 0 -1,400.00 0.00 -1.08
70000 - 79999 5 379,900.00 3 228,900.00 -2 -151,000.00 -40.00 -39.75
80000 - 89999 3 262,900.00 4 332,500.00 1 69,600.00 33.33 26.47
90000 - 99999 3 290,900.00 3 294,400.00 0 3,500.00 0.00 1.20
100000 - 119999 8 855,500.00 8 861,000.00 0 5,500.00 0.00 0.64
120000 - 139999 17 2,260,800.00 13 1,677,700.00 -4 -583,100.00 -23.53 -25.79
140000 - 159999 10 1,504,900.00 11 1,650,000.00 1 145,100.00 10.00 9.64
160000 - 179999 10 1,676,100.00 16 2,722,400.00 6 1,046,300.00 60.00 62.42
180000 - 199999 3 575,400.00 5 945,900.00 2 370,500.00 66.67 64.39
200000 - 249999 9 1,973,900.00 10 2,273,769.00 1 299,869.00 11.11 15.19
250000 - 299999 7 1,910,500.00 10 2,630,619.00 3 720,119.00 42.86 37.69
300000 - 399999 4 1,495,474.00 2 704,400.00 -2 -791,074.00 -50.00 -52.90
400000 - 499999 3 1,279,500.00 0 0.00 -3 -1,279,500.00 -100.00 -100.00
500000 - 749999 0 0.00 0 0.00 0 0.00    
750000 - 999999 0 0.00 0 0.00 0 0.00    
1000000 - 1249999 0 0.00 0 0.00 0 0.00    
1250000 - 1499999 0 0.00 0 0.00 0 0.00    
1500000 - 1999999 0 0.00 0 0.00 0 0.00    
2000000 - 2999999 0 0.00 0 0.00 0 0.00    
3000000 - 99999999 0 0.00 0 0.00 0 0.00    
Totals: 100 15,087,254.00 104 15,014,858.00 4 -72,396.00 4.00 -0.48

Your Credit Report affects your ability to get a home loan.

Your credit score is a grade for your credit history. The score is driven by your credit report. When buying a home the underwriter reviews your credit report to determine are you credit worthy. Your credit history is compiled into your credit report.

Borrowers who have made payments on previous and current obligations in a timely manner represent a reduced risk. On the other hand, if you have been irresponsible and have continuous slow payments, judgments, delinquent accounts, etc. on your report you will most likely need to clean up your credit report to obtain a home loan.

Your credit report is similar to a crystal ball for the loan officer.

Some banks are lowering FICO score requirements

Daily Real Estate News announced some banks are lowering the FICO score requirements. One bank is approving loans for scores of down to 550. If you have tried to buy a home and could not get a loan due to your credit score it might be time to try again.

 

Thinking about buying a Dothan area home and need a loan. Below are things needed when applying for a loan.

  1. Addresses- Landlord's name & addresses or lender & loan number for past two years.
  2. Name, address& phone numbers for each employer-past two years
  3. Gross monthly salary, YTD pay stub& past two years W2's.
  4. Check & saving, retirement accounts-last two month statements
  5. Debt- Name, address, account numbers, balance & monthly payments on all outstanding loans & credit cards
  6. Loan information, market value, & addresses on all real estate owned; copy of leases if rental properties
  7. If self employed- tax returns for past two years. (Signed all schedules)
  8. If commission, interest, or bonus income received- tax returns for past two years
  9. Completed signed sales contract
  10. Up front fee for appraisal, credit report, and flood certification
  11. Veterans- DD 214& Certification of eligibility
  12. FHA- Picture ID & Social Security Card

 

Fannie Mae is offering cash incentives

Fannie Mae has a large inventory of foreclosed homes they want to reduce. To help move them through the system Fannie is offering cash incentives toward closing of 3.5% of purchase price. This offer is available as follows:

During the First Look period(first twenty days after listing).

Initial offer must be submitted no later than March 31, 2014.

Close by May 31, 2014.

Bids must indicate up front the buyer wants to be considered for a closing cost discount.

Available to owner occupants only.

Buyer must commit to live in the home as their primary residence for at least a year.

Buyer must be able to qualify for mortgage financing.

Shop for financing just like you would for any other home. You will need a preapproval letter.

Call Bobby 334-701-1102 with questions.

 

FHA Trims Waiting Period

For case numbers assigned after August 15, 2013 and effective through September 30,2016  FHA may be more lenient with borrowers who went through a bankruptcy, foreclosure, deed-in-liey, or short sale.

There are some qualification requirements including why the event occurred and credit history since the event.

Criteria for satisfactory credit history includes twelve months of good payment historyon payments such as a mortgage, rent, or credit account.

You may can purchase a home sooner than you thought. Check with your mortgage advisor. One of our partners is Lisa Shockey with Interlinc Mortgage. 

Stone Creek Landing

Stone Creek Landing is a unique subdivision for the Dothan area. Residents own the interior of their home. The exterior and the building itself is owned by the homeowners association. HOA dues vary around $160 a month and includes homeowners insurance. Common areas include a clubhouse, walking trails, swimming pool, and fish ponds. Lawn maintenance, common areas, and the home exteriors are maintained by the home owners association. There are some single family homes with mostly quadraplexes. You never know your neighbors are there.

The subdivision is fenced. If you are looking for a home with no maintenance where you can live full time or feel your home is being looked after while you are away Stone Creek Landing will be a great place to call home.

View the Homes Available in Stone Creek Landing.

 

Dothan Real Estate Northside Subdivision

Northside Subdivision or Emerald Lake Subdivision as it is most commonly referred to , was established in 1968. The natural spring fed lake is a haven for geese, turtles, red birds, chipmunks, and several species of fish. The lake was donated to the City of Dothan by the residents of Northside for maintenance purposes. The neighborhood most recently placed benches aroud the perimeter of the lake to enhance the beauty of the lake.
The neighborhood holds annual hotdog suppers, bake sales, Christmas open house, and other activities throughout the year such as Halloween parties for the residents. This is all sponsored by the neighborhood “Garden Club”, not a HOA. Membership is not required, but the benefits of being a member are wonderful.
The residents of Northside are friendly and take pride in their home, yard, and neighborhood. “Yard of the Month” contest are held each month for the prettiest yard. There is also a Christmas lighting contest held annually.
Northside subdivision is a hidden treasure in Dothan. Located on the north side of Ross Clark Circle, shopping and dining is very convenient. Wiregrass Commons Mall and the U S Postal Service are well within walking distance.

Very few homes are for sale in Northside subdivision. Check out the Homes available in Northside subdivision.

 

Dothan Real Estate Grove Park

Grove Park's treelined streets with sidewalks, large play areas, convenience to everything, charming front porches, and friendly neighbors have made Grove Park Dothan's most popular subdivision. Grove Park is of three parts. The original Grove Park is mostly cement fiberboard siding, Grove Park Township is mostly painted brick, the third part is Longleaf Green. Grove Park Township has new construction still in progress. You can find pre loved or brand new homes. Check out the homes available Grove Park Homes For Sale">Grove Park Homes For Sale.

Price your home correctly

Pricing your home correctly when listing makes you money in most cases. The market determines the value of your home. Your agent should be showing you comparable sales to help you determine list price. The closer you can set the list price to actual sale price the quicker the home will sale and the more money it will sell for in most cases.

I ran the numbers for homes sold in Grove Park the past twelve months just to see if there was a price difference in those homes sold without having a price change and those that sold after one or more price changes. I did not include any new construction.

Results show;

Homes sold without a price change sold in an average of 92 days for an average price per square foot of $107.68 at 94.67% of original list price.

Homes sold after at least one price change averaged 220 days for an average price per square foot of $102.14 at 91% of the original list price.

Pricing the home too high when listing stretched the sale time by an average of 4 months and cost the seller an avarage of about $10,000 more than had they priced the home correctly up front. To find the value of your home for free visit HouseValues.com and complete the requested information.

 

Banks or their representative cost them money.

Closed on a home today for seven thousand less than another couple offered back in July. The couple who made the first offer had their offer contingent upon their satisfaction with the home inspection. The inspector found way too many issues. The couple still wanted the home but not at the agreed price. We asked for a reduction and the bank refused. Here we are six months later and they sold the home to another couple for seven thousand less than the first couple would have paid would the bank have worked with them.

 

Dothan Area Homes For sale

We kicked off 2013 with 1210 single family homes available in the Dothan MLS. Back a few months ago we exceeded 1350. This is a good trend although it would be better if those homes had actually sold. Some expired and some were withdrawn.

Still early to report the sales for 2012. We will post the numbers about the latter part of next week. Looking at the numbers available we will be well below the sales for 2011.

Healthy inventory is 500 to 600 homes. This amount of inventory will provide a good selection for buyers and rotate inventory quickly.

Call/text 334-701-1102 with questions about real estate. We are here to assist.

 

Our Goal

Our goal will be to educate you the consumer whether buying or selling real estate in the Dothan area. We will cover a lot of factors in the process of buying and selling real estate. Along with real estate we will often have local events and news about happenings in the Dothan area.

We are here to assist. Please share questions you may have via email at bobby@DothanRealEstate.us or call/text us at 334-701-1102. Any questions you have someone else also has. We will try to answer here.

We plan to cover a lot of ground. Feel free to tag along. We love company.

Thanks,

Bobby

Bobby Dean And Kimberly Thomas, Berkshire Hathaway HomeServices Showcase Propertie

Bobby Dean And Kimberly Thomas

334-701-1102
334-798-0141

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