With good reason, there has been a lot of talk in our area lately about insurance. We definitely have a problem. I think it’s a problem that a lot of people are working on.
I received this in an email today “We are wondering how we will ever be able to buy something (financed) and get insurance on it without getting closed out by the bank when no one will insure us.” I realized there are people out there that think that they cannot buy in the absolutely fantastic market because of the insurance issues. So I thought I would post me reply, in hopes that it will encourage others who are thinking about buying, but discouraged because of the insurance issues.
My reply to the email:
It's really not hopeless. I have learned lots of tricks in the past few years. Insurance is available. The first thing you need to do is talk to a lender and see what monthly note you will qualify for, that you also feel comfortable with. Once you know that I can tell you what range you can look in, taking insurance in mind. There are really many things that influence your payment and there are many things that affect the insurance.
The good thing is that rates are at an historical all time low.
Type of financing influences your monthly note.
FHA is the most common type of financing in our area - and you can get FHA around 4% right now.
USDA is available in certain areas. It's available mainly in rural areas but Theodore Highlands is in a USDA area, and parts of Tillman's Corner and Semmes are not, so we have to check the map for USDA. USDA usually saves you money monthly over FHA because there is no Mortgage Insurance Premium added to the note.
Conventional rates are low, but sometimes you need as much as 20% down.
Now for just a few things that affect the insurance portion of your note:
Location
Age of house
Age of updates
Size of house
Construction of house
Extras like alarm systems
Public vs Volunteer fire department
Type of Coverage
So a new or newer brick home south of I-10 is cheaper on the insurance than a 1970s wood frame house north of I-10.
Then, like with car insurance, type of coverage and deductible make a big difference. I'm practically self insured. I have a $5000 deductible and I am insured for 80% of replacement cost coverage. They allow me to do that because I owe less than 50% of what the insurance company says is my replacement cost coverage. So basically if I have a claim they will determine what it will cost to replace it, then they will deduct $5000 and give me 80% of what's left. On a $10,000 claim I would get $3000. But, I'm in a 50s house south of I-10 in a flood zone. With the exception of the flood claim after Katrina I've never made any claims from any storms, so I don't see any reason to pay higher premiums for the privilege of maybe one day making a claim. Also on something they say will take me $10000 to replace I can actually probably do it for $5000 or less, so if they give me $3000 I'm not really out that much. My main issue with the insurance companies is what they say it cost to replace in our area, but that's a whole other soapbox, so I won’t get into that here.
So that's a long way of saying, actually despite the insurance issues now is really one of the best times in recent decades to be in a position to buy property without having to sell property. Here the lender link from my website:
Talk to anyone of these lenders. It's the best starting spot so you can get a good idea of what you can realistically do.
This Blog by: Julie Martin, CRB, e-PRO, Broker/Realtor, Port City Realty, Mobile, AL;
877-880-8110 toll free
251-665-4665 my cell
julie@portcityrealty.com
877-880-8110 toll free
251-665-4665 my cell
julie@portcityrealty.com
You can search for properties from a LIVE MLS here. This search should have accurate information since it is fed directly from the Mobile MLS.
Click here to search a LIVE MLS link from the Baldwin County
No comments:
Post a Comment