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Understanding the Basics of Flood Insurance Coverage

Understanding the Basics of Flood Insurance Coverage 1024 536 John Robinson

Understanding the Basics of Flood Insurance Coverage

So, what is flood insurance, and how does it work?

It seems that almost daily, we see news coverage of one area or another that has been seriously affected by flooding, and you may be asked to obtain flood insurance, or increase the coverage you already have.

So, what is flood insurance, and how does it work? It falls to the Federal Emergency Management Agency (FEMA) to study areas and create flood maps, which indicate the risk of flooding and how often FEMA expects floods to occur.

Based on FEMA’s flood maps, a risk factor is determined, which will in turn dictate the type of coverage required. Homes are categorized as being in low/moderate – or high-risk areas. Premiums are then determined and policies issued through the National Flood Insurance Program (NFIP), which was established in 1968 and renewed in 2012, and is set to expire later this year.

Factors that determine risks when issuing an insurance policy include elevation of the lowest point of the structure, the number of floors, and the age of a property.  Flood insurance is always written as coverage above and beyond traditional homeowners coverage. Typical insurance policies are very specific as to what they will and won’t cover, and often situations that are remotely related to flooding, such as backed-up sewers that happen during storms, may require special riders and premiums.

According to FloodSmart.gov, the average annual premium for a flood insurance policy is $700, and premiums are paid annually, in advance.

Content provided by MiLEND, Inc. 

Two of the Biggest Mistakes Home Buyers Can Make

Two of the Biggest Mistakes Home Buyers Can Make 1024 536 John Robinson

Two of the Biggest Mistakes Home Buyers Can Make

Two things are absolutely vital for home buyers to do before they attempt to finance a home: 1) know and understand your credit profile, and 2) think about how your income could change due to life events in the future. Miss these and they will become two of your biggest mistakes.

Credit reports

Knowing ahead of time what an underwriter will see on your credit report is extremely important both for you and your loan originator; in the event that information is incorrect and needs to be changed, you can do it prior to falling in love with a home and making an offer. If there are errors (and depending on their extent), the process can take up to 60 days, or even longer in some cases.

There many ways to get your credit report pulled. The two best options, however, are to have your mortgage professional do it – even if he or she charges you for the service – or you can approach the credit bureaus (TransUnion, Experian, and Equifax) yourself. There also are websites that promise to pull your report for free, but be cautious – there are scamsters out there.

Shortsightedness

Home buyers often don’t foresee changes in family size or employment status that could reduce your household income and the ability to pay your bills. Plan for a rainy day when you decide the amount you want to borrow; you never know when you might need an umbrella. Your mortgage professional can help you anticipate future changes and plan for them.

Content provided by MiLEND, Inc. 

Low Rates Won’t Last Forever – Prepare Ahead

Low Rates Won’t Last Forever – Prepare Ahead 1024 536 John Robinson

Low Rates Won’t Last Forever – Prepare Ahead

Because interest rates have been so low for so long, you can’t blame people for believing this is the norm.

But families who financed homes in the 1980’s know otherwise. In fact, if it were 1980, you would be looking at mortgage rates that were in the 13–15 percent range, as opposed to today’s rates of 3–5 percent.  Rates can and do swing widely.  While it’s unlikely that rates will increase to this level anytime in the near future, if you’re purchasing a property in 2017 (especially if you are a first-time buyer), you may want to discuss your home financing options with a mortgage professional at MiLEND.

Renters in particular should be concerned about predictions that rent increases nationally are expected to outpace increases in housing prices in 2017; as a renter, at least get a picture from a mortgage professional of the alternatives available to you in the current low-rate environment.  The state of interest rates is really only one factor of many you need to consider if you are buying a home in the near future.

You also need to be aware of other factors that come into play, including your assets and your credit.  Down payments, closing costs, and other expenses incurred in the process require assets; if you need to start saving now, you’ll need to know how much.  And if your credit rating needs attention – such as paying down debt to get your debt-to-income ratios in line, or addressing items on your credit report – start now and you’ll be ahead of the game when you’re ready to launch your home search.

Even if you are planning on purchasing a home within a longer time frame (three to six months), you’ll want to discuss with a mortgage professional what may lie ahead, how to manage your expectations, and what actions to take now.

Content provided by MiLEND, Inc. 

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