Jeanne Gavish's Blog: January 2011

 All Lender's Require the home you are purchasing to be insured at the time of closing, and during the life of the loan. Here is what you need need to know about insuring your new home, and why and what your lender will require.

Why Do Lenders Require Insurance?

When you borrow money to buy a home the home itself is collateral for the loan in case of default. But when a disaster strikes or a home is subject to a fire, the house may be rendered valueless and uninhabitable. When that occurs the collateral (home value) no longer covers the loan and if the borrower is unable to pay the mortgage payments the Lender is out their investment. So insurance protects the Lender's (and homeowner's) investment.

What is Hazard Insurance?
Hazard insurance is a property insurance that covers the structure(s) for specific types of damage (or causes). Standard Hazard Insurance policies (sometimes referred to as homeowners insurance) cover events such as Fire but may not cover other events such as flood, wind or earthquake. They usually include a liability and home contents policies but the Lender is specifically interested in the Hazard Insurance coverage.

How Much Hazard Insurance Coverage is Required?
Lenders require enough coverage to protect their investment. That is determined by two different factors; the cost to rebuild the home (and additional structures) and the amount of the mortgage loan. The estimated cost to rebuild the home comes from the home appraisal that the Lender requires for financing. Even though the Appraiser's primary goal is to identify the home's market value there is also section of the appraisal report that addresses the estimated cost to rebuild. The lender uses the Appraiser's determination of the cost to rebuild as does the insurance company when they create the policy. The Lender's requirement for insurance coverage may be higher if the amount borrowed exceeds the cost to rebuild. When buying a new home the Lender will require that an annual policy be paid for at the time of loan financing and if insurance premiums are to be paid as part of the monthly mortgage payment, then the lender can also require 2 months of premiums in advance.

When is Flood Insurance Required?
Hazard Insurance policies do not protect against damage caused by floods though they may in some cases cover water damage to a home. Only Flood Insurance will provide adequate coverage. Lenders require Flood Insurance only if the property is contained within a designated flood area or zone. FEMA (the Government agency that handles natural disasters) maintains a map of the entire United that identifies all of the areas that are susceptible to floods. The Lender always requires a Flood Certification document for every home it finances. That document identifies if the property is in a Flood Zone and if so how likely it will flood. That rating gives the Lender the information it needs to determine whether Flood Insurance will be required as a condition of financing. If it is then an annual Flood Insurance policy will need to be purchased at the time of loan closing and 2 months of additional insurance premiums can also be required to be paid in advance.

For More Information About Insurance Requirements and or any other Lending Questions, Call me anytime and I will be happy to discuss your specific needs with you.

Steve Fingerman

Branch Manager

Allied Home Mortgage

4117 Mariner Blvd.

Spring Hill FL, 34609

Office 352-688-7949

Cell    727-946-0904

The National Association of Realtors have published the The 2010 Profile of Home Buyers and Sellers in Florida, which describes the motivations of recent homebuyers and sellers in Florida so real estate professionals can track the changing demands of consumers.  Read on to see who you are:


Characteristics of homebuyers

· Forty-four percent of recent homebuyers were first-time owners compared to 50 percent nationwide.

· The typical first-time buyer was 31 years old, while the typical repeat buyer was 54 years old; nationwide, first-time buyers were typically 30 and repeat buyers were 50 years old.

· The 2009 median household income of Florida buyers was $63,300 - slightly lower than the median income of buyers nationwide, $72,200.

· The median income was $53,500 among first-time buyers and $84,300 among repeat buyers.

· Nineteen percent of recent homebuyers were single females, and 11 percent were single males. Nationwide, twenty percent of recent buyers were single females, and 12 percent were single males.

· For 30 percent of recent homebuyers, the primary reason for the home purchase was a desire to own a home.

Characteristics of homes purchased

· New home purchases were at the lowest level in nine years nationwide - 15 percent of all recent home purchases. But in Florida, 18 percent of homes were new.

· The typical home purchased was 1,800 square feet, built in 1998, and it had three bedrooms and two full bathrooms.

· Seventy-eight percent of homebuyers purchased a detached single-family home.

· The median price of a home was $161,000 compared to $179,000 nationwide.

· When considering the purchase of a home, 73 percent of buyers considered commuting costs very or somewhat important.

The home search process

· For four in ten homebuyers, the first step in the home-buying process was looking online for properties.

· Eighty-nine percent of buyers used the Internet to search for homes.

· Real estate agents were viewed as a useful information source by 98 percent of the buyers who used an agent while searching for a home.

· The typical buyer searched for 12 weeks and viewed 15 homes. This compares to 12 weeks and 12 homes viewed by the typical buyer nationwide.

Home buying and real estate professionals

· Seventy-nine percent of buyers purchased their home through a real estate agent or broker.

· Seven percent of buyers purchased a home in foreclosure - slightly higher than the share of buyers nationally.

· Forty-four percent of buyers found their agent through a referral from a friend or family member.

· Seventy-two percent of buyers would definitely use their real estate again or recommend the same agent to others.

Financing the home purchase

· Eighty percent of homebuyers financed their home purchase compared to a much higher percentage, 91 percent, of buyers nationwide.

· The typical buyer financed 93 percent of their home purchase.

· Forty-six percent of buyers said they made some sacrifices, such as reducing spending on luxury items, entertainment or clothing.

· Twenty-eight percent of buyers reported their mortgage application and approval process was somewhat more difficult than expected, and 16 percent reported it was much more difficult than expected.

Home sellers and their selling experience

· A real estate agent assisted 86 percent of home sellers. Nationwide, 88 percent of sellers used a real estate agent when selling their home.

· Recent sellers typically sold their homes for 94 percent of the listing price, and 63 percent reported they reduced the asking price at least once. Among all sellers nationally, sellers typically sold their homes for 96 percent of the listing price, and 57 percent reduced the asking price at least once.

· Thirty-nine percent of sellers offered incentives to attract buyers, most often assistance with home warranty policies and closing costs.

Home selling and real estate professionals

· Thirty-nine percent of sellers who used a real estate agent found their agents through a referral by friends or family, and 23 percent used the agent they worked with previously to buy or sell a home.

· Eighty-eight percent of sellers reported that their home was listed or advertised on the Internet.

· Among recent sellers who used an agent, 81 percent reported they would definitely (61 percent) or probably (20 percent) use that real estate agent again or recommend the agent to others.

For-sale-by-owner (FSBO) sellers

· The share of home sellers who sold their home without the assistance of a real estate agent was 10 percent, or slightly higher than the national share of 9 percent.

· The primary reason that sellers chose to sell their home using a real estate agent was to avoid paying a commission or fee.

reprinted with permission from Florida Realtors®