When You Can’t Pay Your Mortgage

If you’ve recently suffered a financial hardship- possibly a job layoff or death of a family member- the pressure ofMan with empty pockets making your mortgage payments each month can be very frightening.

If you’re unable to make your house payments, the worst thing you can do is do nothing. Below are some relief options available which can help you avoid foreclosure.

1. Refinance-
If your credit is good, you may be able to qualify for refinancing for a longer term or at a lower interest rate.

If you have not yet missed a payment, visit with your lender to see if refinancing can save you money.

2. Forbearance-
If your financial hardship is only temporary, this may be an option for you. Forbearance includes working with a lender to reduce or suspend your payments so you can get caught up.

3. Loan Modification
A loan modification is simply a change in the terms of the original loan, which can help you to achieve a lower, and more manageable monthly payment.
It’s important to ask a lender about potential affects to your credit score before pursuing a loan modification.

4. Sell your home-
If you can sell your house and net more than the amount you owe, selling your home might be the solution for you. It’s best to visit with a real estate professional to determine the market value of your home as well as the expenses you can expect to incur from a sale. Use those figures against your current mortgage payoff to calculate whether this option is for you.

5. Short Sale-
If the amount you owe on your home is greater than the home’s worth, a short sale may be an option.
With short sales, a homeowner suffering a financial hardship may be eligible for “forgiveness” for some or all of the deficiency.
In most short sale situations, the lender accepts a sale price and a non-collateralized loan for the shortage amount.
The specific terms of the short sale will ultimately determine the degree of impact to the consumers credit history and his credit score.

6. Bankruptcy-
Although not a desirable option, filing bankruptcy can offer debt relief and abruptly stop the foreclosure process. In exchange for a fresh start, those who choose bankruptcy will have their credit score and credit history damaged severely and for a long time.
Bankruptcy may be a desirable option for those suffering severe financial hardship.

7. Deed in Lieu of Foreclosure-
This is a title transferring document signed by a homeowner giving his ownership interests to the bank. Lenders are not obligated to offer a deed in lieu of foreclosure, but may do so after a loan modification or short sale have been denied.
It is extremely important to obtain legal advice prior to accepting a deed in lieu of foreclosure.

8. Renting-
Homesharing is an option if you’re looking to earn extra money to help pay the monthly mortgage. This can be done in a couple of different ways-
– by renting the home out exclusively to a reliable tenant (and you live elsewhere)
– by renting most of the home exclusively to a reliable tenant and you remain in a room of the home in exchange for a small fee
Homesharing involves a great deal of risk and potential liability. If you as the homeowner become a landlord and you continue through the stages of default on your mortgage, you could find yourself in significant financial and legal trouble.

A Basic Guide to Homeowners Insurance

Whether you’re a current or a future homeowner, it’s important to know some basic information about homeownersHomeowners Insurance insurance to ensure you have the proper coverage in the event you need it.

A “peril” is any type of event that causes damage to your home or belongings, such as a tornado or a fire. (Most policies do not include flooding). The perils covered by your insurance are stated in your homeowners insurance policy.

Add-ons or “endorsements” are offered as extra protection to policies which may be lacking. A few examples include: sewer backup, earthquake, or home business coverage.

The different types of homeowner insurance policies available are called “forms”. While you’re reviewing your current policy or shopping for a new one, make sure you understand exactly what is and is not covered.

Here are some general guidelines:

HO-1 Basic form

The HO-1 form is the most basic policy and provides coverage for only the following, basic perils:
Fire and smoke
Hail, windstorm, and lightning
Explosion
Vehicles and aircraft
Civil commotion
Vandalism
Theft
Volcanic eruption

It is a policy often used for catastrophic loss only and is not available in some states.

HO-2 Broad form

HO-2 is a broader type of policy than the HO-1, which covers the same perils as HO-1 plus the following:
Falling objects
Weight of ice, snow, or sleet causing damage
Accidental discharge or overflow of water or steam
Sudden and accidental tearing apart, cracking, burning, or bulging
Freezing of plumbing, heating, A/C, sprinkler system, or appliance
Sudden and accidental damage from artificially generated electrical current

The HO-2 broad form only covers damage resulting from a named peril so any unnamed perils occurring outside those listed are not covered. Personal property may be listed at replacement or actual cash value. HO-2 generally excludes coverage for damage relating to water backup, foundation, or slow leaks.

HO-3 Special form

HO-3 is more comprehensive and is often referred to as an “all risk” policy because it includes “open, unnamed perils” and does not limit coverage to only named perils. HO-3 includes:
The dwelling and private structures connected to the dwelling
Unscheduled personal property on and away from the premises
Loss of use
Personal liability coverage and medical payments

HO-3 is probably the most common policy today. Its coverage applies to the home for open (unnamed) perils, but to the personal property for only named perils. Coverage is additionally excluded for the following:
Ordinance of law
Earth movement
Governmental action
Nuclear hazard
Power failure
War or military action
Water (flood)
Inherent defects
Vermin

HO-4 Tenant’s form
Also referred to as “renter’s insurance”, the HO-4 policy is for tenants and can be written as either an actual cash value or replacement cost policy. It includes coverage for personal property- but not for the dwelling itself. Actual cash value policies use a method of depreciation which means you will only be reimbursed in a claim for the value of the item when it was purchased- not for the cost to replace it.

Most renter’s insurance policies include an amount of liability coverage for legal or medical situations.

HO-5 Comprehensive form
HO-5 is a more elite type of policy that includes a broader protection and higher coverage limits than a typical policy. Not all homes/homeowners qualify for this type of policy. Its coverage applies to the home for open, unnamed perils and to personal property for open, unnamed perils.

HO-6 Condo form
This is a policy designed specifically for condos and most often includes coverage for the walls, floors, and ceiling of the unit. Coverage includes for the interior of the unit and the personal property inside.

The homeowner’s association policy typically includes the rest of the building structure.

HO-7 Mobile home form
An HO7 is similar to that of an HO-1 or HO-3 policy, but is designed specifically for mobile or manufactured homes that don’t meet the requirements for typical homeowner’s insurance policies. It includes coverage for the mobile home structure and adjacent structures as well as most personal belongings. Liability coverage may also be included.

HO-8 Older home
HO-8 is a very basic policy designed specifically for older homes that would be difficult to replace if destroyed- particularly historic homes and landmarks.

Unlike other policies that use the replacement cost method to determine the cost to repair or replace, HO-8 uses “common construction” materials and methods to determine the cost, leaving insurance companies with flexibility in determining what they pay out on claims.

Preparing for an Empty Nest

When your last child has moved out or is about to, it’s common to experience a lot of mixed feelings. While yourNest child is beginning his or her new chapter in life- so are you!

Your new chapter will provide you with more privacy, more time, more flexibility, and more opportunity. So- cry if you want to cry. Just don’t get stuck looking back because you have a lot to look forward to!

 

Here are six things to think about if your nest will be empty soon:

Make lists
What kind of lifestyle do you want to have in this new chapter of your life? Now is the time to rediscover yourself and to embrace all the things you didn’t have time to do when you had kids in the home.

Have you created a bucket list yet? If not- get started! If you already have a bucket list, start working on a plan of action so you can achieve some of those lifelong goals!

Start organizing
Decluttering and organizing can bring a lot of satisfaction to more than just empty nesters. Go one room at a time and sort through which items you’d like to keep, to donate, or to sell. If you struggle getting rid of sentimental items, try taking a photo of the item that you can hold onto instead of the item itself.

Donating items to charity is a great way to declutter your home while helping others in need.

Prepare a Budget
You may expect to have more money when your kids leave the home, but it’s possible you might not. While you will likely save money on your weekly visits to the grocery store- unless your children are completely financially independent- you’ll want to budget some unanticipated expenses for them because you still have kids- they just don’t live with you anymore!

Plan and monitor your financials to determine a budget for when the kids are no longer in the house.

Work on Projects
Have you been putting off replacing the roof on your house? Would you like to convert one of the bedrooms in your home to a home office space? Have you always wanted to take a cooking or yoga class or learn another language? If your kids have left the home- this would be a great time to tackle new ventures or some home improvement projects to increase your home’s value.

Nurture relationships
It’s not uncommon for married couples to put their relationship on the back burner while raising kids. Once the kids have left the home, there’s more time for privacy for you and your spouse. Nurture your marriage and relationships with other friends and family members. If you need extra support, reach out to a friend who has an empty nest too and start a support group together.

Don’t be impulsive
Once the kids are no longer around to help with the cleaning and yardwork- downsizing and maintenance-free living might start to look really appealing. While you may experience a wide range of new feelings and ideas, it’s important not to be impulsive about major decisions like selling your house.

If your mortgage is paid off on your family home, now may or may not be the right time to take on the additional expense of a new place.

If you’re an empty nester considering selling the family home, visit first with your children as well as a real estate professional to discuss all of your options.

What Happens When You Overprice Your Home

If I had a dollar for every time I heard- “well, I can always go down, but I can’t go up”. Ugh. It makes perfectHouse on stack of cash sense that a Seller wants to obtain every dollar they can for the sale of their home, however overpricing a home has proven, detrimental consequences that many Sellers don’t realize or comprehend until it’s too late.

If a home is priced appropriately for the market (not too high and not too low), a Seller will enjoy a full spectrum of buyers and maybe even multiple offers. If a home is overpriced however, a Seller will fall into a cycle of negative and predictable consequences.

 

Take heed of these dangers before overpricing your home:

• Sellers who overprice their home tend to have fewer options available when it comes to listing agents. Many agents won’t even take on an overpriced listing because of the time and energy involved.

Other agents might accept an overpriced listing believing they can acquire new Buyer prospects to sell other homes to when they’re unable to sell the overpriced one.

• Buyers who are qualified to buy in the price range of the home’s actual market value will be deterred from viewing overpriced homes. Those qualified Buyers will skip over the home and not even look at it, believing it’s something they cannot afford.

• The higher the home’s Days on Market (DOM), the higher the home’s marketing time and marketing expense, which can add up quickly and result in unnecessary out of pocket expense.

• Overpricing a home will result in fewer showings, which can be extremely stressful to Sellers who may be vulnerable emotionally. I mean- there’s sadly no chance of selling the home if no one wants to see it, right?

• Buyers from a higher price range who view the overpriced home will inevitably notice that the home is missing the amenities of other homes in that same price range.

• There is a stigma attached to overpriced homes for both Buyers and real estate agents. The longer a home is on the market, the more likely a Buyer will be to believe there must be something wrong with it.

Agents will view an overpriced home as one with unreasonable Sellers. They will, in turn, focus their efforts on selling homes that are reasonably priced.

• Sellers of overpriced homes are less likely receive offers because many Buyers will be afraid to ‘offend’ the Seller with their offer. Buyers instead will present offers on and purchase competing homes.

• Imagine saying ‘maybe tomorrow’ over, and over, and over again. Overpricing a home results in wasted time when ultimately- the Seller will be faced with reducing the list price to what it should have been in the first place- maybe weeks or months after the initial list date.

• The longer a property sits on the market, the longer the Seller will need to pay property taxes, utility expense, and incur other expenses such as lawn maintenance or possibly HOA fees. As a Seller, if you’ve already moved out of the home or are paying for 2 properties, you can incur some hefty expense.

• When it’s all over with, Sellers of an overpriced home will receive a lower overall sale price, which will affect the value of future sales in the market too.

Places to Donate Unwanted Items

Whether you’re Spring cleaning, preparing for an upcoming move, or just wanting to downsize or declutter, thereGiving hands are many charitable organizations that are willing to accept your unwanted stuff.

Consider keeping your unwanted items out of the landfill and donating them to others in need.

 

Books
Operation Paperback is a national non-profit organization that sends gently used books to military service men and women overseas- as well as to their families at home.

Another place to donate books is to your local library.

Clothes
One of the most widely known places to donate clothes is to Goodwill, which supports employment program opportunities in communities and keeps items out of landfills.

Another place to donate clothes is to the Salvation Army, who collects donated items to sell at its stores and uses the profits to help those in need.

Furniture
The National Furniture Bank Association is a non-profit organization that collects furniture for families struggling with poverty.

Other places to donate furniture are local homeless or battered women’s shelters, or to a local thrift store.

CDs and Videos
CD’s, videos, and many other items can be donated to the American Red Cross via the GreenDrop Program, which converts donations to funds for American Red Cross’ programs and relief efforts.  GreenDrop has pickup or dropoff options available.

Shoes
Soles 4 Souls collects new and gently used shoes to provide relief to those in times of poverty or natural disaster and also to those in underdeveloped countries.

Goodwill Industries also accepts donated shoes and will even recycle those in poor condition.

Used cars
You can arrange a pickup or find a local chapter to donate your used vehicle to be repaired and sold with the proceeds benefitting the local Make a Wish Foundation chapter.

Electronics
Ebay’s Giving Works program allows consumers to sell their used electronics and other items online and donate proceeds to a charity of their choice.

Best Buy also has a recycling program, allowing consumers to drop off their unwanted electronics items and appliances for a nominal fee.

Cell phones
New, used, or even damaged cell phones can be donated to Cell Phones for Soldiers Phones for soldiers that provides cost free communication services to active military members and veterans.

Lumber, building materials, home fixtures, bathtubs, sinks and more
If you’ve recently completed a renovation on your home, Habitat for Humanity will gladly accept a variety of household and building goods. It helps families to build an affordable place to live in the local community and around the world.

Children’s toys and games
The Ronald McDonald House offers support for families when a child is sick or needs medical care. Because it hosts thousands of children though, the Ronald McDonald House only accepts toys and games that are new.

Many local preschools and churches are willing to accept toys and games that are new or used.

Costume jewelry
I Have Wings Breast Cancer Foundation accepts donated jewelry and offers support to, not only breast cancer research, but to families during a breast cancer diagnosis.

What is Earnest Money and How Does it Work

What is earnest money? Earnest money is simply a sum of money made from Buyer to Seller to demonstrate aHand with cash Buyer’s seriousness about purchasing a property.

If an offer proceeds to a successful closing, a Buyer can consider his earnest money deposit a type of pre-payment which will be applied to his down payment or closing costs or put toward the purchase price.

Check out the following commonly asked questions to learn more about how earnest money works.

Do all Buyers need earnest money?
Earnest money is not required, however it is highly recommended to demonstrate to the Seller that you, the Buyer, are committed to seeing your offer through up until the time of closing.

Why is earnest money important?
A Buyer’s offer and his earnest money deposit will be taken into consideration by the Seller when the offer is presented so it is important and the amount is important too.

If, for example- a Seller received two offers from two different parties with a similar purchase price and terms, but one has an earnest money deposit and one doesn’t, it stands to reason that the Seller will give more consideration to the offer with the earnest money.

Likewise- if you were a Seller and were presented two similar offers from two different parties, yet one had $500 in earnest money and the other had $2000 in earnest money, which offer do you think you would you give more consideration to?

How much earnest money is enough?
There are different guidelines based on many different factors, but typically $500 is the minimum. Generally speaking- earnest money deposits range from 1%-5% of the purchase price.

How much to offer as earnest money depends on a great deal of variables. A $500 earnest money deposit may be adequate for a $150,000 property, yet insufficient for a $600,000 property.

When do I need earnest money?
As a Buyer, you should have the money to cover your earnest money deposit in your bank account at the time you write an offer. In Iowa, the earnest money is required to be deposited into the listing agent’s escrow account within 5 days of offer acceptance, where it will be held until closing. Held does not mean uncashed! The check will be cashed and must be made payable to the listing agent’s office, not to the Seller.

How might I lose my earnest money?
Earnest money offers assurance to Sellers that the Buyer won’t back out of the deal without valid cause so it’s important as a Buyer to fulfill all your obligations as they are stated in the purchase contract and do so within the specified time frames.

If a Buyer backs out of the deal without valid cause, it would result in forfeiture of the Buyer’s earnest money.

Can I get my earnest money returned to me?
A Buyer is only qualified to receive refunded earnest money if he had, according to the terms of the contract, valid cause to do so.

For example- The Buyer’s offer includes a financing contingency, allowing the Buyer 7 days to obtain financing. If the Buyer is unable to obtain his financing within the 7 days as stated in the contract and decides he wants to backs out of the deal, he would be allowed to do so and would also be entitled to have his earnest money deposit returned to him.

The Advantages and Definition of the “First-Time Home Buyer”

Just because you’ve owned a home before, that does not mean that you are automatically ineligible to be a first-Home Buyerstime home buyer again.

Yes, it’s true! You are considered a first-time home buyer if:
– You have never owned a home before OR
– You have not owned a home within the past 3 years

Spouses are considered for eligibility individually so if your husband or wife has owned a home before- but you haven’t- OR vice versa, you would also still qualify together as first-time home buyers.

Additionally- if you have owned a home without a permanent foundation such as a mobile home or RV in the past 3 years, you may still qualify and if you are a divorced parent who only owned a home with your divorced spouse, you may still qualify.
There are many advantages to first-time home buyers. Whereas conventional mortgage loans typically require a minimum down payment of 20%, consumers who qualify as first-time home buyers can take advantage of down payment assistance, an easier mortgage approval process, and tax advantages too!

One of the most popular loan products available for first-time home buyers is the FHA loan. An FHA loan is simply a mortgage that’s insured by the Federal Housing Administration or FHA.

FHA loans might be desirable to borrows who:
     – Have little or no down payment saved
     – Have a less than perfect credit score
     – Have a modest income
     – Have filed for bankruptcy within the past 4 years

Borrowers with a credit score of 580 or above can take advantage of a minimum down payment requirement of just 3.5%- which can even be gifted by a family member.

Borrowers with a credit score between 500-579 are not ineligible for an FHA loan, however they must pay 10% down.

FHA loans additionally require:
     – United States citizenship
     – Steady employment/reliable source of income
     – A borrower’s satisfactory debt to income ratio
     – A home’s condition meet certain livability standards

Another advantage available to first-time home buyers is the “First-Time Home Buyer Savings Account Program”, which offers tax advantages to those wishing to save money for the down payment and closing costs on a future home purchase in Iowa.

Read more here about Iowa’s First-Time Home Buyer Savings Program.

How to Prepare for a Power Outage

We take for granted the conveniences in our every-day lives.No power supply clip art

In the event of a power outage, conventional methods fail leaving us with only limited resources and means to provide for our most basic needs.

Prepare your home and protect your family from the threat of power outages with the following tips:


Before an outage:

Purchase supplies and know where they’re located in your home:
     -Thermometer
     -Batteries for smoke and carbon monoxide detectors
     -Flashlights and radio with batteries
     -Medication and battery backup for necessary medical devices
     -Non-perishable food items and water
     -Manual can opener
     -Blankets and sleeping bags
     -Entertainment for you and kids such as puzzles, books, magazines, or playing cards
Charge your cell phone and computer
Fill your car up with gas
Withdraw cash from the bank
Fill freezer bags with ice to keep food cold in both refrigerator and freezer
Apply duct tape to bathtub drain and fill bathtub with water for later use
Fill buckets and jugs with water
Identify alternative shelter (if necessary)

During an outage-
Call utility provider to report outage
Keep the refrigerator and freezer doors closed
Use a bucket of water to flush the toilet if necessary
Unplug electronic devices before the power comes back on to prevent damage from power surges
Use car charger to charge your phone in your car

How is Your Curb Appeal

The term ‘curb appeal’ is used a lot in real estate as a general term to describe the overall attractiveness of a property. Curb appeal includes the property’s exterior, the entry, the lawn, and more.

Why is curb appeal so important? First impressions matter- a lot! A typical home buyer, for example, will develop an impression of your home within just seconds of seeing it. If a first impression is positive, Buyers will feel welcome and curious to explore all of the possibilities inside your home. If the first impression is negative, a Seller may risk losing the Buyer completely as well as a potential sale before the Buyer even sets foot in the home.

Good curb appeal doesn’t have to cost you a fortune though. You can create an inviting exterior setting; get Buyers in your front door; and improve the value of your home with the following no to low-cost tips:Brick house

1. Your lawn and landscaping Mow your lawn correctly using the proper blade height so the grass isn’t cut too short or too long. Aerate if necessary and repair any bare spots with fresh grass seed. A proper maintenance routine should include applying fertilizer, removing weeds, and clearing the lawn of any debris or animal waste.

2. Your house- Power wash your house and garage so buildings are free of dirt, cobwebs, or even bird droppings. Remove any branches from rooftops and gutters. Sweep off your patio or deck and apply a fresh coat of stain if necessary.
If your wood siding or trim is chipped, apply a fresh coat of paint.

3. Your entry- Dress up the entry to your home by using a welcome mat or rug near the front door. Make sure it aligns symmetrically with the door and entire entry. Add a splash of life and brighten up your front steps with a potted plant or two.

4. Your lighting- Many Buyers will visit your home, not just in the day, but night too. Make sure the entry and exterior are well-lit and your home looks as attractive at night as it does during the day.

5. Your personal touches- Add your own personal touches with other items or do it yourself projects such as: a bird house, a garden box, a fountain, a bench or sitting area, a firepit, or a new patio or trestle. These items will make a positive impression on your prospective Buyers as well as any of your future guests!

Mortgage Interest Rates are Going Down

If you’ve been watching or reading the national news lately, you may have gotten wind that mortgage interest ratesArrow down have been going down and going down rapidly.

Mortgage rates had been slowly declining since early 2019, when they just recently dropped quickly and rather significantly. According to market data from Freddie Mac, the rate on a 30-year fixed rate mortgage dropped from 4.28% on March 21, 2019 to 4.06% on March 28, 2019. The decline is fantastic news for prospective purchasers and great news for many existing homeowners too.

Mortgage interest rates saw a significant increase in 2018 which, combined with a low inventory of homes, resulted in slightly slower home sales for the year. But there are, again, a lot of mortgage products available with rates under 4% which could mean potential savings for you.

If you’re a prospective home buyer, it’s a great time to consider pulling the trigger on that new home purchase. With the upcoming Spring Market season, you may be able to take advantage of higher Spring Market inventory and a mortgage interest rate lower than has been available in the past year!

If you’re a homeowner, it’s a great time to consider if refinancing might be right for you. It’s possible that you could refinance now at the lower interest rate, pay all the refinancing fees, and still save money on your future mortgage payments- sometimes- hundreds of dollars each month!

If you’re interested in saving money on a new or existing mortgage, contact a local mortgage lender today.