What is Title Insurance? Part 1 | Woke Wednesday’s in Real Estate Episode 5

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Today we are going to break down the basics of title insurance and why it is very important when we are in the process of acquiring a new property. It’s not the typical homeowners insurance that you’re probably thinking of at first, as it doesn’t cover future events that may damage the property, but it does cover the lender’s and owners’ backs against claims for past occurrences that may defect in the title or ownership of a property.

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Title insurance will require an extensive title search of the property. This search will minimize the potential liability to the property owners by discovering any foreseeable title issues.

 

There are two types of title insurance: lenders’ insurance and homeowners’ insurance.  

 

The first one is going to be almost a mandatory for any borrower as it protects the lender in the case that the rights of a property have been transferred not following the law. However the lender’s insurance only protects the lender against loss, while if there is a policy included, it means that there will be some more assurance for the buyer by adding complexity to the title search.

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We need to keep in mind that title search is not going to work always, and that’s where the owner’s title insurance comes into place, as it protects the buyer against possible defects in the title. It is purchased by the seller and it remains optional though.

 

So, why is it a high risk move to not get title insurance?

 

In case of title defect, both parties can be very affected. Some of the common things that title insurance covers are Errors in the public record, fraud,undiscovered liens… Unpaid property taxes by previous owners is one of the most common scenarios that makes sense to get title insurance, as all the responsibility to pay those taxes would now be on the buyer’s shoulders.

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So that’s all for today, hope you found this article useful so far and don’t hesitate in reaching me out if you have any questions or need a consultation.

 

Stay hungry and stay positive!

Make it a great day,

Sean La Rue

 

Facebook: https://www.facebook.com/SeanLaRueHomeLoans/

Instagram: @seanlaruehomeloans

Linkedin: https://www.linkedin.com/company/sean-la-rue-sr-vice-president-franklin-loan-center/

 

YGRENE, PACE AND HERO: Green Efficiency Programs

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Today, we are going to go over the green efficiency programs (YGRENE, PACE and HERO) and see how we may benefit from them, but see as well what risks may be involved.

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Saving water and energy is good for the environment, and you also benefit in the form of lower utility costs. But big upgrades like drought-resistant landscaping solar panels can be costly. If you’re looking to make green improvements, a PACE loan might be an option for funding. PACE financing makes it easy to qualify for relatively affordable long-term loans, but there are pros and cons to using these programs.

What Is PACE?

Property Assessed Clean Energy (PACE) is a way to borrow money for clean energy projects. Property owners get financing for upgrades and repay through property taxes. Getting approved will mainly depend on home’s equity.

Common uses of PACE include solar installations, energy efficient heating and cooling, water-saving landscaping, and numerous other projects for residential and commercial properties.

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However, in Sean La Rue Home Loans we recommend to check the laws related to PACE in your state, as this type of financing is not available in all states.  Some of the most well known programs are Home Energy Renovation (HERO) and Ygrene.

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Advantages of PACE Loans

These programs have certain features that we thought were important to mention:

It’s Easy to Qualify for them: getting approved for these loans seems much easier than with conventional loans. Your FICO credit score won’t be as important with PACE as with conventional loans, but current or recent issues in your credit reports can cause problems. You must also be current on all property taxes.

No down payment needed: PACE allows you to fund the entire cost of a project with no need of a down payment.. As a result, you don’t need to save up money before jumping on a PACE loan, but keep in mind that there will be higher interest costs and higher payments.

Can be transferred to the next owner: If you sell a property after making improvements, you don’t necessarily have to pay off the loan. The loan is attached to the property, so it can be transferred and paid off by the next owner.  However, many federal loan programs will not allow a buyer to get financing with these tax liens assessed on the property and would need to be paid off at closing.

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Time to repay: PACE loans can be paid off over extended periods of time and, as a consequence, payments can be kept relatively small. But, remember that the longer it takes you to pay it off, the bigger the interests will be.

Potential tax credits: PACE funding might make it easier to qualify for environmental tax credits — check with your tax advisor before making any decisions.

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Problems With PACE Loans

Before using PACE funding for your project, get familiar with some of the pitfalls.

Conflicts of interest: PACE financing is often arranged through contractors who might have an incentive to promote expensive upgrades.  Some of them may make misleading statements to get some of those incentives directly from you.

In addition to getting paid for the work they’ll perform, contractors might get additional referral fees from a lender if they arrange funding, and that’s where a potential conflict of interests may come into place.

Payment shock: You may be faced with a surprise expense when it’s time to make those inflated payments. In some cases, the PACE payment will be added to your monthly mortgage payment in smaller chunks.

Interest costs: PACE funding is relatively easy to qualify for. However, interest rates are sometimes higher than you’d pay if you simply use a home equity loan— especially if you have good credit. Don’t be fooled, PACE loans are not necessarily cheap, energy efficient, or the most cost effective.

Costs and benefits: It’s easy to get approved for PACE programs, but is it worth it? These programs make the most sense for individuals who cannot afford less expensive loans (often due to credit problems or limited income). Projects like replacing your windows can add to your home’s value, so you should get some of that money back when you sell. However, you won’t necessarily see a substantial change in utility costs — and you’ll still have to make higher tax payments.

Risk of foreclosure: PACE loans are secured by your home, so it’s possible to lose your home in foreclosure if you don’t make the payments. It is common to see foreclosure even if you make your regular mortgage payments, which is a position that no homeowners should be in.

The risks above do not mean that PACE programs are bad. However, it’s worth knowing the pros and cons of these arrangements before signing up. Unfortunately, the risks are often overlooked because PACE programs are perceived to be “safe.”

 

So that’s all for today, hope you found this article useful so far and don’t hesitate in reaching me out if you have any questions or need a consultation.

 

Stay hungry and stay positive!

Make it a great day,

Sean La Rue

 

Apply for a loan: https://www.SeanLoans.com

Facebook: https://www.facebook.com/SeanLaRueHomeLoans/

Instagram: @seanlaruehomeloans

Linkedin: https://www.linkedin.com/company/sean-la-rue-sr-vice-president-franklin-loan-center/

New Loan Limits for 2019

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Credit to Ben Lane( Housing Wire)- https://www.housingwire.com/articles/47489-fannie-freddie-conforming-loan-limits-increase-in-nearly-every-part-of-the-us

 

Loan limits don’t always change but sometimes they do year over year.  Fannie and Freddie have decided to increase the conforming loan limits for 2019.  This is proof of credit guidelines loosening and will allow home buyers to qualify under conforming loan guidelines instead of jumbo loans.  This is a huge opportunity for the market~ 

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 After not increasing the maximum conforming loan limits on mortgages to be acquired by  Fannie Mae  and Freddie Mac  for 10 years, the  Federal Housing Finance Agency  has now increased the conforming loan limit for the third straight year. 

The FHFA announced Tuesday that it is increasing the conforming loan limit for Fannie and Freddie mortgages in nearly every part of the U.S. 

According the FHFA, the conforming loan limits will rise from this year’s total of $453,100 to $484,350 for 2019. That’s an increase of 6.9% from this year’s loan limit to next year’s. 

As stated above, this marks the third straight year that the FHFA has increased the conforming loan limits after not increasing them from 2006 to 2016. 

Back in 2016, the  FHFA increased  the conforming loan limits from $417,000 to $424,100. Then, last year, the  FHFA raised  the loan limits from $424,100 to $453,100 for 2018. 

And now, the FHFA is doing it again, increasing the loan limit from $453,100 to $484,350 for 2019. 

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The conforming loan limits for Fannie and Freddie are determined by the Housing and Economic Recovery Act of 2008, which established the baseline loan limit at $417,000 and mandated that, after a period of price declines, the baseline loan limit cannot rise again until home prices return to pre-decline levels. 

But, as the FHFA noted earlier Tuesday, home prices are still on the rise, which necessitates a third straight yearly increase in the conforming loan limit. 

The FHFA’s third quarter 2018 House Price Index report, which includes estimates for the increase in the average U.S. home value over the last four quarters, showed that home prices increased 6.9%, on average, between the third quarters of 2017 and 2018.  

Therefore, the maximum conforming loan limit in 2019 will increase by the same percentage to $484,350. 

Loan limits will also be increasing in what the FHFA calls “high-cost areas,” where 115% of the local median home value exceeds the baseline loan limit. 

Under HERA, the maximum loan limit in those “high-cost areas” is calculated as a multiple of the area median home value, while setting a “ceiling” on that limit of 150% of the baseline loan limit. 

According to the FHFA, median home values “generally increased” in high-cost areas as well in 2018, which drove an increase maximum loan limits in many areas.  The new ceiling loan limit for one-unit properties in most high-cost areas will be $726,525, which is 150% of $484,350. 

Per the FHFA, special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam and the U.S. Virgin Islands. In those areas, the baseline loan limit will be $726,525 for one-unit properties. 

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“As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum conforming loan limit will be higher in 2019 in all but 47 counties or county equivalents in the U.S.,” the FHFA said. 

For a county-by-county breakdown of the 2019 conforming loan limits, click here. 

 

https://www.housingwire.com/ext/resources/files/Editorial/Documents/FullCountyLoanLimitList2019_HERA-BASED_FINAL_FLAT.pdf  

 

 

So that’s all for today, hope you found this article useful so far and don’t hesitate in reaching me out if you have any questions or need a consultation.

 

Stay hungry and stay positive!

Make it a great day,

Sean La Rue

 

Facebook: https://www.facebook.com/SeanLaRueHomeLoans/

Instagram: @seanlaruehomeloans

Linkedin: https://www.linkedin.com/company/sean-la-rue-sr-vice-president-franklin-loan-center/

How To protect Yourself against Hacking, Fraud And Identity Theft

Welcome to a new article for Woke Wednesday’s in Real Estate, where we’ll be talking about hacking and identity fraud/theft.

 

 

Welcome to a new article for Woke Wednesday’s in Real Estate, where we’ll be talking about hacking and identity fraud/theft.

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So first, let’s talk about what identity fraud means: it’s that unfortunate situation when someone steals your personal information to use it for his/her own benefit, which can end up really damaging your finances if that person decides to open credit cards with your personal info or stuff like that.

If your identity has been stolen, how do we find that out?

First, go to credit card charges to check if there are any charges that may surprise you, but you can also identify identity fraud by receiving a debt-collection call or if you notice that your credit scores has gone down. So in order to act quickly in case of identity fraud, make sure you check your bank statements regularly!

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We may still suffer from identity theft, but there are ways make it less likely to happen. Here are a few tips:

  • Use safe passwords
  • Be careful what you share online
  • Don’t give out your information easily
  • Get a shredder
  • Follow your instincts
  • Check often your credit reports

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So that’s all for today, hope you found this article useful so far and don’t hesitate in reaching me out if you have any questions or need a consultation.

 

Stay hungry and stay positive!

Make it a great day,

Sean La Rue

Apply for a loan at https://www.SeanLoans.com

Facebook: https://www.facebook.com/SeanLaRueHomeLoans/

Instagram: @seanlaruehomeloans

Linkedin: https://www.linkedin.com/company/sean-la-rue-sr-vice-president-franklin-loan-center/

What’s the difference between Homeowners and Hazard Insurance

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In today’s post we are going to talk about homeowners insurance and hazard insurance, and why it is so important in order to protect property owners against the possibility of any possible thefts or damages from fires or any unfortunate natural events earthquakes, storms…

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When someone applies for a mortgage, it is requested to give proof of insurance in the property so that the bank can issue the mortgage. When it comes to home insurances, homeowners can get either take a look at all the options and pick one that suits best their needs, or leave it in the hands of their banks, which will add an extra cost to the mortgage given.

What does a homeowners insurance cover?  Interior damage, exterior damage, loss or damage of personal assets/belongings, and injuries that may arise while on the property. However, it’s important to remember when a claim is made by the homeowner, he/she will have to pay a deductible, which will be calculated based on the type of insurance policy, excess costs..etc

What is key here is to keep in mind is that the higher the deductible is on an insurance contract, the lower the monthly or annual premium on a homeowners insurance policy will be.

But of course, there is a liability limit, that usually stands at around $100,000, but it can go higher depending on the policyholder. What the liability limit does, is to estimate the percentage of the coverage that would go toward replacing or repairing damage to the property structures, personal belongings, and costs to live somewhere else while the property is worked on.

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The reason why at Sean La Rue Home Loans we think it’s a must to get hazard insurance when you acquire a property is because your average home insurance won’t usually  cover all sort of damages that your place could suffer. Acts of war or acts of God will usually not be covered in a homeowners insurance policy. Its actually a common requirement from a lender to ask to have a minimal hazard insurance when applying for a mortgage, to protect the investment and value of the new home.

Think about it this way: it’s much easier to deal with the cost from hazard insurance than having to pay off all the costs generated from an unfortunate event that may happen to your property. Better to be cautious than taking risks with this kind of stuff, specially when living in high-risk areas. Whenever you buy a home, you are making an investment. You are investing so much out of your pocket every month in that investment, so why not spending a couple hundred more per year to insure it?

How much hazard insurance do I need for my home?

We’ll know how to estimate how much hazard insurance is actually needed for our particular case based on how much cost would we have in the worst case scenario(event of a total loss).  This amount may change from one year to another, and could be significantly different from the property’s value, that’s why policies are usually written for one year and renewable. It’s very common that lenders include the costs of hazard insurance in the monthly mortgage payment.

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And that’s all for today’s post, hope you found it useful and don’t hesitate in reaching me out if you have any questions or you are interested in making a consultation.

Stay positive and stay hungry!

Make it a great day,

Sean La Rue

Youtube video: https://www.youtube.com/watch?v=nCg3I6G_Kds

Facebook: https://www.facebook.com/SeanLaRueHomeLoans/

Instagram: @seanlaruehomeloans

Linkedin: https://www.linkedin.com/company/sean-la-rue-sr-vice-president-franklin-loan-center/