Buying a Home: What’s New in Flood Insurance

 When Evansville residents hear about floods, images of homes tumbling into the sea or half-submerged along the banks of a raging river probably leap to mind. But the risk of flooding isn’t confined to those headline-grabbing catastrophes—which is why the recent passage by Congress and signing by the President of the Homeowner Flood Insurance Affordability Act (HFIAA) will be of interest to many people thinking of buying a home.

Sellers are required by law to disclose if a property is in an officially-designated flood zone; and banks typically check this information as well. While it can certainly be off-putting to be informed of this when buying a home, the availability of flood insurance can keep it from being a deal-breaker. But “available” doesn’t necessarily mean “affordable”—which is where HFIAA comes in.

Many prospective homebuyers are only vaguely aware that flood and water damage are not covered under traditional homeowner policies, something that’s newly relevant when buying a home. Part of the reason is because only 5% of the U.S. population lives in an officially designated “Coastal Flood Plain”—so it’s not a much-discussed issue in most parts of the country.

But the coastal areas that do get attention whenever disaster strikes are not the only kinds of flood plains that are relevant. FEMA assesses and maps areas that are subject to flooding, and assigns them letters denoting the likelihood of flood damage. Some of the provisions of the new HFIAA deal with overhauling those procedures, but the most immediately significant parts deal with (you guessed it) cost.

Here a little history will be helpful. In 1968, the National Flood Insurance program was created to help some property owners secure insurance in areas where it had been prohibitively expensive. But, as one might expect, the cost of the program soon became a problem. That in turn triggered passage of another Act—the Biggert-Waters Flood Insurance Reform Act of 2012—intended to allow premiums in covered areas to rise to offset their real costs.

The new HFIAA now partially reverses that yet again, because policy-makers fear the effect on the housing market. The new act delays some of the price rises for four years and allows homeowners who sell their homes to pass the lower premiums on to the new homeowners. It’s also relevant that there are two different types of coverage available: dwelling only and dwelling/property. Although dwelling only coverage is cheaper, as you might expect, there’s a good reason: it doesn’t cover the personal belongings that a flood could destroy.

Some zones, like Zone X, are as inexpensive as a few hundred dollars per year. The zones that flood more regularly can run into thousands…and all flood insurance premiums are in addition to the regular home insurance costs. For those buying a home in an area where properties might be classified as within a flood zone, it’s a good idea to check with one of the local insurance companies that offers flood coverage. When all is said and done, only you can decide if it’s worth the risk or not.

If you are thinking of buying a home in this summer, flood insurance is only one of the details you’ll want to consider. Call me today and we can begin by putting together a list of your search criteria. You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com

Evansville Real Estate News Letter for April 2014

                                    Market Watch April 2014

As you may be able to tell from your allergies, spring has certainly sprung in Southwestern Indiana.  The real estate market is heating up right along with the warmer temperatures.  We are witnessing a significant increase in sales activity and anticipate that will continue through the spring.  Lawrence Yun, the chief economist for the National Association of Realtors, said a gain was inevitable, following a dismal winter.  (We certainly agree here!) On a national level, showing activity is increasing and sales activity is expected to follow suit as more inventory reaches the market. And in our office, the homes that are priced right and in good condition are getting lots of attention and in some cases, multiple offers. 

The key challenge will continue to be inventory.  We continue to see a shortage of homes for sale, with inventory rates near record lows.  While this shortage will drive an increase in median existing-home price, continued positive momentum is dependent on the availability of homes for sale.  Opportunity’s knock is getting louder on the doors of potential sellers, who at this point will dictate the performance of the local housing markets for the next couple of months. 

While need for listings is high, sellers must present a home that is in good condition and priced right. Working with a real estate agent from the beginning ensures you have a knowledgeable professional that knows the market and can help get your home sold in the shortest amount of time.

If you’ve considered selling your home, now is the time.  With many active buyers, you don’t want to miss this market surge!  And if you’re ready to buy, I’d encourage you to visit www.TheTrentiniTeam.com , where you can use our interactive map search to perfectly define your search area.  Until next month!

New Home Market Reflects Shifting U.S. Patterns

For decades, the three-bedroom house has been a cornerstone of the American dream. Now, as with the rest of the nation, our area’s real estate profile for new single family homes seems to be changing. And last year we may well have reached a turning point in the national new home market: now four bedrooms seems to have become the new norm!

 Last year, a full 48% of new homes—nearly half—were built with at least four bedrooms. That’s quite a jump when you compare it with just four years earlier: in 2009, the figure was 34%. We asked ourselves why the nation’s preferences would have undergone such a sizable shift. A little research revealed some likely answers—and some interesting history behind them.

  The Rise of Bigger Homes

The footprint of the average new home built in the U.S. went Yeti in a very short time. In the late 1940s, Postwar America began producing single family homes on a massive scale—with an average size of about 750 square feet. As the economy expanded, so did house sizes until by 1973 the three-bedroom home dominated the new home market (Evansville included). By 2013, average new home sizes had reached 2,701 square feet according to the Census Bureau.

It may seem counter-intuitive, but at the same time the number of bedrooms was increasing, the size of the American household was heading in the opposite direction. The 3.6-person average of the 1940s had, by 2013, contracted to 2.58. That means the living space for each individual had grown by 80%!

House Sizes Shrink, Then Expand Again

In 2009, as a side-effect of the last decade’s real estate market downturn, single family home sizes had retreated by about 6%. But now the economy’s slow recovery has reversed the reversal. According to the most recent report from the National Association of Home Builders, the average size of a new home built in 2013 was 2607 square feet— a 300-square foot increase over just two years earlier.  

Fewer New Buyers = Bigger Homes

One of the reasons for the new home market shift toward larger four-bedroom designs can be ascribed to a decrease in the number of first-time homebuyers. Largely due to previous tightening in lending criteria and rising mortgage rates (both trends have at least momentarily stalled in the new home market), the smaller homes favored by first-timers claimed a proportionately smaller chunk of the market.

It’s hard to avoid the general conclusion that what were once considered luxurious additions are effectively today’s norm. The en-suite bathrooms, two-car garages and even three-bedroom homes that would have been out of reach for most of the new home buyers of the past are practically standard fare in 2014. But another fact is that every area differs from every other. If this has you wondering how your home compares with what today’s buyers are looking for in your own neighborhood—why not give me a call? You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com

Tradeoffs for Remodeling vs. Moving to a New

Last week’s Rasmussen Reports survey reported that the majority (52%) of Americans consider their home to be a family’s best investment at the same time that the number of people who are choosing to remodel their home is on the rise. According to the Houzz & Home survey, the number of people who planned improvement projects rose a dynamic 12 % last year. Of those, 40% wanted to remodel their home or build an addition.  

While remodeling may be becoming more popular, there are still plenty of advantages to the alternative route: purchasing a new home in. Here are some of the pros and cons of each route:

• Before you start your remodeling project you should take a personal inventory. Do you have the experience and skills to manage the project…and is the prospect appealing? Remodeling your home will require that you deal directly either with tradesmen, contractors, architects— or the whole bunch! It may be the greatest advantage to purchasing a new home: getting the additional space and amenities without the work.
• The loss of privacy during a remodeling project is not something to be underestimated. Depending upon the scope of the project, it may be months before the dust settles and you have the house to yourself again. There is also the inconvenience of not having access to multiple areas of your home while work is proceeding
• For most of us, there really is no place like home. If you’re like me, even when you’ve been on a terrific vacation, eventually you begin to yearn for the comfort and familiarity of your good old home base. Although one or two irksome features of your current house make moving seem like a no-brainer…before you commit to a move, be sure that you really want to leave. History, a sense of community, and the roots you’ve established in your current neighborhood are all reasons to opt for a remodel rather than a new home.
• Selling your existing home and buying a new home is a sizable financial commitment. Moving costs, transaction fees, commissions and taxes are part of the equation to weigh against remodeling costs. A sharp pencil is definitely in order before the dollars and cents can be realistically reckoned—particularly if your finances have improved, and the remodel is meant to bring your home up to an improved standard of living.

The danger lies in overcapitalizing a property in a location where the resale won’t support the expense. Even a great home will still fetch a price that’s relative to other properties in the neighborhood, obliterating the wished-for ‘investment’ value of extensive remodeling.

While it’s important to be informed about the factual tradeoffs of your decision, it’s likely the end choice will also be influenced by what just feels right—as it should be. Whether you’re considering a remodel or a purchase, if you’d like to run some numbers, call me today for a confidential price evaluation! You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com

Simple Steps to Reduce Your Mortgage Costs

Mortgage rates may rise or fall this spring (lately they seem to be falling!)—but that needn’t prevent you from saving even more money when it’s time to structure your own mortgage. The underpublicized fact is that mortgage rates are only one of the factors that affect how much you wind up paying. No matter what happens to mortgage rates in 2014, here are some keys to making mortgage decisions that result in significant savings:

Tailor the term

Evaluate your budget and see whether it is possible to increase the amount of your monthly payment. By increasing monthly repayments, you reduce the term of your mortgage. Over the course of the loan, this can save tens of thousands of dollars.

Refinance for five years instead of two

The interest you pay on a refi loan isn’t the only cost. The origination and other fees can easily end up costing four figures. It’s a numbers game: simply calculate the anticipated savings from refinancing, then subtract the amount of the fees. The difference tells you your net savings…and demonstrates why one of the easiest ways to grow those savings is to refinance less frequently.

Change to biweekly  

Changing to biweekly payments instead of monthly payment can save you more than small change. The reason is on the calendar: there are 52 weeks in a year, but only 12 months. If you make 26 1/2 payments every year, that equates to 13 monthly payments. It’s a stealthy way to make an additional month’s payment every year without really noticing it. When choosing a loan, opt for one where the bank allows you to choose biweekly payments (as long as they don’t want to charge an additional fee). Also request that the extra payments be deducted from the principle.

Improve your credit score

On this count, every mortgage guru sounds like a broken record. Although the average quoted mortgage rate may rise or fall, that’s not necessarily the rate that you pay. Your FICO score is the primary determinant of your mortgage rate. The difference between a good FICO score and a bad one can be significant, so get a copy of your credit card record and challenge any damaging inaccuracies. Lenders want to see a long history of paying on time with a mixed use of credit.

 Mortgage rates will almost certainly increase in the future because they’re still well under historical averages. But there are plenty of steps you can take to cut thousands of dollars from your ultimate mortgage costs. And if you are ready to buy a house in this spring, contact me today—I’m ready to show you what’s coming up at your price point! You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com

Five Useful To-do's After Buying a Home

Buying a home in Evansville is sort of a modern day adventure. At first there’s the intrigue of figuring out the advantages and disadvantages between the neighborhoods and listings competing for your attention; then there are all the challenging, sometimes exhausting—then, ultimately, exhilarating steps that lead to home ownership.

But even after the previous owner has handed over the keys, there’s more to come: a few extra steps new homeowners can decide they wish to take. Here are five of those—things you can choose to do after buying a home:
#1 Change the Locks  

Who knows how many people have a copy of those keys?  It’s a good idea to change the locks on all exterior doors, because it’s not just the previous owners who have had access to the property; there may also have been guests or tradespeople with access to the keys. By installing new locks, you can be sure that you are complete control of the keys to your new home.
#2 Have the House Cleaned

While the previous homeowners are obliged to leave the home in reasonable condition (usually “broom clean”), consider scheduling a professional cleaning crew before you move in. If your budget and schedule allows, it can be a plus to know some serious deep cleaning has been performed on counters, plumbing fixtures, carpets, etc.
#3 Smooth Transfer of Utilities

After buying a home, it’s usually possible to transfer utilities into your name without having to live through a break in service. Contacting all utility companies ahead of time will ensure that the transfer is orderly and scheduled in a manner that will be convenient to your move. It’s also an opportunity to be sure that utility bills have been fully paid before closing on the property.

#4 Store the Settlement Papers

At the end of the process of buying a home, a host of details come fast and furious, making it doubly easy to misplace things—even important things, like copies of the papers you execute  during settlement. Later, when it’s tax time (or in the future should you sell the property), you’ll save yourself a lot of desperate rummaging if you’ve prepared a secure place to keep them from the start.

#5 Take Photos of Your Household Items

It’s important to keep an accurate list of your household contents in the case of theft, fire or other mishap—records to act as verification of your belongings and their condition. Buying a home is the perfect time to take that inventory. Go from room to room snapping digital pictures of everything you own. It will never get easier!

Like anything worth doing, buying your new dream home probably came with its own set of stresses. But it should stand as one of the most rewarding financial moves you will ever make. If you’re thinking of buying or selling a home in Evansville this spring or summer, do give me a call! You can reach me on my cell phone 812-499-9234 or email Rolando@RolandoTrentini.com