5 Ways to Make Sure Your Mortgage is on Track

It's time to make sure your mortgage is on the right track. The Consumer Financial Protection Bureau (CFPB) rules require that your mortgage servicer send you more information and fix mistakes quickly. 

And if your interest rate has changed this year, you should have got a heads up to give you more time to shop for a better deal. 

I hope you have taken the steps to make this year one with fewer runarounds and surprises.

By February you should have received a new monthly mortgage statement showing how your mortgage servicer credited your monthly payments along with any extra payment. Your statement also puts the important information you need in one place: Your interest rate, the balance on your loan, and how your payments are applied. If you use a coupon book, your mortgage servicer will have to send you a coupon book that complies with the new rules.

1. Check for delays.

With very few exceptions, your servicer must credit your mortgage payment as of the day they receive it. Check your statement to see if your payments were credited on time.  If not, call or write your servicer and tell them to correct the problem.

2. Fix mistakes.

The new CFPB mortgage rules require servicers to investigate and fix, in a timely manner, any mistakes that you report. If your servicer won't help you when you call, submit a written error notification for more protection.

3. Shop around.

Your monthly mortgage statement will show you your interest rate and principal balance. Compare your rate to current interest rates. You can find local rates online or in the business section of your newspaper. If your interest rate is higher than current rates, you might look into refinancing.

4. Prepare for your rate reset.

If you have an Adjustable Rate Mortgage (ARM), your mortgage servicer is required to send you an estimate of your new payment seven or eight months before your interest rate resets for the first time. If you have an ARM that has already reset once, you will be notified two to three months in advance of the next reset. This advance notice is designed to give you time to budget for your new payment or shop for a different mortgage.

5. Get help and take control.

If you are having trouble paying your mortgage, you will get a warning that you're late on your payment on your new monthly statement. CFPB rules also generally require your mortgage servicer to reach out to you. But you don't have to wait until you fall behind to act. 

Take control. If you submit a complete application for help soon enough—often called a loss mitigation application—CFPB rules require your servicer to evaluate you for options that may be available to you to avoid foreclosure.


Call (773) 614-3201 if you need some help in understanding your mortgage statement or if you are considering refinancing. Click here to calculate your mortgage.

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Raise Your Children in a Home, not an Apartment

While the value of home ownership as a way of building wealth over time for either single parents or two parent families is well accepted, hardly mentioned is the value of home ownership on the cognitive and behavioral outcomes of the household's young children. Homeownership and Child Outcomes In a recent study on the impact of home ownership on child outcomes, while controlling for the child's gender and health, number of siblings, and characteristics of the household's locality, has indicated that the impact on a child's cognitive outcomes is up to 9% higher in math achievement and 7% higher in reading achievement for children living in owned homes.  Moreover, it is found that the measure of child behavior problems is up to 3% lower if the child resides in a owned home. The result concludes that these youth's greater cognitive abilities and fewer behavior problems will result in higher educational attainment, greater future earnings, and a reduced tendency to engage in deviant behaviors. Steps to Becoming a Homeowner If you are a single parent with the responsibility of raising your children without the help of a spouse, the home environment is even more significant. Although, renting an apartment might be your only current alternative, it would be wise for you to begin taking the necessary steps towards becoming a homeowner. In recent years, the criteria for acquiring a mortgage has become less restrictive. Even though the 30-year interest rate continues to be at an all-time low, unless you apply for a FHA mortgage in which the down payment is 3.5%, you will have to have a down payment of about 5%. And, in addition to the down payment, your middle score on your credit report has to be at least 620. Planning for A Mortgage Consequently, even though the 30-year interest rate is still at an all-time low (currently approximately 4.5% nationwide), home ownership is down because of the down payment and credit score requirements. Planning ahead has to include both saving consistently to build up the down payment as well as a careful review of your credit report with the goal of getting your middle score up to at least 620 or above.  Nevertheless, with a FHA loan and a down payment of 3.5%, your monthly mortgage payment on a $125,000 home would be $611.19. Compare that with your rent payment as well as another mortgage payment scenario. Recently many conventional mortgages have began offering programs with only 3% down.  Many landlords now looking to rent their apartments have discovered the need to be receptive to an applicant with a lower credit score due to the shaky job market and the realization that many applicants are losing their homes to foreclosure.  If you are currently renting, use the time remaining on your lease to take the steps mentioned earlier. In my opinion, renting should be only temporary and out of necessity. For a single parent, the overwhelming value to yourself and your children is to be a homeowner. Call (773) 614-3201 or e-mail me at bwillbar@gmail.com for a free consultation. Any Comments? Leave them below.

What Is the Best Way to Hold Title to Your Home?

There are three common ways in which people hold title to their property: 

1. joint tenancy with the right of survivorship, 
2. tenancy in common, 
3. and tenancy by the entirety. 

Under joint tenancy with the right of survivorship all parties have equal interest. Each has a right to possession of the whole. 

At death, the interest of the decedent passes to the surviving tenant automatically. This is the right of survivorship. This ownership must be created on purpose. There is one deed, equal interest, survivorship must be defined, and there must be four unities: time, title, possession, and interest.

Each tenant has an undivided share in the whole property; is equally responsible for expenses and is equally entitled to rent and profit. The unities are terminated by one co-tenant or more than one tenant. The new owner then becomes a tenant in common.

Under tenancy in common the owners does not necessarily have equal interests. Each unit is inheritable with no right of survivorship. Tenancy in common may accidentally happen by inheritance by more than one heir; through purchase in which shares may and may not be equal; or through failure to specify joint tenancy with right of survivorship. Each tenant has undivided share in the whole property; is equally responsible for expenses and equally entitled to rent and profits. Sale by one co-tenant does not terminate the tenancy in common. The buyer succeeds to interest. Substitution occurs.

And, under tenancy by the entirety, which is created by a deed to the husband and the wife, both have an equal interest in the property and each spouse is entitled to possession of the whole. Upon divorce, the property ownership converts to a tenancy in common. Upon death, interest of the decedent passes automatically to the surviving tenant.

This form of ownership requires the four unities plus the unity of marriage. Each is equally responsible for expenses. Also, only the principal residence can be held in the entirety. One member cannot sell his or her interest. The right of survivorship is not defeated by an attempted sale and divorce converts ownership to tenancy in common.

What is common in each one of these types of ownership is that once the deed is recorded, the names of the parties in each of these forms of ownership are available to the public. If you're concerned about your privacy, you should not consider either of these forms of ownership. Rather you should consider a land trust. Under a land trust, a trustee holds title to the property for the benefit of the beneficiary. The trustee would hold legal title to the property under a deed in trust.

Nevertheless, the beneficiaries have the right of possession of the property, the income generated from the property, the income from the sale of the property, the ease of transferability, and the protection of having the property considered as personal property rather than real property. 

The name(s) of the beneficiaries can be concealed. In my judgment this is the best way to hold title to your property. Not all states have land trusts. But, if you live in Illinois, Florida, Virginia, North Dakota, Indiana, and Hawaii, you should seriously think about it.

Stop Renting. Here's 7 Ways Get an Affordable Home

According to the Department of Housing and Urban Development, the general accepted definition of affordable housing is for a household to pay no more than 30% of its annual income on housing.  A family that pays more than 30% of its income on housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation, and medical care. This post, however, focuses on home ownership as opposed to renting and will offer an overview on owning affordable housing while not having to pay no more than 30 per cent of your annual income for it.  In acquiring affordable housing and building equity, it depends on you and not on the mortgage lender. Here are 7 ways in which you can acquire affordable housing with a minimum down payment if you qualify for mortgage or how to do it if you don't qualify for a mortgage.  The ways to acquire affordable housing are as follows:   county down payment assistance,   city down payment assistance,   lease with an option to buy,   contract for deed,   owner will carry,   not-for-profit grant money,   and, a wraparound mortgage. Each of the seven ways represent a viable strategy for acquiring affordable housing whether you are going for a mortgage or not and should be looked into and discussed with a trusted adviser in detail. Remember. as a homeowner, you own equity and an appreciating asset; you have have peace and privacy; and, you have an estate that can be inherited by your survivors.  For a free consultation on homeownership, call (773) 614-3201

Quick Guide to Buying the Best Homeowners Policy Part 1

When shopping for home insurance, remember this: Insure your house for the cost to replace it (meaning reconstruction costs), not its real estate "market value", and don't factor in the value of your land. 

Also know that a home insurance policy covers much more than damage to your house. 

There are additional coverages within a home insurance policy with limits often set as a percentage of the dwelling's coverage amount. (Check your own policy for limits.)

• Your belongings. (Often 50 percent of the of the dwelling amount.)    

• Certain structures outside your house, such as your garage or fence. (Often 10 percent of     the dwelling amount.)

• Loss of use, meaning additional living expenses you incur if you can't live at home due to damage.     This could include hotel bills, restaurant meals and laundry costs. (Often 20 percent of the dwelling  amount.)

• Liability, for cases where you are sued for damages or injuries to someone else.

• Medical bills for people injured on your property or by your pet.

  Other items may be covered under your home insurance, with specific limits for each, so check your   policy or ask your agent:

• Downed trees.

• Replacement of lawn, trees and shrubs.

• Debris removal.

• Power outages, including food spoilage.

• Grave markers.

• Unauthorized charges to your credit cards.

    

You may also need special add-ons for valuables such as jewelry, your computer equipment, antiques and other pricey possessions, where their value exceeds the coverage limit of your policy.

Home insurance does not cover earthquakes or floods - you'll need to buy separate policies for those if you want coverage for those disasters. And in some areas of the country you need to buy windstorm coverage  separately. Now go to the Part 2 Guide.

Lending institutions usually require mortgage customers to purchase home insurance. Don't rely on the coverage levels mandated by your bank or mortgage company. Those levels are designed to protect the  house itself, but not necessarily your possessions. That's why it's important to check with your agent or  insurance company to make sure you have adequate coverage.

Have questions about your Homeowners' policy, call (773) 614-3201

  

What You Need to Know Before Making a Home Buying Offer

Your home is likely going to be the greatest asset you have and what you can leave to your posterity. 

Once you decide upon the home that you want, your next step is to negotiate about what to include in the offer or purchase commitment.

 In most states, your Realtor will help you determine what to say or even say it for you. Some states may require an attorney to take part in the transaction.

If possible, ask your Realtor to let you see a blank copy of a purchase agreement when you first begin looking at homes. 

This is the document that you will present to the seller, and where you offer a price and any conditions you have for the purchase. That way, you will have time to think about what you want your agreement to cover. 

Be sure to include in your agreement a stipulation that the purchase depends upon a satisfactory professional inspection. If you have any doubts about the results of the inspection, ask for another one.

Here is What You Need to Know Before Making a Home Buying Offer:

1. Get recent selling prices of similar homes in the area to justify your offer price.

2. Be careful not to let your feelings rule. Remember, if the offer is turned down, there are (usually) other homes to your liking.

3. Do a background check on the property. How long has it been on the market? Why is it being sold? What are its good and bad points? Doing your homework will help you make an offer that meets the needs of both buyer and seller.

4. Check out the neighborhood and speak to neighbors.

5. Consider the home's resale value.

6. Negotiate about the offer price and other items to be covered in the offer before you sign any formal papers.

When your offer is formally accepted, you sign the purchase agreement which is a legal contract. It covers many items, such as the price, total down payment, and closing date. (The closing date is when you sign the closing or settlement agreement that officially makes the home yours. 

This date may change if all the necessary paperwork is not finished. The offer also states which party (buyer or seller) will pay for which settlement costs, the type of loan you are applying for, and the interest rate. 

Keep in mind that earnest money or a good faith deposit is required when the offer is accepted. This is a cash deposit towards the down payment and shows your commitment to buying the home. 

Ask your real estate agent how much money is needed for a deposit and use your pre-qualification certificate to back up your offer.

Again, to protect yourself, be sure that the purchase agreement is conditional. This means that you can cancel it if you do not secure the loan or if the inspection identified major problems that can't be corrected before closing.

Any Comments? Leave them below. Click here if you want to calculate your mortgage.

Quick Guide to Buying the Best Homeowners Policy Part 2

You may hear the term "standard home insurance policy." Home insurance policies are often similar because there are two organizations that supply policy forms to insurers: ISO Insurance Services Office) and the American Association of Insurance Services (AAIS). 

Some home insurance companies choose to use their own policies. Whichever type your insurer is using, it has to be approved by your state insurance department.

Know the Perils covered in HO-2, HO-4 and HO-6 policies

1. Fire or lightning

2. Windstorm or hail

3. Explosion

4. Riot or civil commotion

5. Damage caused by aircraft

6. Damage caused by vehicles

7. Smoke

8. Vandalism or malicious mischief

9. Theft

10. Volcanic eruption

11. Falling objects

12. Weight of ice, snow, or sleet

13. Accidental discharge or overflow of water or steam from within a plumbing, heating,               air conditioning, or automatic fire-protective sprinkler system, or from a household                 appliance  
 14. Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot             water heating system, an air conditioning or automatic fire-protective system.

 15. Freezing of a plumbing, heating, air conditioning or automatic, fire-protective                         sprinkler system, or of a household appliance.

 16. Sudden and accidental damage from artificially generated electrical current (does not           include loss to a tube, transistor or similar electronic component).

What will vary will be premiums. You can find a wide range of rates among insurance companies for the exact same level of coverage. That's why it's important to shop around.

Basic Types of Home Insurance Policies
Each homeowners insurance policy provides a combination of property and liability coverage and covers loss of use resulting from damage. There are several basic types of home insurance policies:

HO-1

• Basic homeowners policy.

• Covers your house and possessions against 10 different perils.

• HO-1 policies have been discontinued in most states.

  HO-2

• Broad homeowners policy.

• Covers house and contents against 16 perils, which are named in the policy.

  HO-3

• Special form homeowners policy.

• Covers the structure for all perils except those specifically excluded by the policy.

• Contents are covered against perils named in the policy.

   HO-4

• Renters insurance policy.

• Covers contents for 16 named perils and includes liability coverage. It does not insure the      dwelling itself.

• Also includes liability coverage for the renter.

  HO-5

• Premier homeowners policy, generally offered to newer, high-end homes that are well-         maintained.

• Much like the HO-3 policy but contents are covered against all perils except those                 specifically excluded.

• According to the Insurance Information Institute, in some cases, depending upon the              year of construction, the area where you live, your claims history, and other rating                  factors, you can buy an HO-5 for about the same cost as a traditional HO-3.

  HO-6

 • Insurance for owners of co-ops or condominiums.

 • Provides personal property coverage, liability coverage and specific coverage of                    improvements to the owner's unit. Insurance provided by the owner's association                  normally covers most of the actual structure.

 HO-8

• Policy for older homes.

• Covers the same perils as HO-2 but pays only for repair costs or actual cash value,               since replacement cost could make the policy costly.  

• Well-suited for older homes whose market value is considerably less than the cost to               rebuild them.

Home insurance rates

Many factors go into determining the premiums for a homeowners policy. The age of your home, the materials used to build it, where it's located, the square footage and its distance from a fire hydrant all generally play a role in rates.The insurer should be able to give you an estimate for rebuilding your house in the event of a total loss. That estimate should be your dwelling coverage amount.

Replacing personal property      

The extent of coverage for your belongings depends on the loss settlement clause. This clause identifies property that will be valued at actual cash value, and property that will be valued at replacement cost. 

Before buying home insurance, understand the differences among "actual cash value," and "replacement cost." A cash value policy pays for an item's replacement cost, minus depreciation. Replacement cost policies give you more protection than actual cash value coverage. For example, what happens if a burglar steals your six-year-old television set? With  actual cash value coverage, you get only what you would expect to pay for a six-year-old television set. With replacement cost coverage, the insurance company pays to replace your TV with a new set similar to the stolen one.

Extended replacement cost for your house

In another twist to your policy choices, some companies offer coverage for your dwelling that goes beyond its insured value. In other words, your premium might be determined based on dwelling coverage for $200,000, but if your home is destroyed and it costs $215,000 to rebuild, you're covered.

Guaranteed replacement cost coverage pays for the full cost of replacing or repairing a damaged or destroyed home, even if it is above the policy limit. You may have a tough time finding a policy with guaranteed replacement cost.

Extended replacement cost coverage pays a certain amount above the policy limit to replace a damaged home, generally 120 or 125 percent.

Guaranteed and extended replacement cost policies are designed to protect the policyholder after a major disaster when the high demand for building contractors and materials can push up the normal cost of reconstruction.

Home inventories

Many people learn only after a fire or storm that they didn't have enough personal property coverage. Taking inventory will help you decide how much contents coverage you need. It also will simplify the claims process if you have a large loss; no one wants to reconstruct everything they owned from memory.

Your inventory should list each item, its value and serial number, where applicable. Photograph or videotape each room, including closets, open drawers, storage buildings and your garage. Keep receipts for major items in a fireproof place.

Other insurance you may need

Flood insurance

Homeowners policies do not cover flood damage. The National Flood Insurance Program (NFIP) offers flood insurance    

      

Earthquake insurance

If you are concerned about earthquakes, you can get earthquake insurance with a separate policy.

Windstorm insurance

In much of the country, damage from wind is already included in your homeowners policy. But in hurricane-prone areas like Florida, homeowners who want to insure against wind damage needs to buy special windstorm coverage.

Endorsements & add-ons

Home insurance policies contain exclusions and limitations for some types of personal property that are particularly susceptible to loss. Some policies place a specific dollar limit on certain property such as jewelry or antiques.

   

You might want more coverage for certain items than your policy provides. For an extra premium, you can buy endorsements that expand or increase the coverage on these items. Some of the most common endorsements cover jewelry, fine arts, camera equipment, coin or stamp collections, computer equipment, and radio and television satellite dishes and antennas. To insure that these types of items are properly  covered, look into a "scheduled personal property endorsement."

Personal umbrella liability insurance

If you want more liability coverage than your home and car insurance policies provide, you can buy a separate umbrella insurance policy.

Additional Coverage Available

      • Building code upgrades through home insurance companies        

      • Sewer and drain back-ups nationwide.                              

      • Inflation-guard      

      • Special riders for jewelry, collectibles and expensive items if your home is in a special             flood hazard area, you might be required to purchase flood insurance.

Why you should read your policy  

You may renew your home insurance policy each year and never bother to read the new paperwork your insurer sends. But renewal time is when insurers have the opportunity to make changes to your policy. You  won't know your policy has changes unless you read your declarations page each year. For example, insurers that use forms from AAIS might be sneaking in a new exclusion for roof damage that's  cosmetic. So if hail has pock-marked your roof, repairs may not be covered.

   

Also pervasive in recent years has been the spread of percentage-based deductibles for certain perils, such as windstorms. These policies make you liable for 1 to 5 percent of your home's insured value before the insurance company pays. So, if you have a 2 percent deductible and your home's insured value is $250,000,  you're on the hook for $5,000.

Saving money

The best ways to save money on home insurance are to shop around for rates and to make sure you get all the discounts to which you're entitled. 

If you have any questions about your Homeowners Insurance Policy of if you need Homeowners Insurance, call (773) 614-3201