Exclusive Buyer Agency

Confused About Flood Insurance?

The National Flood Insurance Program is a pre-disaster flood mitigation and insurance protection program designed to reduce the escalating cost of disasters. The National Flood Insurance Program makes federally backed flood insurance available to residents and business owners. Standard flood insurance by the National Flood Insurance Program generally covers physical damages directly caused by flooding within the limits of the coverage purchased. Private providers may have higher limits or broader coverage compared to National Flood Insurance Program policies.

A flood insurance policy is intended to cover physical damage to your building or personal property “directly” caused by a flood. Flood insurance covers damage caused by hurricanes, rivers, and tidal waters. Flood insurance covers water that rises, wind insurance covers water damage cause by blowing water, rain, etc. that enter or damage the property due to wind damage to the property.

Flood insurance rates are determined by several factors, including:

The amount and type of coverage
Location and flood zone
Design and age of your home
Elevation (for homes in high-risk areas built after the first Flood Insurance Rate Maps were drawn)

Losses due to flooding are not covered under most homeowners’ insurance policies. It is recommended that homeowners add a Florida Flood Insurance policy to ensure complete protection of your home in case of a hurricane strike.

In some flood zones, flood insurance is affordable at about $1.40 per day (average is $503 per year), and the U.S. government provides a 100% guarantee.

Flood insurance typically requires a 30-day waiting period on new policies. Here are the exceptions:

If flood insurance is being purchased in connection with the creation, increasing, extending, or renewing of your mortgage loan.
If your home has been recently designated in the SFHA and flood insurance is being purchased within the 13-month period following a map revision.
If flood insurance is required because of a lender determining that your mortgage loan that does not have flood insurance coverage should be protected by flood insurance.
If an additional amount of insurance is selected as an option on the renewal bill.
If your home is affected by flooding on burned Federal land that is a result of, or is exacerbated by, post-wildfire conditions when the policy is purchased within 60 days of the fire containment date.

Flood risk zones are identified by the National Flood Insurance Program (NFIP) and are divided into the following three categories:

High-Risk Zone

There is at least a 25% chance of flooding during a 30-year mortgage. All homeowners in high-risk zones with mortgages from federally regulated or insured lenders are required to purchase flood insurance.

Zones: A, V

Moderate to Low-Risk Zone

The risk of flooding is reduced but not completely removed. Even if you live in a moderate-to-low-risk zone, it’s recommended that you purchase flood insurance. About 25 percent of all flood insurance claims come from areas with low-to-moderate flood risk. On average, only two inches of water in your home can cause $7,800 or more in damage. Poor drainage systems, rapid rainfall accumulation, and broken water mains can all result in flooding.

Zones: B, C, or X

Undetermined Risk Zone

No flood-hazard analysis has been conducted, but a flood risk still exists. Flood insurance rates reflect the uncertainty of the flood risk.

Zone: D

Only a licensed property and casualty insurance agent can sell NFIP flood insurance. Customers can find a local one using FEMA’s Agent Locator Tool.

Filed under: Blog, Exclusive Buyer Agency, First Time Homebuyers, Flood Insurance, Florida Real Estate, Home Buyer Advice, Home Buyers, Homebuyer Advice, Homeowners Insurance, Hurricane Preparedness, Uncategorized by Kim Bregman
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Beware of “Too Good To Be True” Lenders

Homeowners beware.

With the potential of a recession and rising mortgage rates; lenders are seeing fewer loan applications and many buyers are not able to qualify for legitimate loans. Homeowners are often coerced into using the equity in their homes to pay off debt, finance unexpected expenses and to cover job losses, etc.

Lenders that over promise are likely to be ones to stay away from. If you cannot qualify for a mortgage with a reputable financial institution if is best to wait to purchase a home until you can.

What Is Mortgage Fraud?

Any misrepresentation of information on a home loan application can be considered mortgage fraud, classified under Financial Institution Fraud (FIF). Mortgage fraud is typically carried out for profit or for housing.

Mortgage scams for profit: Those who attempt mortgage fraud for financial gain are typically lenders, brokers and other entities that make false claims to obtain monetary compensation or equity from lenders and homeowners.

How To Spot Mortgage Scams

In cases of mortgage fraud for profit, scammers most commonly promise victims to save their homes from foreclosure with term modifications and debt management, or to entice buyers with free services and reduced interest rates. Scammers prey on vulnerable homeowners and prospective homeowners who lack education or financial security.

Predatory mortgage lenders will often use tactics to make their offer seem like a good deal. You may be getting scammed. The following signs may indicate mortgage fraud.

‘Too Good To Be True’ Interest Rates

Mortgage rates that are noticeably lower than market interest rates are typically a sign of various hidden fees or even a bait-and-switch tactic. Predatory lenders may try to tell you that you no longer qualify for the advertised rate, or tack on additional fees after locking in the original rate if they think they can get away with it.

Your Loan Estimate Isn’t Honored

Your Loan Estimate gives basic loan information in a standardized format from the U.S. Department of Housing and Urban Development. It includes itemized costs of a loan, including fees, and is sent within 3 business days of a mortgage application. Lenders aren’t allowed to charge fees outside of the credit report fee prior to accepting the terms.

Mortgage Payment Scams

A mortgage payment should remain under 28% of your monthly income. The higher your debt-to-income ratio (DTI), the riskier you are for a mortgage lender. If your lender is recommending a type of home that requires a loan larger than 28% of your disposable income, be wary.

Homes Overvalued

Overvalued property creates risk for legitimate mortgage lenders by generating an inaccurate resale valuation or an inflated borrower income that will be difficult to pay off with existing income.

Penalties For Prepayment

A prepayment penalty is charged for paying off your mortgage too quickly or for refinancing. While prepayment penalties can offer lower overall interest rates, oftentimes, they’re hidden in the fine print of agreements. As a result, many borrowers don’t realize the stipulations of the penalties and are hit down the line with fees. Generally, these penalties are included as a way for lenders to make money on interest payments at the expense of the borrower.

Your Credit Score Doesn’t Matter

Your credit score will always affect your mortgage rate, without exception. If you’re being offered a home loan that states this score won’t affect the mortgage, be wary. These tactics are typically scams that prey on low-income borrowers and generally come with undesirable terms.

Deceptive Marketing

Victims of predatory lending frequently describe being subjected to a flood of phone calls and letters from brokers and lenders, encouraging them to take out a home equity loan.

Red flag: Lenders who engage in high-pressure tactics, telemarketing, cold calling, and deceptive advertising campaigns.

Excessive Fees

Predatory lenders routinely charge borrowers fees totaling as much as 15% to 20% of the loan amount. Fees alone can have a ruinous impact on a homeowner’s equity. But add them to prepayment penalties and you’re locked into a high-rate, financially disastrous loan.

Red flag: You inquire about fees and charges, but you can’t get the facts. They insist there are no “upfront” fees.

Equity stripping

You need money. You don’t have enough coming in each month to cover your expenses. You have equity in your home. A lender tells you that you could get a loan. This is a big shock because you know you will have difficulty keeping up with the payments. The lender encourages you to “pad” your income on your loan application to help get the loan approved.

Equity stripping is particularly dangerous for people who find themselves in financial trouble. Scammers target people who are facing foreclosure or other financial hardships and make false promises of relief. Beware of anyone who pops up at what seems like the perfect time promising to let you cash in the equity you’ve built up without any consequences. Falling for this scam could end up with you losing your home and all the equity you’ve accumulated.

Red flag: Any suggestion that you can qualify for a loan when you know the truth is you cannot reasonably make the payments.

Balloon payment

You’ve fallen behind in your mortgage payments. Another lender offers to save the day by refinancing your mortgage and lowering your monthly payments. But beware. The payments may be lower because the lender is offering a loan on which you repay only the interest each month.

Red flag: Unrealistically low payments.

Loan churning

Senior homeowners who are asset-rich, but cash-poor are prime targets for this scam. A mortgage company contacts you offering to refinance your loan and throw in some extra cash along with it. The problem is, each time you refinance, the fees and interest rates are going up. Red flag: Lenders that contact you and any suggestion that a loan is the way to get your equity to start “working” for you.

Not all lenders are predatory. The best way to protect yourself against those who are is to be keenly aware of their tactics and always on the lookout for the red flags. If you need an explanation, talk to someone you can trust who has nothing to gain or to lose by the decision you make. Be careful how often you refinance your mortgage. Talk to a HUD-approved housing counselor (hud.gov/counseling) if you have questions or concerns about any mortgage loan transaction. Then consider all the costs of financing and repayment before you agree to a loan.

Filed under: Blog, Boca Raton real estate, cash out refinance, Exclusive Buyer Agency, First Time Homebuyers, Florida Real Estate, HELOC, Home Buyer Advice, Home Buyers, home equity, Home Financing, Homebuyer Advice, House Closings, Mortgage Information, peer to peer lending, private money lender, Real Estate, real estate news, Refinancing, Reverse Mortgage, Seller Financing, South Florida Real Estate by Kim Bregman
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Planning for 2023 As Mortgage Rates Rise

If you’ve been house-hunting in recent years, you’ve really been through it. Maybe you were waiting out the market, hoping the rocketing prices would start to flatten. Now, of course, they have — but between 2021 and 2022, mortgage rates have more than doubled, from less than 3 percent to more than 7 percent.

If you are renting and trying to save for a down-payment, the cost of your rental has likely increased as well.

Sellers who are sitting on low mortgage rates are not listing their homes for sale and supply shortages, cost of land, and cost of lending, along with higher labor and building costs have slowed down new construction.

All these factors contribute to a continued shortage of desirable inventory and home prices are staying propped up and not decreasing as one would expect.

Buyers need to adjust their expectations…Every buyer needs to do a gut check on how much house they can afford now. That might seem daunting, but higher mortgage rates don’t have to derail your dream of buying a home. In fact, historically, today’s rates are not considered particularly high.

Review your Budget: When you review your budget, keep in mind that newly built homes typically come with builder and manufacturer warranties and new energy-efficient appliances. Those advantages of a new home can lower your monthly housing costs. That’s especially true if you currently own an older home that needs repairs and has inefficient appliances.

Raise More Cash: Another option to buy a home with a higher rate is to spend more cash up-front. You can use cash to increase your down payment as a percentage of your loan amount, pay for builder upgrades in cash, or buy down your loan’s interest rate. You should work with your lender on the best use of your cash to achieve the lowest ongoing expenses to home ownership.

Evaluate Loan Options: A third strategy is to get a hybrid loan. This type of mortgage has a fixed rate that resets at the end of a specified period and is then fixed or adjustable for the remainder of the term. An example is a 7/1 hybrid adjustable-rate mortgage (ARM). This type of loan has a lower fixed rate for the first seven years. After that, the rate is adjusted annually (that’s the “1” part) for the remainder of the 30-year term.

Hybrid loans can be more affordable since the initial rate is usually lower. But there’s a risk: If you don’t refinance or sell your home before the rate resets, your payment could rise significantly for the rest of the term. If you can’t afford the higher payment, you could lose your home.

Rethink Your Needs and Wants: Buying a less costly home is another way to cope with higher rates. Less costly doesn’t have to mean a home you don’t like or that doesn’t fit your needs.

Reconsider Your Timing: Interest rates fluctuate, sometimes dramatically, over time. If you postpone buying a home, rates might be lower in the future, making the home you want more affordable. Or they could be higher, putting the home you want further out of reach. Experts are predicting the latter. The question for homebuyers is whether waiting and hoping makes sense. The answer is never as clear as a crystal ball.

Experts recently polled project average 30-year mortgage rates to fall between 5-9.31%in 2023. No one is expecting a move downward in the next 5 years. Several factors could lead to unexpected rate movements in the coming year.

Owning a home has certain benefits that renting doesn’t offer. Renting means no control over future [home price or interest rate] increases, no accumulation of equity through price appreciation, no tax deduction for property taxes and mortgage interest if you itemize your deductions, and no benefit for improvements you make to the property. Waiting to buy while you hope rates move lower means forgoing those benefits.

The lost opportunity of not buying due to a fear of higher rates far outweighs the benefits of homeownership. It’s best to take advantage of what the rates are today and build equity sooner rather than later.

Filed under: 2022 Real Estate, Blog, Boca Raton real estate, cash out refinance, Exclusive Buyer Agency, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Foreign Home Buyers, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, House Closings, International Home Buyers, International investors, Mortgage Information, peer to peer lending, private money lender, Real Estate, Real Estate Closings, Real Estate Investment, real estate news, Real estate trends, Refinancing, Relocation, Retirement, second home, Self Directed IRA, Seller Financing, South Florida Real Estate by Kim Bregman
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Shop for a Mortgage as Rates Rise

It is always advisable to shop for a mortgage, but as rates rise the savings can be significant. Each lender offers different loan programs and sets different borrower requirements. It’s important that you get quotes from several types of financial institutions, mortgage lenders, and brokers to find one that offers the best loan program for you.

Banks

Banks are for-profit financial institutions that typically offer several different products such as mortgages, credit cards, checking and savings accounts, and more. Many large banks have branches nationwide or throughout a specific region where you can get in-person support, and they also might offer a wider selection of mortgage products.

One downside to banks is that they tend to charge slightly higher interest rates on home loans compared to credit unions, according to a side-by-side comparison by the National Credit Union Administration.

Credit Unions

Credit unions are nonprofit organizations that offer banking services to their members. In addition to offering lower interest rates on mortgages and other financial products, credit unions have historically earned the highest customer satisfaction ratings.

However, you’ll need to join a credit union to get a mortgage. Some credit unions are open to anyone, but others may require you to work in a certain industry or live in a certain area.

Mortgage Lenders

You might also find a home loan with another type of lender. For instance, online lenders, such as Rocket Mortgage, offer an end-to-end digital process. You may be able to get pre-approved, upload loan documents, and close on the loan all online. By saving money on overhead costs, online lenders may also be able to offer lower rates or special discounts.

Mortgage Brokers

Mortgage brokers are licensed to act as a go-between with you and your lender. When working with a mortgage broker, you’ll have access to a variety of residential loan programs from different lenders. The broker doesn’t make a loan. Instead, the broker has a variety of lenders they work with.

In general, a mortgage broker will have a lot of knowledge of different home loan programs, and a good idea of what you might qualify for, including what interest rate you’re eligible for.

Shop For Best Rates

Getting rate quotes from multiple lenders and comparing offers is one of the easiest ways to save money on your mortgage. That’s because the interest rate is one of the key components of the mortgage’s total cost, and rates can vary considerably with each lender. Despite this, about half of homebuyers skip shopping for the best rate.

To find the best loan for you, research all costs of the loan. Knowing just the amount of the monthly payment or the interest rate isn’t enough. Even more important than knowing the interest rate is knowing the APR — the total cost you pay for credit, as a yearly interest rate. The interest rate is a very big factor in calculating the APR, but the APR also includes costs like points and other credit costs, like mortgage insurance. Knowing the APR makes it easier to compare “apples to apples” when considering mortgage offers.

When you’re shopping around, you may see ads or get offers claiming to have rates that are very low or fixed. But they may not tell you the true terms of the deal as the law requires. The ad may feature buzz words that are signs that you’ll want to dig a little deeper.

Low or fixed rate. A loan’s interest rate might be fixed or low only for a short introductory period — sometimes as short as 30 days. Then your rate and payment could increase dramatically. Look for the APR: under federal law if the interest rate is in the ad, the APR also should be there. Although it should be clearly stated, you may instead need to look for it buried in the fine print or deep within a website.
Very low payment. This might seem like a good deal, but it could mean you would pay only the interest on the money you borrowed (called the principal). Eventually, though, you would have to pay the principal. That means you would have higher monthly payments or a “balloon” payment — a one-time payment that is usually much larger than your usual payment.

You also may find lenders that offer to let you make monthly payments where you pay only a portion of the interest you owe each month. The unpaid interest is added to the principal that you owe. That means your loan balance will increase over time. Instead of paying off your loan, you end up borrowing more. This is known as negative amortization. It can be risky because you can end up owing more on your home than what you could get if you sold it.

Find out your total payment. While the interest rate determines how much interest you owe each month, you also want to know what you must pay for your total mortgage payment each month. The calculation of your total monthly mortgage payment considers these factors, sometimes called PITI:

principal (money you borrowed)
interest (what you pay the lender to borrow the money)
taxes and
homeowners’ insurance

“Mortgage rates rose again as markets continue to manage the prospect of more aggressive monetary policy due to elevated inflation,” says Sam Khater, Freddie Mac’s chief economist. “Not only are mortgage rates rising but the dispersion of rates has increased, suggesting that borrowers can meaningfully benefit from shopping around for a better rate.”

Filed under: 2022 Real Estate, Blog, Boca Raton real estate, cash out refinance, Exclusive Buyer Agency, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, House Closings, Mortgage Information, peer to peer lending, private money lender, Real Estate, Real Estate Closings, Real Estate Investment, real estate news, Refinancing, Reverse Mortgage, Seller Financing, South Florida Real Estate by Kim Bregman
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2022 Hurricane Preparedness Guide

2023 Hurricane Preparedness Guide

Look carefully at the safety actions associated with each type of hurricane hazard and prepare your family disaster plan accordingly. But remember this is only a guide. The first and most important thing anyone should do when facing a hurricane threat is to use common sense.

Know Hurricane Terms:

Hurricane Watch – A hurricane is possible within thirty-six hours. Stay tuned for additional information.

Hurricane Warning – A hurricane is expected within twenty-four hours. You may be advised to evacuate. If so, evacuate immediately.

Storm Surge – Storm surge is simply water that is pushed toward the shore by the force of the winds swirling around the storm. This advancing surge combines with the normal tides to create the hurricane storm tide, which can increase the mean water level 15 feet or more.

Ask your local emergency preparedness office about evacuation plans. Learn evacuation routes.

Plan a place to meet your family in case you are separated from one another in the hurricane.
Assemble a disaster supplies kit ( See information below)
Board up windows. Permanent storm shutters and impact glass offer the best protection. Also, you can use 5/8″ marine plywood. Tape does not prevent windows from breaking.
Know how to shut off utilities.
Make a record of your personal property (take digital photos or video tape the contents of your home and/or business and keep in a waterproof container with you along with your homeowners insurance policy or better yet, upload everything to the Cloud)
Be sure trees and shrubs around your home are well trimmed.
Clear loose and clogged rain gutters and downspouts.
Determine how and where to secure your boat.
Reduce the water level in your pool by about 1 foot. DO NOT drain your pool.
Charge cell phones and back up batteries
Get extra cash since ATMs will be inoperative if power is lost.
Consider flood insurance and purchase it well in advance.

Have a Place To Go:

Develop a family hurricane preparedness plan before an actual storm threatens your area. If your family hurricane preparedness plan includes evacuation to a safer location for any of the reasons specified with in this web site, then it is important to consider the following points:

If ordered to evacuate, do not wait or delay your departure.

If possible, leave before local officials issue an evacuation order for your area. Even a slight delay in starting your evacuation will result in significantly longer travel times as traffic congestion and weather deteriorates worsens.

Select an evacuation destination that is nearest to your home, preferably in the same county, or at least minimize the distance over which you must travel in order to reach your intended shelter location. In choosing your destination, keep in mind that the hotels and other sheltering options in most inland metropolitan areas are likely to be filled very quickly in a large, multi-county hurricane evacuation event.

If you decide to evacuate to another county or region, be prepared to wait in traffic.

The large number of people in this state who must evacuate during a hurricane will probably cause massive delays and major congestion along most designated evacuation routes; the larger the storm, the greater the probability of traffic jams and extended travel times.

If possible, make arrangements to stay with the friend or relative who resides closest to your home and who will not have to evacuate. Discuss with your intended host the details of your family evacuation plan well before the beginning of the hurricane season.

If a hotel or motel is your final intended destination during an evacuation, make reservations before you leave. Most hotel and motels will fill quickly once evacuations begin. The longer you wait to make reservations, even if an official evacuation order has not been issued for your area or county, the less likely you are to find hotel/motel room vacancies, especially along interstate highways and in major metropolitan areas.

If you are unable to stay with friends or family and no hotels/motels rooms are available, then as a last resort go to a shelter. Remember, shelters are not designed for comfort and do not usually accept pets. Bring your disaster supply kit with you to the shelter. Find Pet-Friendly hotels and motels.

Make sure that you fill up your car with gas, before you leave.

Preparing Your Pets for Emergencies Makes Sense.

Get Ready Now.

If you are like millions of animal owners nationwide, your pet is an important member of your household. The likelihood that you and your animals will survive an emergency such as a fire or flood, tornado or hurricane depends largely on emergency planning done today. Some of the things you can do to prepare for the unexpected, such as assembling an animal emergency supply kit and developing a pet care buddy system, are the same for any emergency. Whether you decide to stay put in an emergency or evacuate to a safer location, you will need to make plans in advance for your pets. Keep in mind that what’s best for you is typically what’s best for your animals.

If you must evacuate, take your pets with you if possible. However, if you are going to a public shelter, it is important to understand that animals may not be allowed inside. Plan in advance for shelter alternatives that will work for both you and your pets.

Make a back-up emergency plan in case you can’t care for your animals yourself. Develop a buddy system with neighbors, friends and relatives to make sure that someone is available to care for or evacuate your pets if you are unable to do so. Be prepared to improvise and use what you have on hand to make it on your own for at least three days, maybe longer.

Disaster Supply Kit

I personally prepare a hurricane closet in May with all the needed supplies and materials so that there is never a last minute rush to the store when the shelves have been cleaned out.

Water :

Plan on one gallon of water per person per day for at least 3 days, for drinking, washing, cooking, and sanitation. Extra water for pets
Store as much as possible in plastic containers such as soft drink bottles.
Avoid using breakable containers, such as glass bottles or mason jars.
Fill bathtubs with water for bathing and washing dishes

Food :

Store at least a three day supply of non perishable food.
Choose foods that do not require refrigeration or cooking.
Choose foods that are healthy and high nutrition type. (Canned meats, fruits and vegetables, protein or fruit bars, dry cereal or granola, peanut butter, dried fruit, nuts, crackers, canned juices, non-perishable pasteurized milk, high enery foods, vitamins, food for infants and pets, comfort/stress foods)

Supplies and Equipment:

A battery operated radio with extra batteries
NOAA Weather Radio with tone alert and extra batteries
A flashlight with extra batteries
Blankets or sleeping bags ( store in trash bags to keep dry)
Paper plates and utensils, including a non electric can opener
Candles and matches in a waterproof container
Plastic sheeting and duct tape to shelter-in-place
Toothbrushes, toothpaste, soap, moist towelettes, and other personal grooming items
Paper towels and toilet paper
First aid kit and medicines ( ask your pharmacist or drug supply company for a one month hurricane supply and store in water proof container)
Fire extinguisher
Wrench or pliers to turn off utilities
Cell phone and plug in battery operated charger
Infant formula and diapers
Books, games and toys to keep kids occupied ( remember those batteries)
Important family documents such as copies of insurance policies, identification and bank account records, COVID Vaccine Passport, in a waterproof, portable container
Complete change of clothing including long sleeved shirt, long pants and sturdy shoes
Insect repellent and sun-screen
Paper and pencil
Local Maps
Make sure to keep all of your medications filled.

Business Preparedness

* Have an emergency communication plan in place before the storm hits. How will co-workers stay in contact if the physical location of a business is damaged?

* Turn off all non-critical work devices before the storm hits.

* Alert a third party about business evacuation plans in case a storm makes it impossible to get to your place of business.

* Protect important business documents that you may need quickly, such as property insurance policies.

* Have cash on hand to pay employees or contractors after the storm.

* Know which employees are certified in CPR, EMT, etc.

* If possible, disconnect a building’s main electrical feeds.

* Have a plan to notify all employees, post-storm, about damage and how you’ll move forward.

* Review contracts that are date sensitive and have a backup plan in place to handle potential problems.

* Assess all functions that could be impacted by a lapse in business – cash flow, bills, budgets and any upcoming events.

Links to Hurricane Information:

National Hurricane Center

NWS Hurricane Awareness site

FEMA Hurricane Info

American Red Cross

FEMA

Filed under: 2022 Real Estate, Blog, Boca Raton real estate, Exclusive Buyer Agency, First Time Homebuyers, Flood Insurance, Home Buyer Advice, Home Buyers, home safety, Homebuyer Advice, Homeowners Insurance, Hurricane Preparedness, Insurance Claims, real estate news, South Florida Real Estate by Kim Bregman
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Contract Contingencies Are Returning for Home Buyers

Spiraling mortgage rates on top of record-high and still-rising home prices are leading many experts to predict the real estate market is on the verge of a correction—if it isn’t already in one. They anticipate home prices will flatten, or even go down a bit, in certain markets.

The result is that new buyers would be paying about 50% more for the same home compared with a year ago in their monthly mortgage bills. And that’s greatly diminishing the buying power of many Americans—especially during a time when inflation has hit a 40-year high, gas prices have spiked, and even rent levels are nationally hitting new highs.

However, experts don’t believe the market is in a bubble or a crash is in the cards, like during the Great Recession. The nation is still suffering from a housing shortage that has reached crisis proportions at a time when many millennials are reaching the age when they start to consider homeownership. That’s likely to keep prices high.

In addition, lenders are giving mortgages only to the most qualified borrowers. These buyers are less likely to wind up in foreclosure. And prices aren’t expected to plummet unless another wave of foreclosures and short sales sweeps through the nation.

The real estate market nationwide is slowly shifting back to a more normal market and may be a Buyers’ market in some areas. In the past couple of years buyers have removed contingencies to woo sellers and win bidding wars.

Price is becoming more negotiable and the need to waive contingencies is hopefully becoming a thing of the past.

As the market has started to shift toward a more neutral market, buyers are regaining some power again and able to use contingencies to better protect themselves. As the market shifts, even in red hot markets, more contingencies are likely to appear as part of the process.

Mortgage and inspection contingencies are likely to become more negotiable in included in contracts for the Buyer’s protection, but contracts contingent on the sale of your current home is still not in the cards for most buyers.

Filed under: Blog, Boca Raton real estate, contracts, Exclusive Buyer Agency, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, home Inspections, Homebuyer Advice, House Closings, Real Estate, Real Estate Closings, real estate news, Real estate trends, South Florida Real Estate by Kim Bregman
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Pit Falls of Post-Closing Occupancy Agreements

More sellers want to stay in their home after closing, sometimes for weeks or months. In many cases, they want to do it for a fraction of the fair market rent or even for free. Agreeing to their request gives some buyers an edge over the competition in a bidding war, but it comes with risks.

The Post-Closing Occupancy Agreement allows the Seller to remain in the property for a designated period after the Buyer takes ownership of the property. As easy as a post- occupancy agreement sounds, there are serious implications arising out of a Seller requesting to remain in occupancy of residential property after the Seller conveys title to the Buyer.

When the seller continues to live in the home after closing, all the risks lie with the buyer. What could go wrong? Plenty…. How long will the seller stay? How much will they pay, or will they pay at all? Who is responsible for utilities, HOA fees, property taxes, insurance, pool and yard maintenance, et. al.? If they want to extend the lease, is that possible? What if they decide not to move out? What if the property is damaged after the closing? What if they do not pay the bills?

Despite all these potential and very serious problems, there are some things you can do as a buyer to protect yourself if you decide to agree to this arrangement. Of paramount importance is to retain an attorney to review the Purchase Contract before signing and to prepare the lease or post-occupancy terms prior to Closing. Considerations that need to be negotiated with the Seller include but are not limited to….

Enter a formal lease?
Security deposit?
Escrow proceeds from the sale to cover damages, unpaid bills, et. al.?
Seller secure renters’ insurance.
Capture the entire rent payment from Sellers proceeds at closing and hold in escrow?
Require a walk-through of the property in advance of returning the Seller’s proceeds held in escrow?
Hold back fund in escrow if they fail to vacate the property on the agreed to date?
Can the lease be extended or terminated early?
Who will be occupying the property?

Transactional agents will be very casual about post-occupancy agreements and assume that everything will go as planned. Buyers need to assume that things will go wrong and make sure that they are protected once they close on the property. Always us an Exclusive Buyer Agent to ensure that you are represented by a fiduciary.

Filed under: Blog, Boca Raton real estate, contracts, Exclusive Buyer Agency, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Homebuyer Advice, House Closings, post closing occupancy, Real Estate, Real Estate Closings, South Florida Real Estate by Kim Bregman
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How To Save On Homeowner’s Insurance

Homeowner’s insurance costs are increasing nationwide and is becoming a larger expenditure in the homeowner’s budget.

Florida homeowners insurance costs vary depending on where you live, the age of your home, your home’s characteristics, and other factors. In addition to the cost of the home, the on-going expense of insuring a property should be a consideration when selecting the home you want to purchase. It may prove beneficial to purchase, for a little more money, a new home with impact glass, a new roof, updated plumbing and electrical and one that is not frame construction.

Several factors affect how much homeowner insurance costs and you can make informed decisions in advance of purchasing a home to minimize the cost of insurance.

Location:

The closer you are to the ocean or Intracoastal waterway or if you are in a flood zone will certainly increase the risk of water damage and insuring a home.

The amount of coverage and replacement cost:

What you paid for your home has no impact on what you need to insure your home for. The sales price of your home includes land and land cannot be insured for fire, wind, theft, etc.

Furthermore, the market value can be based upon location, age and how strong or weak the market is. That is why it is very important that you insure your home for the replacement cost value of your home or what it would cost to rebuild your home brand-new with current building codes and materials.

Your home’s age and condition:

Your insurance premium may be higher if you have a home that was built before 2000 and the advent of stricter building codes. One reason is that older homes often have features or construction materials that not as weather resistant as newer construction. Another reason is that older homes may have outdated plumbing or electrical systems that insurers view as higher risk. The home’s condition is also important, even if it’s newer. Insurers often pay special attention to the roof, roof configuration, roof systems, etc. because leaks due to a worn-out roof can cause expensive damage inside your home.

Home Design and Upgrades:

Features of the home you are buying, such as impact glass or storm shutters, reinforced roofing and updated utilities can decrease insurance costs. If you already own a home, these types of improvements can help decrease the risk for fire and water damage.

In addition, given that Florida is a hurricane prone state, Florida requires companies to offer discounts through wind-mitigation improvements.

Discounts are available for the following safety features:

Roof Shape
Roof Bracing of Gable End Roof Deck Attachment
Roof Covering
Roof-to-Wall Connections
Secondary Water Resistance
Doors
Protection of Openings (windows and other openings)

The initial costs for adding a few of these features can be high, but the long-term financial investment can decrease your Florida homeowner’s insurance coverage costs and make your home safer.

If your house presently has any of these features, you may want to have a home wind-mitigation examination completed to submit to your insurance agent or company to add the additional discounts.

Home security and safety features:

Some companies will offer discounts for having a smoke alarm, alarm system or dead-bolt locks, however a number of companies provide additional discounts if you install a home home generator and/ or a fire and burglar alarm that rings at a monitoring station. These systems can be costly and not every system qualifies for a discount rate. Before you decide to buy such a system, discover what kind your insurer suggests, how much the device will cost and how much you will save on your premiums.

Your credit history:

Establishing a solid credit history can cut your insurance coverage costs. Many customers do not recognize that credit is a factor in how insurance providers evaluate you. Many people do not understand the impact credit plays in insurance coverage and well as mortgage costs, but Insurers have found that policyholders with poor credit tend to make more claims and spend less to maintain their properties.

Due to this finding, most insurance companies reward a favorable credit history with extra discounts, once again lowering your homeowner’s insurance premium.

Your deductible:

Increasing your deductibles will help lower your premium. Insurance is to cover you for large catastrophic events; by increasing your deductible you will be saving every year. Just make sure you’ve set aside enough money to cover a larger deductible if you need to file a claim—and to cover more minor repairs on your own.

Additional Discounts:

Insurance Companies might offer additional internal discounts. Not every company offers the exact same discounts, and these types of discounts will vary by company if available.

These discounts might include:

· Discounts for seniors or retirees

· Gated Community Discounts

· Accredited Builder Discounts

· Newer Roof Discounts

· Companion Policy Discounts

· Electronic Policy Distribution Discounts

· Bundling with auto insurance

Your local agent will usually review these with you, but it is also a good idea to evaluate your quote and ask if any extra discounts might be available.

Shop around:

If you’re buying homeowners insurance for the first time, comparing options among several providers is essential. However, don’t focus exclusively on price. It’s also vital to research claims satisfaction among policyholders and exactly what the limits for your coverages are (mold, sinkhole, sewage back-up, et. al.)

Also, when you inquire about a homeowner’s policy, consider your customer experience. Is the agent willing to answer all your questions, discuss your options, and help you decide on a policy that suits your needs?

Filed under: 2022 Real Estate, Blog, Boca Raton real estate, Exclusive Buyer Agency, Exclusive Buyer Agent, First Time Homebuyers, Flood Insurance, Florida Real Estate, Home Buyer Advice, Home Buyers, Homebuyer Advice, Homeowners Insurance, Hurricane Preparedness, Real Estate, Real Estate Investment, real estate news, Real estate trends, South Florida Real Estate, Uncategorized by Kim Bregman
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Short-Term Rentals As Investments

Companies such as Airbnb and VRBO have brought the short-term rental market into the mainstream, making it easier than ever for investors to profit from real estate ownership.

Rather than getting tied into long-term leases, property owners can capitalize on local demand for temporary and vacation rental housing. In recent years, the industry has transformed from a side-gig for homeowners looking to make extra income into a booming industry in many markets across the country.

Although considered great investments, these types of properties require proper management and good knowledge of a local real estate market.

A short-term rental is a property that has a lease term of fewer than 12 months. It could be a single or multi-family home, a condominium, or a townhome. An owner typically buys this type of property with the intent of leasing. It is important to understand the leasing restriction of the community or municipality.

South Florida is an ideal location for a successful short term rental investment and more and more people are looking to real estate to diversify their investment and hedge against inflation.

A short-term property can be profitable under the right management. But don’t think that it will generate passive income without much effort. Before you invest your money, you must look at several components that determine whether your property will create a profit or not.

– Vacation destinations are considered the best for these types of properties, as they are often favored by tourists because of their competitive prices over expensive hotels and five-star resorts.

– Local laws and regulations set a stage up for the real estate market. For example, some cities, like Delray Beach and Boca Raton have strict policies when it comes to how many days your property can be occupied. These types of restrictions could limit your ability to generate a steady income.

If you want to buy a property in the area that is favorable toward short-term rentals, make sure to use a Realtor that is familiar with local laws and regulations governing the real estate market. Additionally, you should also find out what the rules are for a platform such as HomeAway, VRBO or Airbnb.

“Zoning can be an issue zoning and municipal ordinances will dictate which properties can and cannot be used as Short Term Rentals ( STR). This differs from one city to the next. Likewise, municipalities might dictate how many properties within certain boundaries can be used as STRs. For buyers, knowing what the zoning regulations are before purchasing a property is key.

Even if the property is turnkey, investing in the necessities to ready the property for rental could be a considerable. Furnishing, equipping, and securing a property property to make it safe and well-performing are additional costs that an investor needs to consider in their ROI analysis. The cash outlay can be significant in the beginning and may take a fair amount of time for the property to breakeven and start to generate a positive cash flow.

Owning and operating short-term rentals is considered a business by most local governments, and owners must comply with specific workplace regulations and business licensing rules established in their local communities. There are transient occupancy taxes that are also required to pay. Knowing local and government regulations is crucial to operating an STR.

Owners of STRs should not think they can outsmart the local governments. Cities and Counties are becoming much savvier on tracking Short Term Rentals using data mining, machine learning, and other technologies. Right now, governments can find out when, where, and for how long properties have been rented. As technology continues to expand, it’ll be important for buyers to make sure they are adhering to local guidelines; otherwise, their investment might cost them in fines and legal fees rather than make them money.

Since STRs are rental properties and therefore investments of a specific nature, the normal loan pre-approval likely won’t be enough. A lot of lenders will not finance for STRs or hotel properties.

When shopping for a mortgage it is important to make clear to the lender how the buyer intends to use the property, and merely stating that it will be used as an investment isn’t enough. Likewise, a regular homeowner’s insurance policy won’t cover an STR either. You will need to secure insurance specific to owning a rental property and it will be more expensive than a normal Homeowners Insurance Policy.

A short-term rental property is one of the best ways to generate a steady income from a few hundred dollars to a few thousand dollars a month. Although it’s often considered a form of passive income, running it requires real estate prowess, time and money investment, and excellent communication skills. However, with the right management and favorable market conditions, a real estate investment can become a successful enterprise and generate thousands of dollars per year.

Filed under: 2022 Real Estate, Blog, Boca Raton real estate, downtown boca raton, Exclusive Buyer Agency, Exclusive Buyer Agent, Florida Real Estate, Foreign Home Buyers, Home Buyer Advice, Home Buyers, Homebuyer Advice, Homeowners Insurance, International Home Buyers, International investors, Jupiter FL Gated Communities, Real Estate, Real Estate Investment, real estate news, Real estate trends, second home, short term rentals, South Florida Real Estate, vacation home by Kim Bregman
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Using Home Equity To Buy Another Property

Interest rates are rising and so it the equity in your current real estate holdings. There are alternatives to financing a second home or investment property other than a traditional mortgage. If you have a large amount of equity in your first home, you could obtain enough money through a Home Equity Loan to pay for most—if not all—of the cost of a second home.

Using a home equity loan (also called a second mortgage) to purchase another home can eliminate or reduce a homeowner’s out-of-pocket expenses. However, taking equity out of your home to buy another house comes with risks.

If you’re interested in using home equity to purchase a new home, the value of your house will need to be high enough to support the loan, and you’ll have to meet your lender’s requirements. Here’s how to get a second mortgage to buy another house.

1. Determine the amount you want to borrow. Before taking equity out of your home to buy another house, decide how much you want and need. Home equity loans limit how much you can borrow. In most cases, you can only access up to 85% of the equity in your home.

2. Prepare for the application process. Your approval for a home equity loan will depend on multiple factors. The value in your home will determine the maximum amount of equity available, and your financial information will determine how much of that equity you can borrow. In addition, your lender will look at your credit score, income, other outstanding debts and additional information.

3. Shop around for a home equity loan. When taking out a home equity loan for a second home, you can use any lender. The loan does not have to be with your current bank or mortgage company. So the best way to get a competitive interest rate is to shop around and get quotes from multiple lenders. As you compare, look at the interest rate, loan terms, fees and estimated closing costs. You can also negotiate with the lender on the rate or a particular term.

4. Apply to the loan with the best terms. Once you’ve determined the loan with the best terms, you’re ready to apply. You’ll submit the application and provide the requested information. Your lender will order an appraisal of the home or determine the value using another method.

5. Close on the loan. After you go through the underwriting process, your loan will be ready to close. Before finalizing the loan, make sure you understand the terms carefully. Also, know that the Three-Day Cancellation Rule allows you to cancel a home equity loan without penalty within three days of signing the loan documents.

Before you use a home equity loan for a second home, consider the pros and cons of taking equity out of your home to buy another house.

Pros:

· You’ll reserve your cash flow. Using home equity to buy a second home keeps cash in your pocket that you would otherwise use for the home purchase. This increased cash flow can result in a healthier emergency fund or go towards other investments.

· You’ll increase your borrowing power. Buying a house with equity will allow you to make a larger down payment or even cover the entire cost — making you the equivalent of a cash buyer.

· You’ll borrow at a lower interest rate than with other forms of borrowing. Home equity products typically have lower interest rates than unsecured loans, such as personal loans. Using home equity to purchase a new home will be less expensive than borrowing without putting up collateral.

· You’ll have better approval chances than with an additional mortgage. Home equity loans are less risky for lenders than mortgages on second homes because a borrower’s priority is typically with their primary residence. This may make it easier to get a home equity loan to buy another house than a new separate mortgage.

Cons:

· You’ll put your primary residence at risk. Using a home equity loan to buy a new house can jeopardize your primary home if you’re unable to handle the payments.

· You’ll have multiple loan payments. Taking equity out of your home to buy another house means you’ll potentially have three loans if you have a mortgage on both your primary residence and the second home in addition to the home equity loan.

· You’ll pay higher interest rates than on a mortgage. Home equity products have higher interest rates than mortgages, so you’ll be borrowing at a higher total cost.

· You’ll pay closing costs. When using equity to buy a new home, you’ll have to pay closing costs, which can range from 2% to 5% of the loan amount.

Other options for buying a house with equity

Using a home equity loan to buy another house is just one path borrowers can take. Here are a few additional options for using equity to buy a new home.

Cash-out refinance

A cash-out refinance is one way to buy another property using equity. A cash-out refinance accomplishes two goals. First, it refinances your existing mortgage at market rates, potentially lowering your interest rate. Secondly, it rewrites the loan balance for more than you currently owe, allowing you to walk away with a lump sum to use for the new home purchase. Taking equity out of a home to buy another with a cash-out refinance can be more advantageous than other options because you’ll have a single mortgage instead of two. However, interest rates on cash-out refinances are typically higher than standard refinances, so the actual interest rate will determine if this is a good move.

Home equity line of credit

A home equity line of credit (HELOC) is another option for using home equity to purchase a new home. HELOCs are similar to home equity loans, but instead of receiving the loan proceeds upfront, you have a line of credit that you access during the loan’s “draw period” and repay during the repayment period. This method of using equity to buy investment property can be helpful if you’re “house flipping” because it allows you to purchase the property, pay for renovations and repay the line of credit when the property sells. However, interest rates on HELOCs are typically variable, so there is some instability with this option.

Reverse mortgage

Homeowners 62 or older have an additional option of using equity to buy a second home — a Home Equity Conversion Mortgage (HECM). Commonly known as a reverse mortgage, a HECM allows borrowers to access home equity without making payments. Instead, the loan is repaid when you leave the home. Reverse mortgages provide a flexible way of using equity to buy another home, as borrowers can choose between receiving a lump sum or a line of credit. However, keep in mind that while you won’t make payments with a reverse mortgage, interest will accrue. This causes the loan balance to grow and can result in eating up all the home’s equity.

Alternate forms of financing for purchasing a second home include:

Private money lenders
Seller financing
Peer-to-peer lending
Hard Money Loans
Personal Loans

Filed under: Blog, Boca Raton real estate, cash out refinance, contracts, Down Sizing, Exclusive Buyer Agency, First Time Homebuyers, Florida Real Estate, Foreign Home Buyers, HELOC, home equity, Home Financing, Homebuyer Advice, House Closings, International Home Buyers, International investors, Mortgage Information, peer to peer lending, private money lender, Real Estate, Real Estate Closings, Real Estate Investment, real estate news, Real estate trends, Refinancing, Retirement, Reverse Mortgage, second home, Self Directed IRA, Seller Financing, South Florida Real Estate, vacation home by Kim Bregman
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