Home Insurance 101

Posted on March 7, 2018 by juddblog

When it comes to home insurance not all policies were created equal. So how do you know if you’re getting the right home insurance? There are a lot of things to consider when it comes to home insurance. So here’s a list of some things that you should know in the future when you’re looking to move!

What it Covers
It’s important to know what your homeowners insurance covers. Most people assume that everything is covered once they have insurance, but this is not the case. It’s important to know this before any damage has occurred so you aren’t surprised. So when deciding what needs to be covered, think about the value of you house and your belongings as well as the cost of living.

How Do I Know If I Have Enough Coverage?
A good way to know if you have enough coverage is to get an appraisal. This will help you determine the replacement cost of your home. It is suggested the best way to insure your house is to opt for a guaranteed, or replacement, value coverage. This option usually costs a little more, but in most cases it will cover 100 percent of replacement costs.

How Much Does it Cost?
The cost of homeowners insurance varies for every property. Depending on the condition and location of your home, as well as your credit score, the cost of homeowners insurance will be determined.

How Can I Save?
The best way to save on your rates is to bundle your home and auto insurance together with the same insurance company. The amount you save will be different depending on the insurance company, so do your research before making your final decision!

Can It Be Canceled?
Your homeowners insurance can drop you and or cancel at any time. Being dropped is different from being canceled. When being dropped your policy is not renewed after its expiration date and you must look for another provider. When your homeowners insurance is canceled it is most likely due to specific circumstances. From non-payments to an increase of risk, there are a number of reasons it could get canceled. In the event of a cancellation you’ll receive a 10-30 day notice to start looking for another provider.

Keep In Mind, You Aren’t Covered for Everything
As stated above, most people think they are covered for everything when they get homeowners insurance, but they’re not. If someone were to get hurt on your property there is the possibility of being sued. So, get an umbrella liability insurance as well as homeowners insurance and you’ll be covered for a certain amount depending on your provider.

5 Common Home Mortgage Mistakes

Posted on March 2, 2018 by juddblog

There are many steps to take while buying a home, but figuring out financing is one of the most important steps of the process. Financing doesn’t get discussed as much as it should during the home buying process, which leads to common mortgage mistakes made by homebuyers. When buying a home it’s important for buyers to be educated. If they make one of these mistakes it could be the difference between getting approved for a loan or not. So if you’re thinking of buying a new home make sure to avoid these common mortgage mistakes.

1. Getting Pre-Qualified for a Mortgage, Not Pre-Approved
Getting pre-qualified for a mortgage is completely different from getting pre-approved. This is a common mistake that many homebuyers make when applying for a loan. Not getting a pre-approval when buying a home is a huge mistake. There is a distinct difference between pre-qualified and pre-approved. The lender, without any research, often does a mortgage pre-qualification based on the information that the borrower provides. However, a mortgage pre-approval is issued after the lender reviews important financial information based on the borrowers pay stubs, tax returns, and credit reports. It’s important to know the difference and get the pre-approval so that you can avoid this common mortgage mistake and make the home buying process easier.

2. Putting No Money or Little Money Down
When putting no money or little money down you are at more of a disadvantage compared to others who have put a good amount of money down. When you pay little to no downpayment there is very little equity in your home, which could potentially hurt you in the future. Also, you’ll probably have to pay mortgage insurance as well as higher interest rates on your mortgage if you opt for a smaller downpayment. When making this decision it is important to weight the pros and cons. If you can’t put a substantial amount down don’t worry, you can still make it work. However, if you can afford to make a bigger downpayment it is almost always the better option to go with.

3. Skipping on Locking Your Mortgage Rate
Later into the mortgage application process, one of the decisions you’ll have to make is whether to lock in you mortgage rate or not. Whatever you do, do not skip on locking the mortgage rate. When you don’t commit to the mortgage rate and decide to float your mortgage rate instead, you may put yourself at risk. You can potentially end up with a higher rate than what you would have had if you decided to lock your mortgage rate. So it’s important to remember during the process to always lock your mortgage rate. Better safe than sorry!

4. Overlooking the Total Cost of Owning a Home
Owning a home is much more than just paying you monthly mortgage. There are other costs that come with owning a home and applying for a mortgage. It is extremely important t understand how much it costs to buy a home. Take into account repairs, utilities, groceries, insurance, and other such expenses. When buying a home keep this in mind and crunch the numbers so that you won’t be in a vulnerable position in the future.

5. Not Having Job Stability
When mortgage companies are deciding to approve or deny a borrower a loan they review the current and previous job history of the borrower. Having a sporadic job history will make attaining a home loan difficult for the buyer. Job stability is vital when getting approved for a home loan. Most mortgage companies are looking for at least two years of work in the same occupation. Also, if you’re changing jobs or job positions ask your employer if you can start after the closing date. Changing positions during the process of receiving a mortgage loan will complicate the process. The lender can easily reevaluate the stability of your position and change his or her mind. So keep this in mind when looking for a home, it could potentially hinder you when getting approved for a loan.

Preparing To Buy A New Home: 7 Financial Tips

Posted on January 15, 2018 by juddblog

Buying a house is a huge step for many individuals or families. The task can be nerve-wracking at times because it is most likely the biggest purchase of your life. How do you know how much you can afford? Will you be approved at the rate you want? Don’t let financial stress hinder your experience, bypass the surprise expenses and be completely prepared to navigate the home buying process with these seven financial tips.

1. Check Your Credit Score/History
Your credit score is a major component when it comes to securing a mortgage. It is basically an overview of how much you spend and if you are able to pay your bills in a proper amount of time. Don’t spend more than you earn, lenders are typically looking for 12-18 months of positive history, which includes no late or missed payments and modest balances on credit cards. A good credit score is key to getting approved for a loan. If you don’t want any surprises, make sure to check your score.

2. Pay Your Bills On Time
Paying your bills on time directly affects your credit score. Your credit score is crucial to procuring a mortgage, so it is absolutely critical to pay all of your bills on time. If you think you might have trouble, set up a plan to pay off your bills and get your credit score up.

3. Don’t Open New Lines of Credit
Opening new lines of credit in a short period of time is seen as a risk and can actually lower you credit score. Many lenders will look for this and determine whether you are a high risk. Also, if you know you are applying for a mortgage, avoid making big purchases using your credit card. This can be seen in a negative light by a lender.

4. Research Mortgage Options
When it comes to your mortgage rate, it is important to figure out what loan type is right for you. Is a 30-year, fixed rate the right choice or could you afford larger monthly payments at a lower interest rate in a 20-year or 15-year fixed loan? Alternatively, you could apply for an adjustable-rate mortgage, which comes with a lower interest rate for the first few years but is considered slightly riskier. Crunch some numbers and determine what is the best fit for you before you borrow.

5. Determine How Much You Can Afford
Like researching mortgage options, look into your personal finances and determine what you can afford. Most of the cost will be towards your mortgage. However, don’t forget to add up all the other costs that come with moving as well as your other everyday finances. Make sure to crunch the numbers and figure out what will work best for you, and don’t forget the taxes that come with home ownership! You’ll get an interest deduction when you file, but taxes in some locations can be very costly.

6. Save Your Money!
This seems like a given, but there are a lot of surprise costs when buying a house. Don’t be taken aback by these costs, be prepared. There will always be a down payment when buying a new house. It is typical to put 20% down, but you may be able to put down less. However, that isn’t always the best move. The bigger the down payment, the less you need to borrow and pay monthly. This can be a hefty price and can be the hardest part for many homebuyers. So be sure to start saving early. Despite a hefty down payment, there are other costs to prepare for when buying a home. It’s easy to forget about closing costs, which is usually 3-6% of the loan amount, as well as move-in and after move-in expenses. That’s why you should save your money early so you are prepared for these costs and budget correctly so that you can start off on the right foot.

7. Buy a Home for Tomorrow
Most people look for a home they want now, but they don’t think about what they’ll need for the future. It’s important to meet your current needs, but the future is just as important, if not more important than the present. Buy what works for the future you and you’ll be guaranteed to stay in love with your new home.

7 Ways to Lower Your Heating Bill

Posted on November 17, 2017 by juddblog

With fall in full effect and the impending winter close behind its smart to start thinking about your heating bill. Heating your house in essential for these colder months, but it can get rather costly. Here are seven ways to lower your heating bill, yet still keep your home warm and cozy.

1. Use a Programmable Thermostat
One of the easiest ways to lower your heating bill is to use a programmable thermostat. Or if you don’t have a programmable thermostat, at least use the one you already have properly. Turn down the thermostat 10 degrees when you go to work and bed or leave the house for an extended period of time. The U.S. Department of Energy says for every eight hours you turn your thermostat down, you can possibly save up to 15 percent on your heating bill.

2. Bundle Up
Lower your thermostat by bundling up. That’s right, layer on warm clothing when your home and you won’t feel the difference when you lower your thermostat. Don’t forget about socks! If your feet are cold, the rest of your body will also feel cold.

3. Check For Drafts
Windows and door are the biggest culprits for creating drafts in your house. In order to check for them use a candle or incense and hold it by the windows and doors. If there is a draft you will see the candle light flicker or the incense smoke will escape where the air is being let in.

4. Change Your Filters
Most people forget to change their filters and it is a costly mistake when it comes to your heating bill. A dirty filter can make costs skyrocket. The type of heater you have will affect when and how many times you should change your filter. If you have a gas heater, check the filter every other year. If you have electric or oil, check it once a year.

5. Close Your Fireplace Flue
If you have a fireplace in your house make sure to close the fireplace flue. This seems straightforward, but many people forget about it. If you don’t close the flue, it’s like having a huge hole in your roof letting the cool air in.

6. Use a Space Heater
Some people avoid using a space heater because they think it will make their electric bill higher. However, if you use the space heater properly you can still save on your heating bill without increasing you electric bill drastically. Keep the space heater where your family gathers and turn down the thermostat. Every degree below 70 can save you three percent on your heating bill. An electrical space heater that uses 1500 watts costs approximately 14 cents per hour to use. So your electric bill will go up, but the costs you save from heating will offset the cost of using a space heater. Check out these space heaters and find the perfect one for you!

7. Keep Heating Registers Clear
Don’t block your heating vents with furniture and rugs; make the most of the heat by moving any furniture and rugs away from vents. Also, if you aren’t using a room in your house close the door. There’s no sense in heating a room that isn’t used. So keep the heat where it’s absolutely necessary and stay warm all fall and winter long.

Steps To Choosing The Right Mortgage With Your New Home

Posted on July 29, 2016 by juddblog

For those who are ready to purchase a new home within the next year or two, it’s important to know the steps in the home buying process to not only save money on your home, but also save money on your mortgage. Here are some factors to consider before choosing the mortgage that is right for you and your new home:

First things first, how much do you want to borrow? Mortgage calculators are available online and can even tell you how much you can be borrowing. Ultimately, it’s good to know how much you want to be spending a month or how much you want to give as a down payment. After you know your maximum monthly payment or down payment, you can decide what you feel comfortable with spending and choose a mortgage loan that works best for you.
Need to know how much home you can afford before you start your home search?Check Judd Builder’s Mortgage Payment Calculator:
http://juddbuilders.com/mortgage-calculator.php
The most common mortgage is the conventional loan and majority of buyers choose the 30-year fixed rate option. Conventional loans cannot be used by a home that is more than 4 units and a popular conventional mortgage program is the Conventional 97, which allows for a minimum down payment of just 3% on a home. FHA loans are insured by the Federal Housing Administration and are more popular due to the flexible approval standards and low down payment requirements.
Fixed or adjustable rate? Depending on your financial situation and goals, either rate could be a good fit. For people planning on living in their home for a shorter period of time, adjustable- rate mortgages (ARMs) may be more beneficial. ARMs usually have lower interest rates in the first years and then can fluctuate to match current market trends. Fixed mortgage rates do not change. Homeowners keep the same interest rate for the entire life of the loan, which enables them to create a consistent housing budget.
Your credit score is important to know before choosing a mortgage for your home. People with high credit scores get additional mortgage options and people with low credit scores get more aggressive mortgage rate options. Spending your money responsibly and paying your bills on time account for majority of your final credit score, along with the type of credit you use and how much credit your using at a time.

Having all the information you need as well as knowing as much as you can will help you obtain the mortgage that will be most suitable for you for you to live comfortably in your new home!

The Tax Advantages of Buying a Home

Posted on September 28, 2015 by juddblog

Aside from having your own place and setting it up exactly how you want it, there are other benefits of buying a home, financial benefits. As a homeowner, taxes become more complicated than if you are renting but it is worth it when you see the money you will save at the end of the day.

How deductions work:

There are deductions and credits in the tax world. Credits are like a coupon, they are taken off of your bill. A tax deduction reduces your adjusted gross income, which then reduces your tax liability. So, if you’re in the 25% tax bracket, your tax liability will be reduced by 25% of the total claimed deduction. If you claim a $2,000 deduction you can expect your tax liability to drop by about $500.

The most common types of deductions include mortgage interest, real estate taxes, points and private mortgage insurance (PMI).

For the most part, you can probably deduct all of your home mortgage interest. There are some exceptions such as there being a $1 million yearly cap on the amount you can deduct but that probably doesn’t apply. You can even deduct late fees in many circumstances.

The money you pay in property taxes is deductible also. You’ll find the amount on your 1098 form if you pay for your taxes through a lender escrow account. If you pay directly to your municipality, you have personal records in the form of a check or automatic transfer.

With a new loan, you may have paid points to your lender. Points are normally priced as a percentage of the total. As long as you actually gave the lender money for these points, you will get a deduction. If you refinanced your loan, you get a deduction for points over the lifespan of the loan. Ever time you give a mortgage payment, points are put into the loan which can be deducted each month you made payments.

Private mortgage insurance: If you took out a loan in 2007 or later, you may be able to deduct your PMI. If you’re single and your gross income is less than $50,000, you’re eligible for the deduction. For those who are married, the starting point is $100,000.

For the full article on tax deductions when buying a home, click here.

Why Your Credit Score Matters

Posted on August 27, 2015 by juddblog

Your credit score: 3 simple numbers that largely determine quite a few important financial aspects including what type and how much credit you obtain, what interest you’ll pay and sometimes even if you are eligible for the job you want.

Here are some important things you need to know about your credit score:

The large three credit bureaus mainly focus on what you owe and your repayment history
The most commonly used credit score (a FICO score) has a range from 300 to 850
Standards can change, and for some lenders have increased as to what is seen as a good score
Experts have agreed on 720 being a good score and 740 will typically get you the lowest interest rates as well as the best terms

Your FICO score is based on five factors, weighted as follows:

Your payment history is 35 percent
Amount of debt you owe is 30 percent
Length of you credit history, where typically longer is better, is 15 percent
Amount of new credit you request is 10 percent. Too many requests, especially in a shorter period of time, is a negative
Types of credit you use is 10 percent

Checking your credit:

Consumers are entitled to one free credit report every 12 months
The three credit bureaus support the website http://AnnualCreditReport.com
Your credit report will have detailed information: be sure to check for errors and fix them
Your actual credit score may cost a nominal fee, such as $10, but its an advisable investment

To improve your credit score over time; pay your bills on time, reduce debt, look out for errors in your credit report and pay off your bad debt and ask for it to be mark as paid on your credit report. Patience is important in improving your credit because it doesn’t happen fast but these steps are known to help your score.

Determining How Much You Can Afford to Borrow

Posted on August 18, 2015 by juddblog

How can you be certain how much you can afford when applying for a loan? Many home shoppers find a quick fix answer on websites that provide an online calculator. Simply entering your monthly income, expenses and what you believe to be your credit score in a computer program won’t accurately predict what a specific lender will actually agree to lend you. More important, it won’t give you insights into the often flexible, case-by-case factors that lenders can use in order to get your loan application approved.

Here’s what really matters to lenders and how you can more accurately foresee whether or not you’ll qualify for a given loan amount.

1. Ratios are important: Every mortgage lender uses debt-to-income (DTI) ratios to judge your financial capability to repay a loan. It is used to measure your gross monthly household income and compare it to two types of debt: The money you spend each month on core housing-related expenses combined and the amount you spend on non-housing debts, such as credit cards, auto loans, student loans, etc.

2. Your Housing Ratio:

How much will your top housing-related costs be per month and what percentage of your income will they represent?

These housing costs include

Principal, interest, property taxes and hazard insurance on the loan you’re applying for
Homeowners association, condominium or cooperative fees that you are required to pay
Any additional fees required for your mortgage or property, such as flood insurance or mortgage insurance premiums.

3. Your total debt ratio: This ratio is the most significant. A lender will take your total housing expense and add all other recurring debt payments that you have, including credit cards, auto loans or leases, personal installment loans, student loans, child support and alimony payments.

4. Loan types matter a lot: For majority of new buyers, the type of mortgage they choose will have a large impact on what they can afford. There are four major types of mortgages:

Conventional: loans intended to be sold to Fannie Mae or Freddie Mac, the giant mortgage investment companies. These loans generally require higher down payments and stricter underwriting standards than government agency-backed loans.
FHA: Federal Housing Administration-insured loans are designed for first-time buyers and those with less-than-perfect credit histories.
VA: Provided by the U.S. Department of Veteran Affairs, these guaranteed mortgages are reserved for active duty and retired military personnel.
USDA: Also called a Rural Development Loan, these mortgages are intended to serve buyers in rural and small towns, where credit availability can be tight.

For more details on loan tips along with mathematical examples, click here.

5 Surprising Homeowners Insurance Facts

Posted on July 22, 2015 by juddblog

Although necessary, Homeowners insurance can be rough on your budget, but there are smart ways to get high-quality insurance and save money too. Below you will find 5 surprising facts about what affects homeowner insurance quotes.

1. Credit Is An Important Rating Factor: Your credit history plays a role in things such as the interest rate you pay for credit accounts, and whether you can rent an apartment, but it also affects your insurance premiums. A past study from insuranceQuotes.com study found that if you have fair or median credit, you pay 29% more on average nationwide for home insurance than someone with exceptional credit. But if you have poor credit, your premium will almost double!

2. Making A Claim Affects Your Rate: No one wants to ever have to use their homeowners insurance, but it’s there just in case. In the unfortunate event that you have to turn to your homeowners insurance, not only is it a hassle to repair your home, but making a claim can make your rates shoot up! Depending on the type of claim you make and what area you live in, your annual premium could increase about 9% on average nationwide from just one claim.

3. A Previous Owner’s Claim Can Affect Your Rate: When it comes to claims history on a home, even any prior owners’ insurance claims made over the previous 7 years can affect the homeowner insurance rate that you have to pay. The reasoning for this is, an insurer sees a home/property with multiple claims as a higher risk for having more claims in the future, and may charge you more because of that.

4. Some Dog Breeds Are Blacklisted: Surprisingly, your loving pet can possibly cause problems with your home insurance. Since dog bites make up one third of claims and on average are $30,000 per claim, insurers may be particular about the breeds living in your home. Some are blacklisted all together and others you will have to pay an inflated rate. A few of the most commonly blacklisted breeds include Boxers, Great Danes, German Shepherds, Pit Bulls, Siberian huskies and Rottweilers.

5. Not Everything Is Covered: It is important to know that a lot of policies state in order for something to be covered by home insurance, it must be sudden and accidental such as natural disasters. Examples of things that may not be covered include mold or sewer backups. Also, some personal items have coverage caps. Jewelry, artwork, computer equipment, silverware or firearms may only be covered from $5,000 to $10,000. You should raise the coverage of any expensive belongings to make sure your policy pays out enough in the event that they are damaged.

To refer to the original article, click here!

Housing in the Second Half- Buyers, Renters & Homebuilders

Posted on July 16, 2015 by juddblog

According to CNBC, the second half of the year is mainly about affordability for buyers and renters. Housing prices still continue to rise, but at a slower pace than they were this time last year. Mortgage rates; however, on a straight path going up. The short supply of homes for sale will continue, which is keeping prices elevated. Fortunately though, at some point higher mortgage rates will hit affordability and could outdo that short supply.

Homebuilders are struggling themselves by tight credit and a shortage of labor. They have not increased production much this year and it does not look like they are going to in the next six months. Builders are also only building for contract buyers. There will be an increase in new construction, but not enough to fix the supply issue.

It’s not getting any easier for renters in the near future and the demand continues to grow. The demand for occupancy is at a new high, which gives landlords the upper hand with pricing. As new homes form, majority of these occupants are renters. Renters do not tend to be turning into buyers, which will not change in the second half since high rents make it harder to save for a down payment.

The biggest change in the second half will most likely be a larger emphasis on mortgage credit availability. Lenders are seeing new regulations that will force them to be more careful but rising rates will make them want more business. Independent lenders will tend to be more flexible and creative with credit as they strive to get more business.