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			    <title>Grand Rapids Real Estate News</title> 
				<link>http://www.realestateingrandrapids.com/homenews/</link> 
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			<title>Insurance Anyone?</title>
			<link>http://www.realestateingrandrapids.com/homenews/news/insurance-anyone</link>
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I am often asked about the different types of insurances that surround real estate. And while I am no expert on the topic, I do feel qualified to give an overview and some insight to assist you in asking intelligent questions to true insurance professionals. So, here it goes:

Homeowner’s Insurance covers the replacement cost of the home and is required by lenders to ensure that their collateral (the home) will be replaced in case of damage. The amount of the policy need not include the value of the land. There are variables in cost by company and by the amount of the deductible.  Many people include riders to their homeowner’s policy for personal property (like jewelry) or get discounts because they tie it to their auto policies, etc. Recognize also that policies vary for owner occupied homes to second homes to vacation homes to investment properties.
Flood Insurance is mandated by the Federal Government if your property is located in a Flood Zone. Flood Insurance Premiums are used to assist FEMA in rebuilding areas affected by flooding (like from a hurricane). Traditionally, “acts of God” have been excluded from many insurance policies. That was what forced the Flood Maps and mandatory coverages. (I imagine there is Tornado and Earthquake Insurance Policies as well, in areas where they are more likely.)
Title Insurance is usually split into two policies – an Owner’s Policy and a Lender’s Policy. Both basically insure the same thing- that the owner of record is the rightful owner and that the liens of record (mortgages, for example) are the ones that everyone has agreed to. The title company searches the public records and certifies the title and the liens. Often, they clear prior liens and handle the transfer of ownership from seller to buyer with the County Clerk. Additionally, they provide information about real estate taxes, judgment and bankruptcy searches, and Certificates of Occupancy and Building Permits.
Life and Disability Insurances are something to consider when you own a home. What if the worst case scenario happens? Depending on your age and health, the cost can be worth it. There are many types of life insurance (term vs. universal life insurance, for example) that can accomplish different goals from paying off your mortgage to planning for retirement. A strong life insurance professional is as important as a strong accountant. Cheapest is rarely best. Financially, many are covered in case of death but get crushed at times of disability. Investigate the cost….it usually makes good sense.

I expect today’s piece to get you thinking about what you must have and what you might consider for insurance. Just scratching the surface. Go get the recommendation of a professional. Check out cost, sure…but don’t lose sight of the concept of protecting your assets and your family.

  
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			<pubDate>Thu, 03 Nov 2011 11:47:42 MDT</pubDate>
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			<title>Is It Really Time to Buy a Home?</title>
			<link>http://www.realestateingrandrapids.com/homenews/news/is-it-really-time-to-buy-a-home</link>
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On Monday, we gave you the links to four different articles that came to the same conclusion: it’s time to buy a home. Today, we want to take a closer look at one of the sources, the JP Morgan’s Market Insights report. Right from the beginning, the paper identifies the greatest challenge in today’s housing market: consumer emotion. They attempt to overcome that emotion with logical reasons why now is the time to buy a home. They break it down to the following.
Price-to-Income Ratio
One measure of housing values is the ratio of personal income to home prices. The report explains where we are today:
“Since 1966, the median price of an existing single family home in the U.S. has varied between 150% and 251% of personal income per household. However, roughly three-quarters of the time it has been in a relatively narrow band between 185% and 230%. In September 2011, the ratio was just 153%, implying that to get back to an average price to income ratio, home prices would have to rise by about 27%.”
Current Mortgage Interest Rates 
With current 30 year mortgage rates, housing payments are at historic lows as compared to personal income.
“During the week of October 7, Freddie Mac reported that mortgage rates had fallen to an average annual level of 3.94%. Assuming the use of a fixed rate mortgage with 20% down, this would make the median mortgage payment on a single family existing home just 6.9% of per household personal income, compared with an average of 14.4% since 1966.” 
Monthly Rent vs. Monthly Mortgage Payment 
Is it less expensive to own a home or rent a home? The answer to this question helps families make the decision whether or not to buy a home. The report explains:
“By the third quarter of this year, we estimate that the implied median mortgage payment had fallen to just 78% of the median asking rent…”  
Bottom Line
The paper comes to the conclusion that now is the time to buy.
“The numbers on housing have an important message for American families today, and particularly younger families setting out on life’s great adventure: Five years ago, at the peak of the home-buying euphoria, it was emphatically a time to rent. Today, when home ownership is depreciated more than ever before, the numbers tell us it is a time to buy.”
We agree.

  
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			<pubDate>Wed, 02 Nov 2011 19:33:22 MDT</pubDate>
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			<title>Real estate moguls in the making</title>
			<link>http://www.realestateingrandrapids.com/homenews/news/real-estate-moguls-in-the-making</link>
			<description><![CDATA[These real estate investors are taking advantage of rock-bottom prices with the knowledge that the markets have to recover at some point. While they wait, they&#039;re making a pretty nice return on their investments as landlords.]]></description>
			<pubDate>Wed, 02 Nov 2011 19:33:22 MDT</pubDate>
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			<title>Will the 30 Year Mortgage Disappear?</title>
			<link>http://www.realestateingrandrapids.com/homenews/news/will-the-30-year-mortgage-disappear</link>
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The federal government is reconsidering their involvement in the home mortgage process. They plan to still ‘guarantee’ certain mortgages. However, they appear to be redefining what they consider a ‘qualified purchaser’. They are discussing stricter lending guidelines in four different areas:

The type of mortgage
The minimum down payment
The debt ratios of the buyer
The FICO score of the purchaser

Today, we want to look at #1.
It appears that there is at least conversation about eliminating the 30 year fixed rate mortgage which has been a staple in this country’s housing industry for some time. Some in government want to duplicate the mortgage process of other countries. In Canada, for example, they don’t even have 30 year fix rate mortgages available. The vast majority of Canadian home loans have a 25 year payout but the interest rate is renegotiated every five years. If rates go down, you will wind up with a lower rate. If rates go up, you end up paying a higher rate. If you want a fixed rate mortgage for 25 years you pay a rate approximately two percentage points higher than the going rate at the time of your closing.
Would the same happen in this country? Last week, Housing Wire quoted Janis Bowdler, senior policy analyst at the National Council of La Raza:
“Without some form of Fannie Mae and Freddie Mac, replacements to support these popular loans, many first time borrowers will be shut out.
“Without that guarantee lenders would not offer 30-year fixed-rate mortgages, at least not at rates the average person could afford. Yes, some would be available but not for the average family but for those with a large amount of inherited wealth they can put to a large down payment.”
Why Is This Important?
You probably want to set your housing expense at the lowest number possible for the longest time possible. This may be the appropriate time to lock-in your long term housing expense as three things seem possible, if not likely, in the future:

Mortgage rates will increase from current historic lows
The 30 year fixed rate mortgage may disappear
Rents will return to historic norms of 3% annual increases 

Bottom Line
If you want to purchase a home of your own but are waiting to see where prices will go, consider what you could be giving up while you wait.

  
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			<pubDate>Tue, 01 Nov 2011 23:36:09 MDT</pubDate>
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			<title>Underwater Refinance Program Expanded</title>
			<link>http://www.realestateingrandrapids.com/homenews/news/underwater-refinance-program-expanded</link>
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At a campaign stop in Nevada on Monday, President Obama announced an expansion of the HARP (Home Affordable Refinance Program) which would eliminate the current maximum LTV of 125%. The initiative is being looked at as a way to reward those homeowners who have been good payers of their mortgages but, because of declining home values, they could not take advantage of today’s lower interest rates.
While the actual details on the program will not be released until next month, here’s the buzz:


It will only pertain to loans currently being serviced by Fannie Mae or Freddie Mac
Because of the removal of the LTV cap, appraisals may not be required
With the only qualifying criteria announced being that the last six payments be on time, it is possible that income documentation may be streamlined and credit scores might be more forgiving
Fees allegedly will be reduced
Incentives may be offered to people who shorten their repayment time
It also sounds that the banks may be given some incentive by not holding them liable for the underwater portion of the new loan (a major incentive for sure).

The government is on the hook for these loans already. By lowering the payments (by offering lower rates), they will likely help these loans to continue to perform and make it less likely for the underwater homeowner to walk away.
The original HARP was expected to help 5 million families.  After two years, it has yet to reach 900,000; therefore, estimates ranging from 800,000 to 1.6 million borrowers who may benefit need to be taken with a grain of salt.
Whether the Administration is looking for purely political rhetoric points or not, my advice to underwater homeowners is too keep an eye out for the final guidelines because you just might be able to lower your payments.

  
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			<pubDate>Tue, 01 Nov 2011 23:36:09 MDT</pubDate>
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			<title>Short Summary on Short Sales</title>
			<link>http://www.realestateingrandrapids.com/homenews/news/short-summary-on-short-sales</link>
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InfoGraphic

  
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			<pubDate>Tue, 01 Nov 2011 23:36:09 MDT</pubDate>
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			<title>It’s Simple: Now Is the Time to Buy a Home</title>
			<link>http://www.realestateingrandrapids.com/homenews/news/it’s-simple-now-is-the-time-to-buy-a-home</link>
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“The millionaire says to a thousand people, ‘I read this book and it started me on the road to wealth.’  Guess how many go out and get the book? Very few. Isn’t that incredible? Why wouldn’t everyone get the book? A mystery of life.”  – Jim Rohn
Mr. Rohn explains that if we want to make the right financial decisions in our lives, we should depend on the same sources the wealthy read. This past month four different iconic financial resources said the same thing:
IT’S TIME TO BUY A HOME!
Here are all four resources.
Forbes Magazine: The Next Mortgage Crisis
Wall Street Journal: It’s Time to Buy That House
MarketWatch.com: Now Might Be the Best Time Ever to Buy a Home
JP Morgan Market Insights: Housing: A Time To Buy
Enjoy reading them!!
 

  
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			<pubDate>Tue, 01 Nov 2011 23:36:09 MDT</pubDate>
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			<title>Uncle Sam Wants You! – To Rent from Him</title>
			<link>http://www.realestateingrandrapids.com/homenews/news/uncle-sam-wants-you-to-rent-from-him</link>
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Today, we are again honored to have Ken H. Johnson, Ph.D. — Florida International University (FIU) and Editor of the Journal of Housing Research as our guest blogger. To view other research from FIU, visit http://realestate.fiu.edu/. Dr. Johnson will also be speaking at NAR’s Conference and Expo in Anaheim. For more information click here. - The KCM Crew
On August 10th, The New York Times reported: “Uncle Sam wants you — to rent a house from Uncle Sam”.  The gist of the story is that the Obama administration is seeking ideas on how to convert the federal government’s inventory of foreclosed properties into rental properties that can be managed by private enterprises or sold in bulk.  The goal here is to stabilize housing markets around the country that are suffering through a wave of foreclosures.  Today, rumors of turning foreclosures into rentals are surfacing again.  Is this a good idea?  If so, how should such a program be organized and managed?  What are some of the potential downfalls of such a program?
To begin with, this is, in general, a good idea for a number of reasons.  First, vacant non-performing assets (empty properties) will begin to provide returns and thus mitigate total eventual losses to lenders and thereby lower the tab to all.  Second, the program should slow down the flood of foreclosed properties and should help stabilize pricing as traditional home sellers will now have fewer foreclosures to compete against.  Third, the program would allow lenders (Fannie, Freddie, and others – perhaps the original lender) to time the selling of foreclosed properties, which would assist in stabilizing the housing markets around the country. 
If turning foreclosures into rental happens, what should not be done?  Renting to the previous owners should not be allowed as this would create significant conflicts of interest, which could easily lead to a deluge of lawsuits resulting in the failure of the program.  Additionally, social engineering should not be allowed.  Let the marketplace decide rent levels.
Where might problems arise from turning foreclosures into rentals?  Though they are very similar, foreclosure laws vary by state.  One general commonality among the various laws is that the lender must mitigate the loss to the previous owner through a timely resale of the property.  These laws can be thought of as the Milton Drysdale deterrent.  It is simply not in the best interest of society to allow lenders to foreclose on property, ride out the tough times, and then resell at a huge profit.  However, these laws never contemplated a situation where foreclosures would be as rampant as they are at present.  Regardless, if the federal government, through Fannie, Freddie, joint ventures with outside investors with Fannie and Freddie, or even the original lenders themselves, becomes a landlord looking for a better environment in which to sell, the likelihood of lawsuits over violations of state foreclosure laws is almost certain.  That is to say, we will probably have “Robo-signing II”.  Thus, the big question is will Congress be willing to back turning foreclosures into rentals with a federal law that overrides state foreclosure statutes. 
Four years ago, I told a graduate audience that banks should get ready to manage property in order to mitigate losses from the coming real estate crisis.  However, state laws would probably prevent this and that federal legislation was needed to allow for lenders to manage and/or re-sell property in a way that balanced market stabilization with mitigating losses to the original owners.  Is turning foreclosures into rentals a good idea?  Yes, the idea is sound.  The only surprise is that it took this long to get around to considering this eventuality.

  
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			<pubDate>Tue, 01 Nov 2011 23:36:09 MDT</pubDate>
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			<title>Foreclosures continue to plague housing market</title>
			<link>http://www.realestateingrandrapids.com/homenews/news/foreclosures-continue-to-plague-housing-market</link>
			<description><![CDATA[Foreclosures continued to plague the U.S. housing market last quarter, while a a growing backlog has caused the length of the foreclosure process to drag on and on.]]></description>
			<pubDate>Tue, 01 Nov 2011 23:36:09 MDT</pubDate>
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			<title>The 4% mortgage - good luck getting one</title>
			<link>http://www.realestateingrandrapids.com/homenews/news/the-4-mortgage-good-luck-getting-one</link>
			<description><![CDATA[A 4% mortgage sounds too good to be true -- and for more than 90% of borrowers, it is.]]></description>
			<pubDate>Tue, 01 Nov 2011 23:36:09 MDT</pubDate>
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