Tell us a little bit about your company and the services you offer.

Kenneth Jeanes: Boardwalk Insurance Group has been in business since 2008. Our CEO owned another agency previously and then started his own home insurance carrier in 2007. We have the capability and the resources to write almost any type of risk, from your home insurance to your business insurance. I personally have been in the insurance industry since 1997 and was previously an underwriter for an insurance company.

Is there something about getting insured that most new homeowners don’t know that they should know?

I do not think most people realize there is now a credit score for your insurance. As with a lot of other things in life, your credit can help or hurt you getting the best insurance rate. It is important to note that some carriers do not use credit as a factor and each company has their own criteria for determining where you fit in their scoring.

How would you suggest that a new homeowner approaches “shopping” for home insurance? At what point should they start the process?

I find that a lot of people ask their friends and family with whom they are insured and if they have been happy with their service. If I were the one asking the questions, I would also ask if they have had a claim with their carrier and how it was handled. I would also get a few different quotes, however I would not call every agent in town because most of us have a lot of the same carriers. When I am quoting a new account for a client, I provide a few different options to them and explain the pros and cons of each policy. For instance, one may have a higher limit for theft of your jewelry, but the annual cost is higher. I would wait until you have decided on the house you want; a good insurance agent should be able to provide a quote the same day or the day after your call. If you are asking for an insurance quote on 10 different properties in the same area and price range, the quotes are most likely going to be very similar.

What do you consider “adequate” coverage for a new home and how do you determine the amount?

Most insurance agents and the companies they offer provide cost-estimating software, which helps determine the value of the home. An agent will, of course, ask how much you are paying for the home, but that does not mean that would be the replacement value should there be a total loss. When an agent uses this software, they can input the details about your home and the system will calculate how much it would cost to rebuild your home at today’s rates. You should make your agent aware of things that have been added such as wood floors or a remodeled kitchen so they can factor in those items.

Why do home insurance rates/premiums increase? Is there any way to prevent this?

Rates are always changing and therefore premiums are always changing. For example, in Houston we have had and will continue to have hurricanes in our area every few years. We have had large claims because of these hurricanes and therefore our rates are higher than the rest of the state. A lot of times your rates have nothing to do with you, it may have to do with the higher claims frequency in a certain area or the area is a higher risk, such as a coastal exposure. Your rates can also be affected by your own credit score and your claims history at a previous residence. I would advise making sure that your home is correctly insured. While it needs to be insured for replacement cost, sometimes you can be over-insured. Many policies have an automatic increase feature which increases your dwelling value each year for inflation. This can be accurate or you may be over-insured after a few years. Talk to your agent about re-evaluating the replacement cost of your home if you think this is the case. Also, you can reduce your premium significantly if you have a central station alarm and working smoke detectors.

What are some of the most important decisions that new homeowners need to make about their coverage?

It is so important to make sure that you have a replacement cost endorsement on your policy for both the dwelling and your contents. In the event of a loss, you could get a fraction of what you need to replace or fix what has been lost or damaged if this endorsement is not on your policy. Also, I would make sure you have water back-up coverage on your policy as a normal policy does not cover this. If you have a toilet or shower back up and it floods your bathroom, this needs to be on your policy. Along those same lines, if you live in an area that floods a lot or you are close to a body of water or a bayou, I would highly recommend that you have flood coverage. Rising water of any kind is not covered and it is better to be safe than sorry.

What’s the best way for people to contact you and your company?

You can stop by our office, give me a call or send me an e-mail and I will do my best to assist you. We are located at 9100 Southwest Freeway, Suite 201, Houston, TX 77074 and our phone number is 866-595-4077. My e-mail address is kjeanes@boardwalkinsurance.com. Our Texas-based agency is licensed in over 25 other states in the US.

By Kenneth Jeanes

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What is the role of an Appraiser?

Real estate is expensive and changes hands much less frequently than most commodities. For this reason, the market value of any particular property is often difficult to determine. The role of a real estate appraiser is to help their clients to systematically determine the market value of a property, which is one of the first steps in any real estate transaction whether you are a buyer, seller, lender, or other interested party. Here are some further details about the role of a real estate appraiser.

An Appraiser is an Appointed Expert

Appraisers gain their title by being appointed by judicial or quasi-judicial authorities in their local jurisdiction. The services of a skilled appraiser are highly valued by banks, lenders, and other parties who care about the value of property because with their expertise, they are able to wade through the many significant factors that affect the market value of a home such as its size, structure, design, and location, and arrive at a knowledgeable market value estimate.

An Appraiser’s estimate is Broadly Relevant

After determining the value of a property, an appraiser provides you with a written report, which is then used as the basis for mortgage loans, taxes, settling estates, divorces, and more. The report is sometimes also used by a buyer and seller to determine a sale price. However, the most common usage of appraisers in the United States is for mortgage valuations: banks need to know how much your potential home is actually worth on the market before they agree to loan you the money for a mortgage.

In the unfortunate event that you default on your payments and are unable to pay back your debts, your lender needs to know they can sell the property for enough money to cover the amount they loaned you, and they confirm the amount through the work of an appraiser. Because of the importance of accurate appraisals, most appraisers use a standardized form, such as the Uniform Residential Appraisal Report, as a guideline for their valuation.

What Exactly Do Real Estate Appraisers Do?

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A real estate appraisal aims to pinpoint a property’s market value for your lender, as well as other relevant information related to a sale process, such as estimated time to sell and location. Your bank will need an appraisal for the final parts of your mortgage approval process, in order to confirm that your home will at least sell for the amount of your loan in case you default and they need to recover their money.

Remember ? an appraisal is for your bank, not you. Don’t confuse it with a Comparative Market Analysis. Real estate agents use CMAs to help sellers find the best price to list their homes at. A good CMA will probably come up with a value close to the appraisal value, but the two will likely be different due to the different priorities sellers and banks have. So what actually happens in an appraisal?

• An appraisal report will be very detailed. Banks like to have as much information as possible, so the more detail in the report, the more they can be confident in your property’s value.
• The report will include standard information about your potential home, such as size, bedrooms, area, outside property and yard space, and all of the other normal descriptions of a house.
• On top of detailed information about the property, an appraisal report will also contain side-by-side comparisons with similar houses to give an idea of the neighborhood and how reasonable the home’s pricing is.
• If your potential home has poor access or a long private driveway, these will also be included in the report along with anything else the appraiser thinks might be harmful to the bank’s ability to sell the property.
• If there are any serious problems or obvious signs of damage, these will obviously be included in the report. Remember ? an appraiser isn’t a home inspector, so he won’t be actively looking for problems or signs of damage.
• Your appraisal report will also have a rough estimate of how long your home would take to sell, given the real estate market in the area.
• There are usually two ways price is obtained through an appraisal ? either a comparison with similar homes that have sold in the same location, or a cost estimate that tries to place the material price of rebuilding the home.
• Personal approval for a mortgage happens early in the process, but there will always be an escape clause for a bank if the appraisal is unsatisfactory.
• If your lender lets you choose the appraiser, make sure they are on your lender’s approved list or the appraisal may be rejected outright.

Why do you need an Appraisal?

Verification of your on-time payment history via your credit score will be a large factor in qualifying for your mortgage, but due to the hefty size of most home loans, banks require a little extra security. The appraisal comes in as your lender’s extra insurance that he won’t lose money on your loan ? something most banks aren’t fond of.

The appraisal serves to guarantee that the house will sell for enough to cover the cost of your loan in the unfortunate event that you default on your mortgage. In this case, the bank’s last option is usually a foreclosure, in which they sell your house to recoup those losses, so it’s important to them that they’re able to get a decent price.

What does an Appraisal entail?

An appraisal will usually cost less than four hundred dollars, comprising of either a comparison of your potential home with similar houses in the neighborhood, or an evaluation of the property’s replacement cost plus a decent estimate of the land’s value if your house is new. Updated appliances, plumbing, electrical work, roofing, windows, landscaping, and more can all improve your appraisal.

Warning!

An appraisal affects your bank’s profits so they should be carefully directing the process, preventing any mistakes from being made. But in case some choice is left to your discretion, make sure your appraisal is done by one of your lender’s approved appraisers to prevent any appraisal-rejection issues.

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Tell us a little bit about your company and the services you offer.

Hatcher Kimrey Insurance began offering insurance products in 1999. We are an independent agency offering homeowner, auto, small business, supplemental and life insurances. We are always there for you when you need us. We work hard to find you the best insurance for your needs.

Is there something about getting homeowners insurance that you wish more people knew?

When calling an independent agent, it takes a little time to get quotes. As an independent agent, we research the marketplace to obtain the best quote based on price and suitability for the client. We do different scenarios based on home with auto, as well as standalone auto and home, to find the best rates. If a homeowner has other needs, such as an umbrella, boat, or dwelling fire, each policy can be bundled to give a discounted rate on each.

It is customary for us to prepare quotes from numerous companies, and multiple quotes within a company. Also, in order to get the most accurate quote, we need information. So, be prepared to spend a few minutes discussing your home. The information we need is age of roof, age of heating/air conditioning, when was the water heater last replaced, have updates been made to the home in its electrical, mechanical or plumbing systems? This is information we cannot obtain from public records, but helps us in obtaining lower rates for you.

How do you help a homeowner figure out how the replacement costs for their house and belongings, as well as how much they should ideally be insured for?

Most insurance companies, as part of the quoting process, have replacement cost estimators that we fill out for each company. These take into consideration the size of the home, type and quality of construction, amenities, type of floor coverings, number of stories, etc. We do a lot of fact finding from public records on the home to obtain the information. The more information the client can provide, the closer we can come to obtaining a realistic value for their home.

What types of discounts might be available for homeowners in Texas?

Each company is a little different in the discounts that they offer. But, generally all companies are going to offer companion product discounts, i.e., auto, secondary dwellings, umbrella. Most will offer discounts for burglar alarm systems (monitored alarms as well as unmonitored alarms), new purchase discount, new home discount, and fire suppression sprinkler systems. Some companies that only offer home insurance will give a discount if the auto is also insured by the agent to compete with the companies that carry both home and auto and give companion discounts.

Why do home insurance rates/premium increase? Is there any way to prevent this?

Rates and premiums increase due to many factors, some can be controlled and others cannot. Weather has a large impact on rates for both home and auto. In the last six or seven years, we in Texas have experienced major losses from tornadoes, straight line winds, hail, drought causing wild fires, hurricanes, ice storms and freezing temperatures. Insurance companies have experienced record losses due to our inclement weather conditions. These losses are passed on to the consumer.

The rates usually follow the last three to four years of weather. As the effects of weather increase the losses, the rates rise, and conversely, the rates will lower as weather is better. A factor in premiums rising is costs of construction. Insurance companies must continue to evaluate costs of construction and maintain a level of coverage to be able to replace or repair your current home in the event of loss. So, as costs rise, so will premiums because they are based on the replacement cost value of the home. Premiums on new homes will increase as the home ages, because every year the new home discount gets less until it is gone, usually by the home’s tenth year.

Good maintenance in and around the home will help to keep rates down. Non-weather related claims cause rates to increase and a large percentage of these claims can be avoided by timely simple repairs, for example, keeping trees trimmed and away from the roof. As winds blow the tree limbs can rub against the roof and in time cause a loss of integrity of the roof which can lead to water leaks in the home. So, by keeping the trees limbs trimmed at least 18 inches from the roof will eliminate the potential for claims and increased premiums.

What are some of the most important decisions that new homeowners need to make about their coverage?

Make certain that you are covered by a reputable company that will have the financial strength to sustain great losses as in the event of major disasters from tornadoes or hurricanes that can affect great numbers of homes, subdivisions, towns, even cities. This can be determined by the company’s rating. AM Best rates companies based on its financial strength. Most financial institutions require a B+ or better rate. We work with “A” rated companies, so that you can always feel confident that you will be protected in the event of a major loss.

Customer satisfaction is also important to know, retention rates as well as how well the company pays its claims. Also, many companies will have lower rates because their deductibles are higher, especially on wind and hail. Be sure that you are comparing comparable policies and coverages when obtaining rates. You don’t want to suffer a loss to find out that you don’t have the coverage you thought you were getting.

What’s the best way for people to contact your company?

We can be reached by phone at 972-485-8900 (toll-free at 888-412-8908) or by email at mhk@hatcherkimrey.com.

By Michelle Kimrey

Tell us a little bit about your company and the services you offer.

James Barrett Jr: The Barrett Company was formed in 2010 as a Home Inspection company. We are a small company, having only one Inspector and all inspections are done in-house by me. I received my TREC license in January of 2011 after retiring from the business of construction with 50 years of building in many different areas of the industry including residential, light and heavy commercial, and ending in heavy civil and military construction. I would add that the process required to become a licensed Professional Inspector was much more difficult than becoming a contractor in the states where I was licensed as a General Contractor. We do only home inspections as required by the Texas Real Estate Commission (TREC), following the guidelines and requirements of the Standards of Practice. I do not include the several other types of inspections sometimes required by the lender or buyer; I do assist my clients in finding other types of inspectors if they inquire for recommendations. The Standards are available on the TREC website @ www.trec.state.tx.us.

What are two or three of the most common repairs that are needed on the houses you’ve seen in the North East Texas area?

The most common issues are generally caused and found in older homes we inspect. As for rating these issues, I would state that as homes age, and if it has been left with less than normal maintenance the most common issue are system failures aka: heating, air conditioning, electrical and water heating systems. Next would be roofing systems, then the common foundation issues caused by settlement. We are required to inspect the entire home and all installed systems for function, including doors, walls, ceilings, windows, stairs, appliances and active utilities. These issues also are the common issues that cause possible costly repairs for the potential buyer.

What should a standard home inspection cover?

The requirements for a standard inspection include:

• Structural Systems & Foundation
• Electrical System
• Heating, Venting, & Air Conditioning Systems
• Plumbing System
• Appliances, Installed
• Optional and Added Systems.

The full scope of systems to be inspected covers fifteen (15) pages of the Standards of Practice. My common site walk-out inspection report covers more than 300 items to be reviewed.

How long should it take for homeowners to receive their inspection report?

The Standards require that the report be forwarded within “a reasonable time period”. I deliver my reports within two (2) days after the completion of the walk-out inspection. All of my document transfer is done via E-mail, including the photo file. Some of the “large” inspection companies using computer field systems deliver their reports at the end of the inspection, onsite.

Should a quality home inspector also provide repair work? What are some of the reasons why or why not?

This is not allowed by the TREC, as it can become a Conflict of Ethics issue. It will cause the Inspector to be fined, possibly suspended or loss of License.

The requirements for licensing as a TREC Professional Inspector are 472 hours of Class & Field training, passing a Final Exam that has been found to be so difficult that approximately 70% of the people taking the exam will fail, some more than one time. Each year after passing the final exam and being licensed the Inspector must complete 16 Unit Hours of Continuing Education each year in order to be re-licensed every two years, totaling 32 Unit Hours for each two-year period.

In the state of Texas “All” home inspectors are required to be Licensed, Insured and supervised by a state agency, the Texas Real Estate Commission (TREC). The Professional E & O insurance required by the state must be active at all times to maintain the license. If any person or persons does not meet and maintain these requirements this person is “Not” a legal “Home Inspector”. All Inspectors are listed on the TREC website at www.trec.state,tx.us., if they are not listed, they are not legal, Period! The benefit to all home buyers is “Licensed Professional Inspector, Licensed by the State of Texas”! No General Contractor in Texas is required to be licensed by the state; Home Inspectors are required to be licensed.

If a home inspector misses a major defect, do home buyers have any recourse?

Yes, the TREC has in-place a recovery fund, which all inspectors must contribute to. Also, we are required to carry Professional Liability Insurance, knows as E. & O. (errors & oversights) insurance. All report forms are required to make the client aware of these funds for recovery of possible damages. All inspectors work very hard to prevent oversights and the problems that can be created by this. We do all we can to find these kinds of issues and always do our due-diligence to prevent problems. We are not builders and cannot see through walls, nor are we allowed to do any “destructive investigation” to find hidden defects.

What is the best way for people to reach you and your company?

MY website is on the Internet at www.thebarrco.com

I am also listed on the HomeAdvisor website.

The company contact number is 214-234-6196

My company E-mail is: jbarrett@thebarrco.com

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By James Barrett Jr.

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Why Should You Appraise Your Home: with Jazmin Quintero-Watson of Aztec Appraisals

Tell us a little bit about your company and its foundation.

Aztec Appraisals, LLC opened our doors in 2005. Hispanic and, woman-owned small business. We started with 2 AMC’s, and are now on the list of every major AMC and top lender’s pre-approved appraiser lists. David Watson has been an appraiser for almost 13 years. We are both licensed Realtors as well so, we certainly understand the importance of an accurate and detailed opinion of value. We have completed numerous high end property appraisals as high as $5 million dollars in value, and over 13,000 square feet. Living in such a diverse metroplex, we also receive numerous requests from clients who prefer to have a Spanish-speaking appraisal representative to answer questions and put their mind at ease. When we call the borrowers, we make sure I answer any and all questions and explain the appraisal process in detail. Customer service is our #1 priority!

What is a list of reasons someone should appraise their home?

Divorce, refinancing, purchase, estate, if a Realtor or seller wants to have an idea of what to list their property for, and fighting taxes. Most recently, many Realtors have requested our services to measure their properties to determine the exact square footage for listing purposes since other sources are not considered as reliable.

How are home appraisers paid?

The price is determined by the complexity, and in some cases, distance of the appraisal. In general, when we complete an appraisal for an appraisal management company(standard fees apply and if more complex, the rate increases). We cover Harris, Fort Bend, and also have extensive experience in Montgomery, Galveston, Brazoria, and Waller counties.

How long does an appraisal take?

The actual appraisal visit varies since it really just depends on the characteristics of the property…,square footage, custom features/amenities, if it’s on acreage, if it has outbuildings, etc. So, for example, a 2000 square foot property with no major complexities could take about 45 minutes. As far as turn-time, we do our best to get the report back to our clients within 2-4 business days. Although we do receive quite a bit of “Rush” requests to make closing dates!

What is the best way for people to reach you and or your company?

We can be reached at 832-567-1124. Please feel free to visit us on our website at www.aztecappraisals.net and email jazmin@aztecappraisals.net

By Jazmin Quintero-Watson

A modular, also known as a pre-fab or manufactured home, has components pre-built in the manufacturer’s factory, shipped to the location and assembled onsite. Homeowners can choose the modular home builder and model, just as if picking a model and choosing upgrades from a more traditional subdivision builder. The difference is that a modular home can be assembled most anywhere and is not limited to the builder’s subdivision.

Not to be confused with mobile homes, today’s modular homes are the real deal on permanent foundations with various model options and even a stucco exterior for desert locations. Here’s a look at the good and bad of modular-home living when compared to traditionally built frame homes.

The Good

• Less expensive purchase price of 15 to 20 percent over traditional construction..
• Built in a temperature-controlled factory, so no shrinkage or swelling of materials during building.
• No construction delays due to weather for a quicker finish, as components come ready to construct.
• Much more sturdier building techniques, as tools used in factory that can’t be used onsite.
• Lag bolts used instead of nails for more solid construction.
• More affordable per square foot for easier sale when moving.

The Bad and Ugly

• Land must be purchased separately and may require added expense of utility line installations.
• Must temporarily finance construction upfront, but once completed, the homeowner’s mortgage then returns the money paid for construction.
• Options are available, but are more limited.
• Many subdivisions do not allow modular homes.
• Less appreciation than site-built frame house, as valued less by appraisers.
• Many skeptical of modular homes, which can affect home sale when moving.

There are many modular home builders that often have purchase sites outside of larger cities and towns where model homes can be viewed and contracts signed. Some do provide in-house loans for building and land, if qualified. Modular home builders in Texas include Palm Harbor Homes, American Modular Homes, Oak Creek Homes and others. View as many modular homes as possible to get the best price and layout.

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Tell us a little bit about your company and its foundation.

Steven Bray: Texas Lone Star Lending is a different kind of mortgage company. We’re small and prefer the personal touch. We don’t operate on bank hours. We’re not on the golf course at 3p. Your questions and needs are important. While we cannot always answer the phone, if you call between 9a and 7p Monday through Friday, we will return your call within two hours. (We’ll even return calls on Saturday between noon and 6p, but please cut us some slack on holidays.)

Steve and Stacy have over 30 years of combined industry experience, and if we don’t know the answer to your question, we know where to find it. We mean it when we say we’re “Your Loan Educator.”

What are some of the services your company provides?

Residential mortgage, commercial mortgage, land loans, construction loans.

What are some important questions to ask your mortgage broker before applying?

How is my interest rate determined?
How are you (the loan originator) paid?
Should I lock my rate at application or later in the process?

What are some important aspects of the mortgage approval process?

I’m going to break the process down into six important steps. While it’s possible to argue that other parts of the process are also important, I think these six capture the essence of it.

Application: During this step, you meet with your loan originator (LO), in person or on the phone, to discuss your needs and provide financial information. Your LO should give you a list of required documentation, which will support the loan application.

Appraisal: I’m listing this as a step because it’s so critical to the approval process. The appraisal is an estimate of the market value of your property. If the value is less than expected, we may not be able to approve your mortgage.

Underwriting: Once we have all your documentation, we submit it to our underwriter. It is this person’s job to verify that your financial information conforms to the loan program’s requirements and to make sure all the documentation makes sense. The underwriter also reviews the appraisal to make sure that the appraiser followed accepted guidelines and that the appraised value supports your loan application.

Conditional approval: Assuming your financial information meets the loan program requirements, the underwriter will issue a “conditional approval.” This means the approval will be granted if you satisfy certain conditions. Typically, these are requests for additional documentation to explain something in the loan file, such as a large deposit, a recent job change, or mismatching addresses on your bank statements. I recommend you be patient with this process. It can seem tedious, but as a result of the financial crisis, all i’s get dotted and t’s get crossed.

Closing: Once you satisfy the conditions for approval, you’re ready to close your transaction. Generally, the closing process takes a couple days as the lender’s attorneys prepare the loan documents and iterate with the lender and the closing agent (usually a title company) to get all the numbers right. The most important number for you at this point is how much money you have to bring to closing. Your LO should be able to give you a good estimate, but the closing agent will calculate the final amount. Closing happens when you sign the loan documents and give the closing agent your check.

Funding: For a home purchase, you should get the keys when your mortgage funds, and that should happen the day you close (unless you close late in the day). If you’re refinancing, federal regulations dictate that your mortgage cannot fund until the fourth business day after closing. You have the right to cancel the transaction during this time. Funding pays off your previous mortgage.

How do you suggest clients prepare for this process?

Get your financial documents ready. Your LO likely will need copies of the following:
Most recent 2 months of bank and investment account statements- If you don’t receive paper statements, see if you can download them from the institution’s Web site or contact the institution for copies.
Most recent 2 years of tax returns- If you don’t have copies, you can order them from the IRS. If you filed an extension for the most recent year, you will need a completed copy of the extension request form. You may have to document that you paid any income tax due.
Most recent 2 years of W-2s- If you don’t have copies, your employer(s) should be able to provide them.
Pay stub- You will need to provide your most recent pay stub.
Driver’s license- Your lender will need a copy to comply with the Patriot Act.
Legal papers- Examples include a divorce decree, child support order, bankruptcy filing, or anything other legal matter that could affect your financial situation.
If you’re refinancing, your LO also will need copies of your existing survey and your property insurance declarations page.

In addition, it is important to pay attention to the following so you don’t rock your credit boat. Until your mortgage funds:
Do not apply for new credit
Do not co-sign for anyone else’s debt
Do not quit your job
Do not make unnecessary large deposits
Do not move money between accounts unnecessarily
Do not make late payments on existing debt
Do not spend your closing funds

What are some common issues you face when it comes to approving a mortgage?

The most common issues we encounter are associated with the applicant’s credit or with the appraisal:

Credit issues: If you ignore the advice above and “rock your credit boat,” you may torpedo your approval. We will check for new credit accounts and verify that you’re still employed just before closing. If anything changes, the underwriter must consider how it affects your ability to repay the mortgage.

Appraisal issues: The appraiser is our “eyes” on the property. If the appraiser identifies issues with the property that could affect your health or safety, these must be corrected before we can approve your mortgage. Keep in mind that the appraiser is not a home inspector, but he/she is going to notice issues like a broken exterior door lock (safety issue), non-functioning bathroom (health issue), or large cracks in walls or the foundation (safety issue).
A more common appraisal issue we face is the appraised value not equaling the sales price (for a home purchase) or expected value (for a refinance). For a purchase, approval depends on the seller lowering the contract price or you increasing your down payment to cover the difference between the price and the value. For a refinance, the resolution depends on the amount of equity you have in your property. Outcomes range from no effect to a slightly higher interest rate to a higher amount of cash due at closing.

What advice do you have for those with a low credit score?

For someone looking to purchase a home, I suggest you work with your LO or a reputable credit services company to improve your scores. If your credit report contains errors, you have the right to have them corrected. You may not be able to buy a home right now, but if you work on the issues depressing your scores, you can buy in the future. It’s really unlikely the issues will go away if you ignore them.

For someone looking to refinance an existing mortgage, it may be possible to refinance regardless of your low scores. Talk to your LO about the available options.

How long does the approval process typically take?

It depends on the type of mortgage and the complexity of the situation. It can take as little as two weeks or as long as several months. On average, it should take 30 to 40 days.

Are there any special circumstances that can speed up the approval process, and if so what?

Use the checklists I provided above to be prepared. We spend much of the mortgage process waiting- waiting for the applicant to return documents, waiting on the appraiser, waiting for real estate agents to update contracts, waiting for the underwriter, etc. We cannot eliminate all of the waiting, but if you’re prepared, it will speed up the process.

Secondly, be forthcoming with your LO. If you think an issue may affect your ability to qualify, chances are it will. Some issues are easily explained with additional documentation or a letter from the applicant. If you tell your LO about them up front, you eliminate the need for the lender to discover them and issue conditions for approval. Besides, if an issue is going to prevent you from qualifying, isn’t it better to know that before you spend money on an appraisal and a credit report?

What is the best way for people to get in contact with you or your company?

You can contact us by phone (512-261-1542) or by email (info@LoneStarLending.com). We’re on the Web at www.LoneStarLending.com and www.facebook.com/TexasLoneStarLending. We recommend our daily, one-minute videos posted on both sites to keep you up-to-date on interest rates, loan program changes, and real estate market trends.

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-By Steven Bray, Lone Star Lending

Tell us a little bit about your company and its foundation.

Ed Wise: I started Wise Insurance Group on April 1, 2011 after stints at Liberty Mutual, Countrywide Insurance, and Farmers. I learned about insurance at these different companies and knew I wanted to run an independent agency where I could bring the best policy with the best value to each client. The overriding goal of Wise Insurance Group is operate in an advisory role for each client whether an individual, family, or business.

What are some of the services your company provides?

We provide a full suite of insurance solutions for individuals and families from a variety of companies. The insurance solutions include auto, home, life, long term care, disability, as well as commercial insurance products such as general liability, professional liability, commercial vehicle, and more. I’m a big believer in helping create educated consumers which is why I blog about insurance related topics.

Please briefly explain the idea of home insurance to our readers, what it is, why it was created, etc.

Home insurance is designed to protect the homeowner from financial loss when something happens such as damage from a water leak, hail storm, fire, etc. There should be enough coverage on the home to replace it if there is a total loss. Home insurance was created to provide homeowners a way of sharing the risk of a loss with a financially strong entity, the home insurance company.

What facts should I gather about my new house before I start shopping?

We use a questionnaire to help gather information about everyone’s home we quote home insurance for. Basic information should include square footage, number of stories, number of bedrooms & bathrooms, as well as their grade (basic, semi-custom, custom, etc.). In addition, we ask about flooring type, wall coverings, is there a fire place, swimming pool, trampoline, what kind of pets they have, roofing material, and exterior walls.

If the home is over 15 years old, it’s also important to know when the roof was last replaced and have there been updates to the home’s plumbing (water heater), electrical system and heating and cooling systems. There are discounts for these items from many of the carriers. We’ll also ask about whether a monitored alarm system will be or is installed.

If the home is near water (pond, stream, creek, etc.), I will run a flood zone determination to confirm whether the home is in a flood zone or not. Lastly, I run CLUE reports which show claim and share this information with new home buyers to confirm repairs were made for damage from water leaks, hail damage to the roof, etc.

If the home has been built in the last 5 years, it’s important to know if it is a certified “green” home. There are a couple of insurance companies that provide a discount for a green home.

How can the location of my home affect my insurance costs?

Location does impact what a person pays for home insurance. If the home is in the city limits, factors like crime statistics, home age, fire department ISO classification, and weather patterns shape the home insurance premium. If the home is out of the city limits, issues like fire department ISO classification, responding fire house distance, presence of water, and brush hazards shape the premium.

In addition, if the home is located in an area where earthquakes have occurred, or is prone to hurricanes, I review the special coverage they may need that their home insurance policy won’t cover or needs to cover. For instance, homes located on or near the coast, should confirm they don’t need a separate wind (hurricane) policy and that their home insurance includes coverage for wind driven rain.

How do I make sure I am not under-insured? What does it mean to make sure I insure my home to “replacement value”?

It’s important to insure the home for what it would cost to replace it due to a total loss. That means there should be enough coverage on the home to completely cover any demolition that is required, hauling debris away to the dump (this usually requires special permits), and then rebuilding the home. Most people don’t realize that home construction includes plans or blue prints, permits, inspections, EPA skirting around the lot, fencing, etc.

One of the steps we take is to divide the home’s insured value by the number of square feet in the home (excluding an attached or detached garage). This provides the homeowner with a cost per square foot. Most agents should be able to provide what claims are estimating the average cost per square foot should be for a home (this will vary depending on finish out, location, etc.) in their area and guide them as to whether they are properly insured or not. If the amount the home is insured for hasn’t changed in 5 years or more, it should definitely be evaluated.

In your personal opinion, is it worth it to get additional coverage for some of the valuable items in my home?

Most home insurance policies have limits on the amount of coverage the policy provides for valuable items (jewelry, artwork, collectibles, antiques, musical instruments, etc.). These limits can be dollar limits such as $2,000 total for a jewelry loss, they can limit the type of loss (mysterious disappearance is usually excluded) or both.

If the homeowner has any of these items, and they combined value is $2,000 or more, this is excellent coverage to add to the home policy or to purchase separately. For all scheduled jewelry, I strongly recommend that mysterious disappearance (I lost it) coverage be included. Many carriers will insist on an appraisal that is no older than two years.

Can I save money on my monthly premium if I add certain safety features to my home?

Most home insurance companies provide a discount on the home insurance policy if the homeowner has operational smoke detectors, a fire extinguisher, deadbolt locks and the home is visible to neighbors. Additional discounts may be available for homes with a centrally monitored burglar and fire alarm system and some offer an even better discount if the alarm system is monitored by the local fire and police departments.

How can I ensure that I am working with a home insurance provider that I trust?

It’s important for any homeowner to do their homework when selecting an insurance company. Start with the financial ratings provided by A.M. Best and Standard and Poor to confirm whether they are financially strong. Check with your state insurance department too. Many provide a listing of what perils are covered and which ones are not. The Texas Department of Insurance provides homeowners the ability to compare policies between companies and there should be information on how well they handle claims. If the agent represents more than one company, ask who they have their home insured with!

What’s the best way for people to get in contact with you and your company?

We can be reached in a number of ways including:
Office number: (469) 464-5740
Email: ed.wise@wiseinsurancegroup.com
Twitter: @wiseinsgroup
Facebook: www.facebook.com/wiseinsurancegroup
Website Blog: www.wiseinsurancegroup.com/blog

By Ed Wise

How an Appraisal Report is Compiled

Each appraisal report contains a variety of figures, property details and sales comparisons. This includes current specs of the subject property, and a side-by-side comparison of three similar properties. The report will provide an estimate of the average sales time for the property, the type of area the home is in (stand alone acreage, development, etc.). The appraiser may point out details about the subject property that are detrimental to its value, i.e. obstructed access to the home, and highlight any apparent characteristic flaws, such as a crumbling foundation. The appraiser also evaluates the overall market in the area, detailing the volume of transactions and average DOM (days on market) and home values for the neighborhood.

There are two appraisal methods used for residential properties. The first is known as the cost approach. Formerly referred to as the summation approach, this is applied to newly built properties, where the costs to build are known. The figure given is an estimate of how much it would cost to replace the structure if it were destroyed. It’s calculated as a hybrid of the cost and sales comparison approaches i.e., the replacement cost of a home is determined by adding the labor, material, and other costs, with consideration for land values and depreciation.

The second approach, a sales comparison, determines the home’s market value by comparing it to similar properties recently sold in the area. As no two properties are ever alike, the appraiser must make paperwork adjustments to the comps to make their features more in sync with the subject property. The resulting figure shows what each comp would have sold for if it had the same specs as the subject.

What’s Included in an Appraisal Report

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An appraisal is a survey of a home performed by a licensed, independent professional to determine the home’s market value. The appraiser documents the property’s interior and exterior condition, from the layout, amenities and features, modernization updates, and the overall construction quality.

Appraisals typically happen for one of two reasons: a lender orders one prior to approving a loan for a home buyer, or the property’s current owner orders one to assess its value before putting it on the market. The Equal Credit Opportunity Act mandates that your lender provide you with a copy of the appraisal report upon your written request.

The appraiser estimates the GLA (gross living area) in square footage by measuring the exterior of the home. Finished basements and non-living areas such as garages aren’t included in the GLA estimate, but are documented and considered in value separately. This information will guide the appraiser throughout the comparison and valuation process.

In most cases, the appraiser only considers permanent structures and real property. As most small sheds and above-ground swimming pools are not permanent fixtures, they are usually excluded in the valuation. However, the specific installation process and local custom, may allow an above ground pool or small shed to be considered as part of the real property.

Appraisals are vital reports in the real estate market, because they are relevant to buyers, sellers, and lenders. The value that an appraiser determines in their appraisal report ultimately sets the guideline for what a lender is likely willing to lend to a potential buyer. Given that is such an important element of any real estate transaction, it is useful to know what a typical appraisal report contains. Here are more details about the contents of an appraisal report.

Elements to be included in the Appraisal Report

In the Appraisal Report, the appraiser documents:

• The property’s interior and exterior condition, from the layout, amenities and features, modernization updates, and the overall construction quality.
• An estimate of the GLA (gross living area) in square footage by measuring the exterior of the home.
• Living areas only, and excludes finished basements and non-living areas such as garages, which are instead documented and considered in value separately.

The information in an Appraisal Report will guide the appraiser throughout the comparison and valuation process. In most cases, the appraiser only considers permanent structures and real property. As most small sheds and above-ground swimming pools are not permanent fixtures, they are usually excluded from the valuation as well.

Two Appraisal Methods

There are two appraisal methods used for residential properties, the cost approach and sales comparison. The former is applied to newly built properties, where the costs to build are known. The figure given is an estimate of how much it would cost to replace the structure if it were destroyed. A sales comparison determines the home’s market value by comparing it to similar properties recently sold in the area. As no two properties are ever alike, the appraiser must make paperwork adjustments to the comps (compared property) to make their features more in sync with the subject property. The resulting figures show what each comp would have sold for if it had the same specs as the subject.

How Long is an Appraisal Good For?

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An appraisal report details several crucial bits of figures concerning prices and vales. One number you likely won’t see is an expiration date for the appraisal itself. Most loan agreements don’t specify the timeframe for when an appraisal is considered expired.

Different lenders have different time frames before they consider an appraisal expired, typically spanning between 60-90 days, never exceeding 180 days (6 months). Lenders want to have a current snapshot of the market surrounding the appraised home, which is why they require comparable sales figures (or “comps”) that are no more than six months past, meaning the appraisal should be no more than six months old. Most appraisers and lenders agree six months is the maximum amount of time that an appraisal is considered valid, known as the “term of validity.”

Lenders want an appraisal to use comps as close to the appraised home as possible, with few adjustments needed to match them up. Within six months is the preferred window, but they may stretch to a year if a sufficient number of newer comps are not available.

Expired appraisals can be recertified for another 90 days. Recertification is the appraiser confirming that the values are still accurate based on comparables in the area. Many times, if new information isn’t available, they will use the same comparables. Most appraisers charge a reduced fee for recertified appraisals.

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By Derren Peters

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Tell us a little bit about your company and its foundation.

Felicia Foster: I started out in the business 26 years ago, and most of my clientele have come to me via referral. I value the relationships that I build with both builders and custom clients. My focus is on the service that I provide to my clients: helping a builder with a speculative project that needs to be built within a budget and helping a custom client see their dream home become a reality. My experience is not only in design but also construction and value engineering.

What are a few of the benefits of starting with a floor plan when designing a home?

Most people can walk a model and pick out what they like and dislike because they can see it. I sit down with the client and ask questions about their day, what their goals are, where they see themselves in 5 years, and then start to design a floor plan around their lifestyle. It’s important in our part of the country to have a good understanding of topography and how to design with the lay of the land. Sometimes listening to a client describe their wishes and then standing on a lot where I think their family room will be can be very impactful, better than a model home.

Can you briefly walk us through the floor plan process?

The process of designing a home can vary as much as the clients. Every time it’s a little different. When I meet with a client the first time I can usually “design” their house in my head before leaving. Most people know what they want but can’t put it all together. That’s my job.

How long does this process take?

Just like the design process is different for each client, so is the time it takes to bring an idea, or several ideas, to fruition. There is a level of trust that has to be developed before moving too far into the design. Once the client understands that everything that they tell me they want in their home will be considered then they feel more comfortable moving forward. I meet with the clients several times through the process: programming, schematics, working drawings, etc. and each time it may take a few meetings to process the “wish list.”

If you could give any outstanding advice for a homeowner who is designing floor plans for the first time, what would it be?

Do your design homework. Have an idea of what you want in a house, how it will work for your family, and determine what your budget is. Don’t be afraid to share your budget up front. A good design team will help you achieve your goals but will also tell you when what you want will not work within your budget. Everyone has a budget.

What is the best way for people to reach you and or your company?

The best way to reach me and view my portfolio is to visit www.barroncustomdesign.com.

By Felicia Foster

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