New Insurance Policy Protects Ohio Homeowners' Home Values

There is a new insurance coverage for homeowners that will guarantee the value of your home.  The new insurance policy, being offered by Home Value Insurance Company, is designed to insure homeowners against losses if their home has depreciated when it's time to sell.

The new insurance has just rolled out, starting in Ohio, then continuing to expand in other states.  This coverage is regulated by the state Department of Insurance, and can only be sold by a licensed insurance agent.

Here are the highlights of the new policy:

• Any homeowner can buy a policy, typically at $20 a month for every $100,000 of value.

• The current home value is determined by the sale price of the home, if purchased within the last year, or an appraised value. The value would be locked in for a 10 year period.

• The insurance premium won't go up by more than 5 percent a year.

• If the homeowner sells at a loss at some point in the future, the insurance will pay up to the percentage of value lost, according to the nationally regarded Standard & Poor's Case-Shiller index. So if a community lost 20 percent of its value over recent years, the owner of a $200,000 home who sold at a loss could file a claim for up to $40,000.

• There are high deductibles the first two years: 10 percent the first year and 5 percent the second year. The purpose of this is to deter flipping.


Based on the information provided thus far, it would seem that a homeowner that may consider selling within the next 5 years would benefit the most from such an insurance coverage.  This would be an option for those who relocate for work, foresee an event that will cause them to move in the short-term, or protect from unforeseen events that will require a home sale.

New FHA Loan Limits - How It Affects Your Home Purchase

Starting October 1st, FHA is reducing loan limits varying by county.
In most of the Ohio counties, the maximum loan amounts will be REDUCED to $271,050. This is a huge reduction in purchase power especially in Summit and Portage County, dropping $58,950 from the prior loan limit of $330,000!! Reductions range from $6,450-$27,700 in the other near-by counties (Lorain, Cuyahoga, Medina, etc.), which are also included in the new $271,050 maximum limit. 

What does this mean for you as a buyer?

After October 1st, 2011, if you're putting the minimum 3.5% down on their FHA loan, the maximum purchase price for your new home would be $280,880, and the new loan amount would be $271,050. Again, these are the maximum limits.  To go with a higher-priced home, a larger down payment would be required to avoid exceeding the FHA maximum loan limit.

If you're considering a home purchase, it's advised that you submit a mortgage application immediately, to take advantage of the prior loan limit.  FHA loans must be assigned an FHA case number by September 30th to qualify for the prior limit. 

A Short Sale May Be Your Best Option To Avoid Foreclosure

Headlines today are filled with stories about homeowners in financial distress—people who face a lender’s foreclosure on their home.

Millions of American home owners are wondering what to do.
Like most crises, this one has produced its share of rumors and misinformation. One of the biggest ones is “just let it happen." Why fight back, this line of thinking goes. It’s too emotionally draining, and the government’s loan modifications aren’t helping many people. Well, that’s only partly true.
While government loan modification programs have fallen short of the mark so far, there is another solid, sensible option for homeowners. It’s called a short sale—a sale to a buyer where the seller’s lender agrees to accept less than the full amount owned.

Why not be foreclosed? Why sell short? Agents who have closed hundreds of these transactions provide this list of reasons:

• Avoid the foreclosure stigma – Homeowners will always have to disclose that they had a foreclosure on any mortgage application and (many job applications) that they submit in the future. This can have an adverse affect on their future mortgage rates. Foreclosure is asked about specifically in credit inquiries. There is no seven-year time limit on this item.
• Protect credit score – Credit scores will be lowered by 300-plus points (per loan) by foreclosure. The impact of a short sale—about half that much.
• Improve eligibility for a government insured loan – The homeowner will be ineligible for a government insured loan for 5-7 years (only two years in a short sale). A foreclosure is the one credit report item that is almost impossible to have repaired.
• Avoid a deficiency judgment – Lenders can seek a deficiency judgment against the homeowner and collect any amount they do not recover at sale.
• Protect employment prospects – Many employers run credit checks on prospective employees. Foreclosure is one of the top items that will put a potential new hire, or even current employment, in jeopardy.

These are the top reasons, but there are more. An expert short sale specialist agent can give a full picture of the options.

One more tip. Don’t believe everything you read about how long short sales take and how few get finalized. Short sale timelines, while still longer than normal, are shrinking as lenders get their paperwork act together. Find out who the top short sale agents are in your market. These pros are closing 70 to 90 percent of the short sales they represent—more than three times the national average. They know where to find buyers, and how to negotiate the buyer’s offer effectively with lenders and get the deal closed—so the homeowner can move on with life and recover.