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Renter’s Insurance – Everything You Need To Know

Renter's Insurance

What is renter’s insurance and how is it different from homeowner’s insurance?

Renter’s insurance is an insurance policy that covers the contents of a leased property (generally, any livable structure with a kitchen and bathroom). There are even renter’s insurance policies for houseboats, RVs, and campers. Homeowner’s insurance, on the other hand, covers loss and damages to the property itself and accidents that may occur within the home or on the property. To simplify, the landlord’s insurance covers the walls out and the tenant’s renter’s insurance covers everything within the walls.

There are a few different types of coverage when it comes to renter’s insurance: contents coverage, liability to landlord coverage, and loss of use coverage. Many property managers will require all three as contents coverage protects a tenants belongings, liability protects the property in case of damage, and loss of use protects both tenant and landlord in the case that the property becomes uninhabitable due to a covered incident.

What does renter’s insurance really cover?

A simple policy protects personal contents against fire, theft, non-flood water damage, and any other incidents listed on the policy. A lot of policies will include items stored on the property like vehicles. Most renter’s insurance policies do not cover water damage as this applies to liability coverage. Renter’s liability insurance protects the renter if someone were to be injured in their home due to negligence. Liability to landlord insurance covers structural loss caused by tenant negligence.

How much does renter’s insurance cost?

The average cost of renter’s insurance throughout the US is around $15 per month, though prices vary greatly depending on location and coverage. Cost may be affected by: geographic location, crime rates per capita, regional claim related costs, property condition, coverage, whether the policy is bundled with other insurance policies like auto insurance, bulk buyers, credit ratings, and number of renters covered (if spouse is included)

Your Fall Home Maintenance Checklist

For many homeowners, fall is the season for football, checking chores off to-do lists and getting ready for the winter months. What can you do to keep your house in excellent condition? These maintenance tasks can help keep your home running efficiently:

Outside Your Home

Check window and door seals. When heat escapes through seams in your windows and doors, you’re wasting your money, and you’re probably still cold. But you can often spot problems with a thorough once-over. Look for spaces that may have insufficient caulking and make sure weatherstripping is in good condition. While you’re at it, check to make sure all of your locks are working well.

Test smoke and carbon monoxide detectors. Fall tends to be dry in most places so checking your fire and carbon monoxide alarms should be done seasonally at the very least.

Clear out gutters. Clogged gutters can lead to leaks. Although this should be a twice-annual task, removing debris is especially crucial in fall since leaves might be collecting. Tip: It’s a lot easier to clean your gutters when they’re dry.

Inside Your Home

Keep an eye on major appliances. Many of us spend more time baking and cooking during the fall and winter months. Make sure your oven, dishwasher, and refrigerator can handle the activities of the season by checking seals and giving everything a good clean.

Clean your carpets. Allergens and dirt get trapped here, but you can help keep your carpet fresh by giving it regular attention. Fall is a great time to have your rugs steamed — just in time to impress your holiday guests.

Get your HVAC system inspected. Don’t wait until December to test your heating system. It’s better to find out about any issues well before you need to use your heater.

Buyers Need To Hurry As Prices Rise

Prices are still on the rise in the American bull market. In almost all parts of the country, sellers are exuberant as their home price keeps going up. The median sales price in July was $230,411, up 5.8 percent year over year.

But if your buyer clients are hoping to wait it out, you might want to remind them that mortgage rates are also increasing. The typical mortgage payment jumped 13.1 percent over that same one-year period, due to a nearly 0.6 percentage point increase in mortgage rates, according to a real estate data firm called CoreLogic.

Mortgage rates are expected to keep rising, too. CoreLogic researchers predict a nearly 10 percent increase in buyers’ mortgage payments by next July, twice the rate expected for home prices. Rates are expected to increase by about 0.43 percentage points between July 2018 and July 2019. Housing forecasters predict median home sale prices to continue to rise by 1.8 percent in real terms over that same period.

Based on these projections, CoreLogic researchers predict the inflation-adjusted typical monthly mortgage payment to rise from $937 in July 2018 to $1,003 by July 2019. Furthermore, real disposable income is expected to increase by only around 2.5 percent over the next year. That means “home buyers would see a larger chunk of their incomes devoted to mortgage payments,” CoreLogic researchers note.

To calculate the typical mortgage payment, CoreLogic researchers use Freddie Mac’s average rate on a 30-year fixed-rate mortgage with a 20 percent down payment (not factoring in taxes or insurance). The typical mortgage payment standard is used to help judge affordability since it shows the monthly amount a borrower would have to qualify to get a mortgage to purchase a median-priced U.S. home.

Nevertheless, while mortgage payments are on the rise, they’re still low by historical standards, CoreLogic researchers note. In July 2018, the typical inflation-adjusted mortgage payment remained 26.8 percent below the all-time peak of $1,280 in July 2006. The average mortgage rate in June 2006 was 6.7 percent compared to 4.5 percent in July 2018.

National Housing Inventory Crisis Reaches Inflection Point

The Home of Home SearchTM, today released its September housing report which shows national inventory has started to flatten, signaling a crucial inflection point for the inventory crisis. According to the report, inventory declined only 0.2 percent from a year ago and is poised for positive growth ahead, boosted by an 8 percent increase in new listings — the largest yearly jump since 2013.

“After years of record-breaking inventory declines, September’s almost flat inventory signals a big change in the real estate market,” said Danielle Hale, chief economist for realtor.com®. Every time a house goes on the market, buyers are jumping on it. Potential buyers may see more homes being listed.

In September, the U.S. median listing price remained at $295,000, a 7 percent increase year-over-year, but lower than last year’s 10 percent increase. Homes continue to sell at a relatively rapid pace of 65 days on average, 4 days faster than last year. There have been more than 465,000 new listings entered the market in September, an 8 percent increase and the biggest yearly jump since 2013. These new listings were 8 percent, or $25,000, cheaper than existing inventory in the market, and 10 percent, or 200 square-feet, smaller than homes already in the market, on average. Although single-family home inventory remained relatively flat, declining by only 1 percent, new inventory growth was found in condominiums and townhomes, which are now up 3 percent year-over-year.

The inventory recovery is evident in large cities. In September, 22 of the 45 largest markets in the U.S. saw year-over-year inventory increases. The five markets that saw the largest inventory jumps were San Jose, Calif.; Seattle; Jacksonville, Fla.; San Diego, and San Francisco, all posting increases of 31 percent or more. Inventory also rose over last year in Chicago, Miami, Dallas, Boston, Los Angeles, and New York. Combined inventory in the 45 largest markets increased 5.6 percent year-over-year on average, the most substantial yearly increase since realtor.com® started tracking it in 2013.

Finding And Fixing Leaks In Your Home

Anything attached to the water supply runs the risk of a leak. That also includes anything that drains water away. With so much riding on your pipes and appliances holding all their water inside, you’d think it would be easy to locate a leak. As it turns out, it can be quite tricky.

Ask Yourself: Is it Really a Leak?
This may sound like common sense, but when you’re new to homeownership, or even just to leaking stuff, you may mistake condensation for leaks. There’s a good reason for this. Older pipes do sometimes condensate so hard that they drip. This is especially common in high humidity areas like basements and crawl spaces.

Before you panic, because your pipes are leaking, take a hard look at where that water is coming from. Is it intermittent? Just when it’s muggy? Run a dehumidifier near the condensation pipe and, like magic, your condensing pipes will be no more! If the problem is in a crawl space, try opening up your foundation vents so outside air can move in and push built up humidity out. Adding pre-formed foam pipe insulation in both locations will also help fight the drip.

On the Hunt for Leaks
Usually, a homeowner will stumble across leaks on pure accident. They’re rarely loud, raging rivers, most are gentle trickles at best. You could have a leak for months and not even realize it! So how do you go about tracking one down?

1. Look for signs of moisture damage. A leaking toilet, for example, will almost always leak at the wax ring that creates the seal between the stool to the drain pipe. When leaking happens here, it’s common that the water goes under the flooring and causes it to bubble up or soften.

2. Smell around. This sounds ridiculous, but if you can’t see any damage, you may be able to smell the distinctive scent of mildew and moisture. Follow your nose to the source of the problem.

3. Listen for dripping sounds. Even a tiny leak can sometimes be heard, especially if the leak in question is dripping into a closed area. For example, an air handler with a clogged or rusted condensation pan may drip into the space below, until a significant amount of standing water collects. The drip, drip, drip you hear when you walk by the utility closet could be a warning sign.

When you know there’s a leak somewhere in your home, but you can’t find it, the best thing to do is start a systematic search. Make a list of all things in the house that use water; check all those areas thoroughly, and go from there.

Fixing a Leak
Fixing your leak is going to depend heavily on where it’s located and what kind of materials are involved. For a basic homeowner-level repair, limit your efforts to plastic pipes and screw-on braided cables like the water lines to the toilet and sinks. Copper, galvanized steel and cast iron require special tools and specific expertise to fix.

However, your leak might not even be related to pipes — it could be coming from a backed-up condensation line at your air handler. In that case, running vinegar through the line will loosen the clog and let water flow freely again. If it’s a rusted condensation pan, though, you’re going to need a professional. The same goes for a water heater that’s leaking out the bottom.

Ultimately, leaks are enormous pains, but many can be repaired easily. It’s more important to know when you’re in over your head because it’s easy to make the problem worse. If you can’t fix the leak, make sure to put the shut-off valve into the “off” position until a pro can help.

Mortgage Fraud Is Becoming More Prevalent

With high demand, mortgage fraud has climbed 12.4 percent year over year in the second quarter of 2018, and about one out of every 109 mortgage applications has been found to contain false or misleading information, according to real estate data firm CoreLogic. “Because home prices are rising and demand is strong, most mortgage fraud in this type of market is motivated by bona fide borrowers trying to qualify for a mortgage,” says Bridget Berg, CoreLogic’s principle of fraud solutions strategy. “Undisclosed real estate liabilities, credit repair, questionable down payment sources, and income falsification are the most likely misrepresentations.” These increases show a sort of desperation for some homebuyers.

Mortgage fraud is most common with loan-to-value ratios of 80 percent or less, according to CoreLogic. Meaning borrowers who need a large loan and less of a down paymeny; usually meaning they are financially stretching themselves out. The metro areas with the highest increases of fraud risk year over year are Oklahoma City; El Paso, Texas; Springfield, Mass.; Albuquerque, N.M.; and Spokane, Wash. Overall, the states with the highest incidences of mortgage fraud are New York, New Jersey, and Florida, according to the report.

CoreLogic identifies the following as the most common types of mortgage fraud:

Income fraud: An applicant misrepresents the existence, continuance, source, or amount of their income. This is the most common type of fraud.
Occupancy fraud: An applicant deliberately misstates the intended use of a property as a primary or secondary residence or an investment.
Transaction fraud: The applicant misrepresents the nature of the transaction, such as an undisclosed agreement between parties, falsified down payments, non-arm’s-length sale, or use of a straw buyer.
Property fraud: An applicant intentionally falsifies information about a property or its value.
Undisclosed real estate debt: An applicant fails to disclose additional real estate debt or previous foreclosures.
Identity fraud: An applicant alters their identity or credit history, or uses a false identity.

The most substantial uptick—22 percent—was in income fraud over the past 12 months, according to CoreLogic. Massachusetts, Colorado, Utah, Nevada, and Kansas have seen the most significant increases in income fraud over the past year, according to the report.

Millennials Have Their Eye On The American Dream

Home prices are going up, inventory is drying up, and wages are not increasing nearly as quick as real estate prices.

Simply put, pursuing the American dream has become increasingly difficult, especially for young adults struggling to navigate student loan debt, and stay on their feet.

According to a report by PropertyShark, millennials’ goal to own a home is not as far-fetched as it seems.

PropertyShark surveyed 2,134 U.S. renters, owners and people living with family to determine savings, home ownership, amenity, and community preferences, as well as demographic data such as employment and marital status.

According to the company, although student debt is the number one obstacle for Gen Z and Millennial respondents, an amazing 83% of Gen Z has plans to purchase a home within the next five years. This indicates that millennials are going to cause a stir in the market within the next few years.

Millennials have also been so locked into the rental market that they can’t even think about buying a house.

A report conducted by RentCafé found that Millennials are paying nearly 45% of their total income towards rent and setting aside about $92,000 towards rent before they turn 30. It’s recommended that you pay no more than 30% of your income towards rent.

PropertyShark discovered that the same number of Millennial and Gen Z respondents expect to pay more than $50,000 for a home down payment, which is about a third of both generations. However, when compared to Gen Z, Millennials expect they’ll need to put $41,000 down on a home payment, which is about 10% more than Gen Z.

So, what exactly is driving Gen Z homeownership optimism? Technology and amenities. Millennials and Gen Z want the newest and latest technology in their home.

Gen Z is dreaming big; they want large homes and are less likely to compromise this desire when purchasing a home. While Millennials find extreme importance in location, Gen Z would sacrifice location and an easy commute for space and amenities, according to the report.

PropertyShark determined that entertainment options rank significantly higher than living close to convenient outdoor spaces, and “the digital fluency” indicates that Gen Z prizes smart appliances and smart homes over their generational counterparts. They want more up-to-date, luxury items in their homes. Their passion for social media has fueled this type of lifestyle.

In the next decade, the housing market can expect millions of millennials lining up to buy a home and carve out their slice of the American Dream.

Changes To Real Estate Tax Deduction 2018

As a homeowner, your ability to deduct mortgage interest from your tax return makes real estate one of the best investments.

The tax bill that will be in force in the up and coming tax season, the Tax Cuts and Jobs Act (TCJA), has made some dramatic changes to the tax law. Here’s a summary of the changes:

TCJA Items to Watch in 2018
When the TCJA was pushed through Congress in December 2017, many people were up in arms. The overhaul, they said, was going to be problematic for many reasons, which, we’ll see how that pans out. It does seem that when it comes to real estate, the TCJA is going to make it tough for homeowners to lower their taxes.

These are the top items you’ll want to pay close attention to this year:

Item #1: SALT

The state and local tax deduction (SALT) is set to be a problem for homeowners in high-tax areas. In the past, you could claim an unlimited amount of already-paid personal state and local income taxes, as well as your property taxes, as a deduction to offset your tax bill. From now until 2025, you’ll only be able to use your Schedule A to itemize $5,000 worth of these taxes if you’re single or married filing separately and $10,000 for married filing jointly.

This looks like an issue for many people in those high tax areas on both coasts, but for some, the increase of the standard deduction to $12,000 for singles or $24,000 for couples may balance the equation.

Item #2: Your Mortgage Interest Deduction

If your home was purchased after December 14, 2017, you will be subject to the new limits on mortgage interest deductions. Instead of being able to deduct the interest on up to a $1,000,000 mortgage, you’ll be capped at the interest on only $750,000. If you are in the less expensive parts of the country, this is probably not an issue. But, those of you living close to the coast may have to pay more.

According to a Zillow report published shortly after the TCJA passed, “Under the current setup [Pre-TCJA], roughly 44 percent of U.S. homes are worth enough for it to make sense for a homeowner to itemize their deductions and take advantage of the mortgage interest deduction. Under the new bill (as reported), that proportion of homes drops to 14.4 percent. Interest on second/vacation homes will remain deductible, but will also have a ceiling of $750,000.”

Item #3: Home Equity Loan Interest Deductions

Bad news for people who bought their home with a home equity loan. If you purchased a house with a home equity loan, you might lose your deduction this year. The TCJA says that unless your home equity loan was used for home improvements, it’s no longer allowed.

It is unclear, however, how the IRS will identify where you spend your funds, especially if the loan was 10 to 15 years.

Item #4: Gains From Home Sales Still Protected

The very beneficial home sale gain exclusion remains. You’ll still be able to exclude up to $250,000 ($500k for married filing jointly) of gain from a home you’ve owned and used as a primary residence for at least two of the last five years.

Taxes and Real Estate
Even though taxes may go up, real estate is still one of the best investments you can make due to the stability it has. Home prices continue to rise, even with the threat of fewer tax deductions.

Tips For Choosing A Home Inspector

You have finally have your home in escrow and couldn’t be more excited. But, when your Realtor calls to ask you who you want to use for your home inspection, you freeze. Do you get to pick your own home inspector? How do you even go about doing that?

Choosing a home inspector isn’t a difficult process, but as usual, we have tips to help you make it even easier.

When you don’t have an existing relationship with a home inspector, your Realtor will likely present you with a list of pros that they recommend highly. But, you need to research for yourself and find out who is the best inspector for your particular home.

Some Helpful Tips:

1. Make sure that all potential inspectors are members of the American Society of Home Inspectors. This group has been accrediting home inspectors for more than 40 years and requires that inspectors complete at least 250 inspections before they can call themselves “certified.” It’s a high achievement for a home inspector and a confidence builder for their clients. You want someone who won’t just do the minimum work, but go the extra mile to assure your home is or isn’t in good shape.

2. Ask what inspections they perform. Some home inspectors only do a general home inspection, which won’t be as thorough. But because home inspectors come from all areas of the construction industry, some have specific expertise that can be helpful in finding problems that you probably didn’t notice when you walked into the home of your dreams.

3. Have they inspected houses similar to yours? Houses built in the early 1900s cannot be held to the same standards as houses built in the 2000s. Not only are construction techniques very different, but the sort of strange upgrades that may have been made to the older home also would never be seen in a newer house. An inspector that has little to no experience with a house like yours may flag things wrong that are common for a home of that age. You don’t want to get your inspection back and panic because your inspector held an older house to a newer standard, for example.

4. Do they provide photos within their reports? There’s no standard format for a home inspection report, though there are a limited number of software packages for inspection companies. They have a lot of options, including providing optional photos of trouble spots or other items the inspector may feel needs pointing out. You want a home inspector that will put in the extra time to send you photos to more easily monitor the problems with your home.

5. How soon can they come out? It might seem like a silly question, but you’re very likely working with a limited window of time to ask for repairs. That means the sooner your new home inspector can get out, the better. It takes hours to complete a thorough home inspection. You also never know if you will need to make major changes to the home. If you’re down to your final cut and one can come out tomorrow and the rest can’t until next week, it’s an easy call.

Starbucks Tends To Boost Housing Prices

In a study done by Harvard Business School, each new Starbucks boosts the value of housing prices in a neighborhood. And not by a small amount.

A new Starbucks introduced into a ZIP code reported a 0.5 percent increase in home prices. It’s not clear whether housing prices are rising due to the Starbucks, or just because the Starbucks is bringing more affluent people to the area.

Harvard economics professor Edward Glaeser said Yelp data reveals it may be the latter. The study found that each 10-unit increase in the number of reviews is associated with a 1.4 percent increase in housing prices in the ZIP code.

“The most natural hypothesis to us is that restaurants respond to exogenous changes in neighborhood composition, not that restaurant availability is driving neighborhood change,” the paper concludes.

Gentrification is associated with grocery stores, restaruants, and generally more expensive activities. The people will go where they feel is a perfect balance between fun and affordability.

A hot topic in policy debates worldwide, gentrification is defined as the process of rebuilding homes and businesses accompanied by an influx of middle-class or affluent people at the expense of earlier, often more impoverished residents. The lack of consistent data is the main issue in determining if the effects of gentrification are positive or negative.

This study shows that there are better ways to analyze the growth of gentrification.

“Economists have long used government data from statistical agencies such as the Bureau of Labor Statistics and Census Bureau for analyzing policy and the economy — these data sources are invaluable but come with important limitations,” Michael Luca, an associate professor at HBS, told CNBC in an email.

Data collected from Yelp compliments the existing data by providing real-time updates on local stores as well as an insight into how neighborhoods change during gentrification.

“Yelp data has the advantage of being more up to date than most official government statistics,” the economist added. “It also contains metrics on things like cuisine, prices, and ratings that can be difficult to observe otherwise.”

“Yet, it seems true that Yelp establishments from 2007-2011 predict changes in education levels over the next five years, but education from 2007 to 2011 does not predict increases in the number of Yelp establishments, once we control for the initial level of Yelp establishments.”

So Starbucks may not be causing gentrification, but its arrival may confirm the gentrification trend. One of the reasons gentrification is becoming more common, is because of the expansion of Starbucks.

“The presence of a Starbucks is far less important than whether the community has people who consume Starbucks,” Glaeser writes in the paper. “Consequently, we think that this variable is likely to be a proxy for gentrification itself.”

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