5 Reasons to Buy a Home in the New Year

buy a home in the New Year

In recent years, buying a home in Colorado has felt like trying to catch a speeding bus. Maybe you weren’t quite ready in 2016 when rates were at an all-time low. And maybe you were afraid to hop on in 2017 amidst soaring Front Range housing prices. So now that we’ve turned the corner to a new year, you may be wondering, “Should I buy a home in 2018, or is to too late? What if prices are out of reach? What if I’ve already missed the low-interest rates?”  It may feel safer to keep renting. But here are 5 reasons why you should hop on board and buy a home in the new year.

Rates are still at historic lows

Yes, mortgage interest rates bottomed at 3.36% in July 2016, tying the lowest rate on record. But with January 30-year fixed mortgage rates still hovering around 4.1%, they remain at historic lows. This means that for many, a house payment is still lower than a rental payment. But experts agree that these historically-low rates won’t last forever. Interest rates have already begun to rise, and are likely to continue to climb. In fact, according to the Mortgage Bankers Association, mortgage interest rates are expected to climb to 4.6% by the end of the year, and to 5% by 2019. This means that by simply waiting to buy until later in the year, your mortgage could cost hundreds of dollars more. So it’s a good idea to lock in now.

And no matter what your rate, one benefit of locking in a conventional loan means that your payment will stay the same for the life of the mortgage. This translates to significant savings over renting, especially since overall rents in Colorado Springs have increased from around $660 in 2002 to $1133 in 2017 – a 170% increase. “Unlike rent, a fixed mortgage can’t go up (even if inflation does),” says CB&T Mortgage loan advisor Theresa Anderson. All the more reason to hop on board and lock at a low rate now.

Home prices are still rising

In 1940, the average home price in the U.S. (adjusted for inflation) was only $30,000. Home prices have more than quadrupled over the past 70 years, making home ownership an exceptional long-term investment. Rising home prices in Colorado have outpaced the national average in recent years. But don’t let that deter you because there’s still room to grow. The local housing market is still going strong, with a 5.2% price increase expected in Colorado Springs in the next year. With its robust economy, low unemployment rate, and innovative downtown commercial projects, Colorado Springs continues to be a desirable place to live and work. These are some of the many reasons that Realtor.com recently rated the city as one of the top 10 hottest housing markets in 2018. So why let the seller pocket those price increases? Hop on board and buy now so that you can start building the ultimate nest egg with an asset that appreciates over time.

Increased Loan limits

To match rising home prices, the Federal Housing Finance Agency (FHFA) increased the maximum conventional mortgage loan limits to $453,100 for 2018. Conventional mortgage loans feature competitive rates, low down payment requirements, and increased flexibility over other types of loans, making them a great option for many buyers. This 6.8% year-over-year increase from the previous limit means that financing a home in 2018 will keep pace with current home prices.

Winter is a good time to buy

Many people think that they need to wait until spring or summer to start house hunting. But there are many good reasons to get a jump on the peak season and start shopping for a new home in the winter, instead. There are fewer buyers to compete with in winter, which means less chance that there will be multiple offers on a property. Lower demand also keeps prices in check in winter versus the hot season. And even though there are fewer homes on the market, the sellers are more motivated and willing to negotiate. Put on a coat and get out there now in the New Year, while you have the upper hand.

Home ownership has perks

Homeownership gives you the freedom to create your own domestic comfort. From painting to remodeling a kitchen or bathroom, to adopting a dog or cat, you don’t need a landlord’s blessing. Owning a home also means owning a part of your community. Homeownership allows you to have an impact on your neighborhood with a voice in how your neighborhood is run. As Theresa Anderson of CB&T Mortgage states, home ownership means that “you make an investment for your future,” not your landlord’s.

Indeed, there’s no place like home. So don’t let another year pass you by. The conditions are ripe in the New Year for you to hop on board and become a homeowner.

 

The cost of nature’s wrath: 3 potential changes to insurance policies stemming from recent natural disasters

insurance policies

On May 8, 2017, a record-breaking hail storm slammed tennis ball-sized hail onto Denver residents during the busy rush hour, resulting in $1.4 billion in damages. It was the state’s most expensive natural catastrophe in history. In August and September, hurricanes Harvey and Irma battered Texas and Florida with unprecedented rain and flooding, inflicting up to $200 billion in damages – a number that’s still on the rise. And these are just a few of the ways that Mother Nature’s fury has plagued Americans in 2017. If it seems as though there are more catastrophic weather events now than ever, you’re right. Since 1970, the amount of natural disasters has quadrupled worldwide. And when these storms strike, insurance claims soar. As a result, changes may be coming to the way insurance companies cover hail and flood claims, even affecting people who weren’t victims of a recent event. Here are three changes you may see to homeowners insurance policies in the future:

Changes to add-on coverage

Colorado’s Front Range is located in the center of “Hail Alley,” which receives the highest frequency of large hail in North America. But as large hail events become even more common and extreme, Coloradans may find that this form of nature’s wrath is no longer included in a standard homeowners insurance policy. Like flood insurance, homeowners may be required to buy hail coverage as an add-on policy, instead. This trend could also spread to other parts of the country for frequent climate-related events, depending on regional weather history.

The long-term effects of this year’s hurricanes, particularly Harvey’s ravaging floods, won’t be known for quite a while. But we do know that much of southeast Texas was not included in FEMA-mapped high-risk flood zones. And only around 1 in 5 homes damaged by hurricane Harvey’s flood waters were covered by flood insurance. And many of the 100,000 flood claims that were filed under the beleaguered National Flood Insurance Program (NFIP) didn’t sufficiently cover repair or replacement costs. So it’s possible that Houston’s historic flood event will spur Congress to enact overdue reform on the National Flood Insurance Program as a whole, including updating FEMA flood-zone maps. In the future, flood insurance may not only be required in high-hazard flood areas, but also on properties well outside of 100-year flood zones. Reforms may also include allowing private insurers to provide more flood coverage, easing the burden placed on the NFIP.

Stricter rules on claims

Insurers may begin shifting costs to consumers by placing stricter rules on how claims are paid after a storm. For example, some Colorado homeowners insurance policies already impose a 1% deductible for hail damage. This means that if a home is worth $400,000, the owner must pay $4,000 out-of-pocket towards hail-damaged roof repair or replacement. Insurance companies may also begin settling roof claims on an actual cash value or depreciating-value basis. If this trend continues, more Colorado homeowners may only receive a percentage of the cost to replace their roof after future hailstorms.

Higher premiums

In the past year, insurance companies have paid out billions of dollars to repair or replace damaged property caused by natural disasters. It makes sense for insurers to increase future premiums to offset the costs, especially in the hardest-hit areas. In fact, Colorado’s devastating year-after-year hail events could spell significant percentage increases in homeowner’s insurance renewal premiums next year. And while it’s too early to predict the effects of hurricanes Harvey and Irma, insurance rates will likely increase in Texas and Florida. But even customers in neighboring states could see a hike in premiums since some insurers calculate rates regionally.

As costly natural disasters increase across the country, many could see changes to their homeowners insurance policies. Colorado’s latest hailstorm and hurricanes Harvey and Irma could be the confirmation the insurance industry needs to make sweeping reforms across the board.

Whether it’s hail, water, or wind, Mother Nature can wreak havoc on your property. Our specialized team of insurance professionals stay on top of every change in the industry, so you don’t have to. Let us analyze your association’s risk exposure and recommend the coverage solution that is right for you, so you aren’t caught paying the price.

Call us today to begin your insurance review!


Sources:

http://www.rmiia.org/catastrophes_and_statistics/Hail.asp
http://fortune.com/2017/09/22/hurricane-maria-irma-harvey-damage-cost/
https://www.economist.com/blogs/graphicdetail/2017/08/daily-chart-19
https://consumerfed.org/press_release/consumers-get-fair-claims-payments-wake-hurricane-harvey/
https://www.insurancejournal.com/magazines/features/2014/10/20/343553.htm