All Forum Posts by: Nicholas Covington

@Joe Koppel TBH that is a horrible question to ask a customer as it's the agents responsibility to adequately cover the property. Now if that is the average coverage $ per sqft for the area, then I guess that would do.

So I guess you could ask them if they feel that would adequately cover the property in your area for at least 80% of replacement cost. Generally you would want closer to 100%, but if you are trying to save some money then 80% is the min. I normally insured homes for  $83 a sqft but I was a national agent that wrote for over 35 states, so i had to have a basic guideline.

The main thing I really suggest is to just ask the agent your questions and voice your concerns, if you feel comfortable with the answers than that's all that matters because ultimately you are paying for peace of mind.

As far as deductible goes, that's a personal choice. Want a lower premium? Go with a higher deductible. Which is what I probably recommend for an investment. Remember to refer back to your lender requirements, because they generally have  cap for how high of a deductible you can set. Normally this isn't hit but you should just be aware of it.

@Joe Splitrock it is not a blanket statement, it is a fact. Non-owner occupied does not only mean investment as you can get a secondary home insured as well. This will be much more money than your primary since it is added risk. Of course insurance would be less for not covering contents, but that's by personal choice because you do have the option to do so.

Stating that you are insuring homes for 165k for under $400 a year has nothing to do with anything really as you can get homes for over 800k insured for less than $200 for the year. Insurance is not tied to the price of the home in any aspect, which you elaborate later on.

The OP is comparing his primary to an investment so in this case we are not really worried about what is insured as far as contents and such. Price is price. If he were to live in the investment property there is a 99.9% chance that it would be less and if not, it would not be relative to the premium amount of an investment NOO property.

@Account Closed Hello!

To be honest there really isn't a difference between the two. It would really come down to what they can offer as far as rates and your experience working with them. Quicken loans will probably have the lower rates due to having less overhead than a bank would. I haven't worked with Quicken Loans myself, but they would still need to operate the same as any other lender. Reading reviews of customer's experience would get you a better deal of what to look out for.

Any business has the goal to make money, so you would just need to see what kind of fees they are charging. They are just giving you other options on how to obtain financing, IE online.

Best of Luck,

Nick

@Anthony L. Hello!

Yes, that is a lot of money period. Doesn't matter if its for investing or your own property. I'm going to assume that isn't a 30yr loan? What are the full terms? Interest and months?

This sounds like a personal loan rather than a mortgage.

@Richard Solano Hello!

First off building insurance for a condo would be considered a "master condo policy" which covers the structure of the build aka "studs out." Normally this would be things like, siding, roof, outside fixtures, things of that nature.

When you get insurance you would be getting a condo dwelling "fire policy" which would cover "studs in" aka the inside of the condo. To find what the HOA truly covers, that would be reading the CC&Rs and their policy.

Of course their insurance will be higher than yours because they are covering the whole entire building, they pass on this charge as a portion of the HOA.

As far as you talking to insurance companies, for them to say 1985 is "old" they are wrongly mistaken. That is not old at all as the most insurance companies will go back to 1960's, anything before that is just a different system of calculating coverage. I'm not sure who you called, but to me that sounded like she didn't know what she was talking about. But I will say that every state and carrier will have their own set of rules. 

When requesting an insurance quote, did you tell them you are just looking for coverage for just the inside of the condo? This is normally much cheaper since its a smaller risk they are taking on.

For a good rule of thumb to estimate insurance, there isn't one in regards to calculating premium costs. As you would need to know specifically what that company charges per sqft. Even then would be hard because premium is also based on your personal profile IE credit score, how long you have owned a home, and previous claims, ect. We only have a rule of thumb of how much coverage you should have on your dwelling, but even that is a crude estimate as it would depend on the state and their building material costs and labor. 

Best of Luck,

Nick

@Christopher J Lemmon

Maybe stating that a cash value policy is "bad" isn't the correct word to use. As it is a product that is offered to a certain type of customer in need of insurance. There is a reason why it is "cheaper" than what a replacement cost policy offers and that is because of how payout is calculated in the even of a loss. IE some payout is better than no payout, which would be the case from the item or dwelling being depreciated. 

If your agent failed to explain this than I do encourage you to look into the policy again. Could I be wrong? Yes. Have I had customers come to me and state they didn't know they had an ACV policy and that it is based on depreciated values? Yes, most definitely. 

If your goal is to make money from your investment, which of course it is, then you might be willing to skimp on some things to do so. I would do the exact same thing if my lender allowed me to do so, and I will actually look into this in the future. Would I have it on my primary home? Heck no.

@Bill D. Hello!

To answer your question it would really depend on how y'all will hold the title. There should be no problem getting a bank to lend to your brother granted that everyone agrees/consents to the "entire" property to be used as collateral. This would be the case if the title is held in "joint tenancy," everyone has equal rights to property and must equally consent for whole use for financial gains/purposes. 

If you feel like this would still pose a problem then you are welcome to looking into hold separate titles as "tenancy in common," where the property is split equally between the five of you and you are each responsible for your own "piece of the pie." You are free to do what you want with your piece, but you would only have access to what yours is worth, rather than having the value of the whole property.

There are pros and cons to each one, so you would just have to ask yourself how the relationship is between the family members. 

Side note: Although possible to receive a loan through either method, most lenders would prefer the title to be held in "joint tenancy" as this way they are able to seize the whole property if someone was to default on loan.

Best of Luck,

Nick

@Chris Polsley Hello!

As an agent that has dealt with customers switching from USAA on their home insurance as well as having USAA for insurance myself, I can say they definitely aren't the cheapest. But like they say you get what you pay for. I do not have experience with 360 insurance and to be honest I have never heard of them, but with so many carriers out there that doesn't mean it's a bad company. 

One thing with USAA insurance, and a primary reason they are higher compared to others, is that they offer coverage for "open peril" which is for ALL perils minus those excluded from policy. This would be opposed to a "named" or "broad" peril policy where as your home is ONLY covered by the perils listed on the policy. An open peril policy will also extend towards your personal property as well. 

So although they may appear to be identical, chances are they are probably not if you aren't sure what to really look for. But they could be and the price difference is due to location. Sometimes insurance carriers just can't compete in certain states, due to their risk profile, and immediately price out.

You just might be fine with a named peril policy, this is what most people have anyways. The other you are just paying for peace of mind because you just never know what might happen. It's hard to say "such and such would never happen to me" since the main thing insurance is for is to protect you from the unknown.

Best of Luck,

Nick

Hello @Dan Beaulieu

Ahhh the good 'ol appraisal dilemma. To put it frankly I would go ahead and accept the offer of 534,000 because there are not many times that a buyer will up the cash difference knowing that the home is not "worth" that. To my knowledge as the seller there is not much you can do on the appraisal side unless the buyer talks to the lender about requesting another one. But this request would probably be denied unless there was good proof that is was done incorrectly or used bad comps.

At this point I am not even sure contractually you are allowed to go with a backup offer as there are no grounds to not accepting the sellers offer. Unless it would be due to it not being the 545k they offered initially, but being based contingent on appraisal I don't think that applies anymore. Normally you would be the one to drop the price to the 515k so for them to still want to pay a difference they must really love the home.

I say let 'em have it if it's a win-win on both sides. I wouldn't call it greedy for wanting what you put into it, but they say don't bite the hand that feeds you.

Best of Luck,

Nick

@Joe Koppel sorry my questions were more towards Christopher and his experiences.

ACV = actual cash value which is the cash value policy he is referring to in his post. There are different types of dwelling coverage that an insurance carrier can provide its customers. Most common is a replacement cost policy, which covers the materials and labor needed to rebuild the home from scratch. This is different from market value which takes into account of land and location; most lenders require you to carry this type of coverage.

A cash value policy will take what the home is valued at and then subtract and depreciation from the covered amount. This would be bad for the lender because a total loss would result in losing money as the home is no longer valued the same in insurance dollars. Which is why they generally don't allow this type of policy.