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Homeownership

New HUD program could do a lot of good for homeowners that suffer from flood losses

(HOMEOWNERSHIP NEWS) Half of all homes in the United States affected by floodwaters do not have flood insurance prior to the event. Could the newest HUD proposal help to change that?

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When the unthinkable happens

As a responsible property owner, you purchase insurance to mitigate against loss from factors you feel likely to impact your home.

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For many who do not live near a body of water, however, purchasing flood insurance is not in their insurance portfolio. Typically flood insurance is an afterthought after the damage has occurred.

Elevating the elevation standards

HUD proposed new elevation standards in an attempt to protect buyers and ensure that properties seeking Federal Housing Administration (FHA) mortgage insurance or financial assistance from HUD are safeguarded. The proposal calls for properties identified as “non-critical” to be a minimum of two feet above the location’s base flood elevation (or the 100-year floodplain).

“Critical” properties, such as police/fire stations, hospitals, and nursing homes, should be three feet higher than the base flood elevation or the 500-year floodplain, whichever is higher.

Additionally, the proposal seeks to widen the horizontal floodplain around both critical and non-critical properties.

It also revises the single-family home and public housing development Minimum Property Standards with mortgages insured by FHA.

For properties located within the 100-year floodplain, the lowest floor in both new construction and structures which are substantially improved must be built at least two feet above the base flood elevation based on the best information at hand. Horizontal flooding patterns are not considered as a result of this new proposal for these types of properties.

An historical proposal

This proposal is the first in 40 years to identify the need to raise current required elevation levels for properties.

The proposal is based on an anticipated increase in flooding risks based on climate change and associated rise in sea-levels.

Furthermore, HUD utilized the work of the 2014 National Climate Assessment, which identified that significant damage from infrastructure likely occurs based on extreme weather events.

“If we’re serious about protecting people and property from flooding, we have to think differently than we did 40 years ago,” noted HUD Secretary Julian Castro. “Today we begin the process of aligning our regulations with the evidence to make sure taxpayer dollars are invested in the most responsible and resilient manner possible.”

Not all parties affected, however, see the same line of reasoning. “HUD must stick to the original intent of the president’s executive order by stipulating that expanded floodplain rules only apply to federally funded projects,” said Ed Brady, chairman of the National Association of Home Builders (NAHB).

Brady takes a harsher view of the effect the proposal would have on the housing market. “HUD’s proposal is a disaster for housing affordability. It will trigger delays and higher construction costs for properties facing little risk of flooding,” he asserts.

Better for all

Half of all homes in the United States affected by floodwaters do not have flood insurance prior to the event. Many homeowners are under the mistaken belief that flooding is covered under their standard home insurance policy. Flood insurance is sold specifically to cover that instance, which is not covered under the “multi-peril” clause of the standard home insurance policy.

The National Flood Insurance Program (NFIP), which provides flood insurance for homeowners, found almost 25 percent of claims they process are from properties outside areas identified as a high-flood risk. As such, both homeowners and the federal government alike must consider taking expanded steps to protect their investments.

#HUDFlood

Roger is a Staff Writer at The Real Daily and holds two Master's degrees, one in Education Leadership and another in Leadership Studies. In his spare time away from researching leadership retention and communication styles, he loves to watch baseball, especially the Red Sox!

Homeownership

On the fence about buying a house? Low interest rates may change your mind

(HOMEOWNERSHIP) It’s understandable to be unsure about buying a house in COVID times, but there are some good reasons to take advantage right now.

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Buying a home seems intimidating but worth it.

If you’re on the fence about buying a house in the time of COVID, perhaps this will change your mind: For the third consecutive week, interest rates are well below 3% across the board.

Fox Business reports current fixed-rate mortgages as staying below 3% this week—like the last two weeks—with 30-year rates sitting at 2.75 percent. 20- and 15-year fixed rates are rating 2.75% and 2.125%, respectively. That’s a heck of a lot lower than rates were this time last year, and while there’s an obvious culprit with egregious downsides to thank, the fact remains that a pyrrhic thanks may indeed be in order.

Even refinancing rates are substantially lower than usual. A fixed 30-year rate is right at three percent, while rates for shorter time frames are consistently holding at below 2.8%. This proves true for the 13th week in a row, so it seems like now—like 12 weeks ago—is a good time to refinance your home for a lower rate.

While these rates may differ from what you’ll receive when looking to buy, you can generally expect lower interest rates these days—even if your credit isn’t perfect. Other factors that will impact your rate include property location and value, your income, and how much you’re able to afford for the down payment. Similarly, as long as the economy is going through a rough patch, it seems fair to expect that rates will continue to err on the side of lower than average.

As someone with an interest rate over 4% on a 30-year fixed-rate mortgage, it’s tempting to refinance, especially given that the process for doing so is necessarily contact-free. Even if you’re fully buying a house, though, there’s some merit to entering the market now.

It’s no secret that the economy has slowed down during the pandemic. With the majority of the population hunkering down and sheltering in place, buying a home may not be the first thing that comes to mind for most. Sure, it’s a process that is rife with risk at the moment; however, if your plans for this year included moving anyway, now is a pretty good time to apply.

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Homeownership

Getting a mortgage in 2020, what’s changed?

(HOMEOWNERSHIP) In this unexpected marketplace, here’s some advice on how to get a mortgage in 2020.

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Mortgage papers held in hands with a pen, being handed to the other hands.

Mortgages are terrifying. The idea of being committed to a payment for the next 30 years is a viscerally horrifying concept—which makes it a perfect topic to visit this season. Here is what you need to know about applying for a mortgage in the tail end of 2020.

Firstly, it’s important to understand that while mortgage rates are currently low—the last 3 weeks have seen interest rates dip well below three percent—that doesn’t mean you can expect the lowest possible rate. There are a lot of factors that play into the mortgage rate you receive: Credit, location, estimated value, and even your occupation. For this reason, you should evaluate your own eligibility so you know how “safe” you are before calling your bank.

You should also know that your credit history—while always important—will play even more of a role if you plan on buying any time soon. In the absence of other economic factors, lenders are looking much more closely at debt in comparison to income, and some lenders reserve the right to ask applicants to reduce or eliminate sources of debt before granting a loan.

Another aspect of the loan application process involves extremely timely employment checks—some of which may seem invasive. It isn’t out of the ordinary for lenders to vet applicants’ job stability, including whether or not the job will subject workers to increased risk of contracting COVID; for now, at least, a higher-risk opportunity for you might lead to a more tenuous standing in lenders’ eyes.

Finally, most experts in the loan field agree that helping your loan service help you is a crucial aspect of getting information quickly and accurately—something that is of paramount importance these days. The best way to do this is simply for you to be available to the best of your ability; the quicker you can respond with the necessary information, the faster your selected lender will be able to move you through the application process and get you a quote.

Everything feels uncertain right now, and the real estate field isn’t exempt from that feeling. By following the information here, you can cut back on your own uncertainty—and, in the process, potentially score a decent rate on a mortgage.

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Homeownership

Demand for newly built homes soars, but so is the cost of lumber

[HOMEOWNERSHIP] Many potential buyers are looking for newly built homes, but will builders be able to meet this demand with lumber prices on the rise?

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lumber

COVID-19 has had an undeniable effect on the U.S. economy. In the housing market, increased interest in single-family, new-construction homes has given builders a bright spot in the crisis. Builder confidence in this market has now reached a 35-year high, but builders are not out of the woods yet.

Potential homebuyers are showing up in hoards (figuratively speaking, we hope) this fall with a keen interest in new-construction homes. Buyers looking to take advantage of record-low interest rates are knocking on model home doors, seeking improved living arrangements with more space and functionality. The market sentiment for single-family homes is positive, but rising lumber prices are tempering home builders’ excitement for booming business.

Many white-collar workers are staring down an indefinite stretch of remote working arrangements, with some large tech companies even considering making the change to remote work permanent. The COVID-19 pandemic has forced workers to make big shifts in their everyday life. These lifestyles changes, along with low interest rates, have prompted a new wave of homebuyers.

Unfortunately for builders, the pandemic has had a much harder impact on blue-collar workers and a negative impact on supply and demand. While office workers sit on their couches and open up their laptops to Zillow, places like lumber mills and factories had no choice but to shut down during the height (if that is even past us) of the pandemic.

Many lumber mills and factories remain closed or are dealing with severe labor shortages as these blue-collar workers are disproportionately affected by the pandemic and access to adequate health care.

Prior to shutdowns, the market was not expecting this type of boom in new-construction interest from homebuyers. Builders are now seeing lumber prices rise as a result of increased demand and dwindling supplies.

Mortgage rates hit record lows in early August, and while those have risen somewhat since then, it is unlikely that rates will skyrocket anytime soon. With no end to the pandemic in sight for the U.S., potential homebuyers will keep coming and builders will just have to deal with the premium on lumber for the foreseeable future.

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