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Quick Hits on Important Home Buying Stuff

These are topics that are important to know about, but that I can explain in short form.  They could be full articles, but I think you'll appreciate them as "quick hits".

 

WINDSTORM INSURANCE
South Florida residents know all too well that windstorm damage can be devastating. One only needs to mention Hurricane Andrew in 1992 to evoke some pretty vivid memories. More recently, the 2004-2005 seasons were unprecedented in the frequency of hurricanes and damage they caused. With this in mind, it’s easy to see how imperative it is to calculate the cost of windstorm insurance into any real estate transaction.

When I moved to Palmetto Bay in 2004, I had some knowledge about windstorm insurance, but really didn’t know how it worked. Perhaps you are in a similar situation. Windstorm insurance (sometimes called hurricane insurance) protects the policyholder from the effects of wind and wind-borne debris. This article provides starting points to understanding the mechanics of windstorm insurance. As always, consult with a professional about your specific needs.

Since Hurricane Andrew, a lot has changed in windstorm insurance. Although it is still possible to get private windstorm insurance, the list of carriers continues to dwindle. As a result, in 2002, the State of Florida created Citizens Windstorm Insurance Corporation. Citizens is utilized as a ‘last resort’ choice when no other carrier will insure the property. Citizens is required by law to have rates that do not compete with those of Florida's private insurance companies. It calculates those rates by looking at the rates of the top 20 insurers in the state and makes sure its rates are higher. Therefore, it is strongly recommended you invest the time to call several carriers to see if you can get a policy written with them. I have found a great web resource sponsored by the State of Florida to find a potential insurer and guesstimate about how wind protection improvement on your home will help you save money.

If you land with Citizens as your carrier (and most of you will), the next step in understanding the mechanics of windstorm insurance is to look at home construction and location.  In most cases, homes east vs. west of US-1 carry very different premiums.  Also, construction standards will pay a big role in discounts (called wind mitigation) you will receive from your insurance carrier.


Happy Home Hunting!
Hal

 

FLOOD INSURANCE
One of the reasons South Florida is called a little slice of paradise is the area’s abundant water. You are never too far from the beautiful ocean, sparkling lake, canal or stream. However, sometimes we get too much of a good thing. Because Miami-Dade County is located in a unique geographical area, it is particularly susceptible to flooding from major rain events and storm surge.

With few exceptions, mortgaged homes in our region will require flood insurance. If not required, it is certainly strongly advised that any homeowner look into the hazards of potential flood waters and protect themselves accordingly.

When I moved from the Northeast to Palmetto Bay in 2004, I had no idea about the importance of flood insurance. It was eye opening to understand how the risks were calculated, how a home was classified into a particular risk categories and how to best factor this information while selecting a home.

Most homeowners insurance policies do not cover flood damage. So, in 1968, Congress created the National Flood Insurance Program (NFIP) to help provide a means for property owners to financially protect themselves. In order to participate in the NFIP, your community must comply with FEMA standards to reduce the risks of flooding. Don’t worry, nearly every South Florida community is qualified to participate in the NFIP. To get started, work with your homeowners insurance company. They will provide information to help you obtain a flood insurance policy. Pricing varies on the coverage as well as risk.

FEMA designates risk levels (available here) by looking at elevation and proximity to water. They then assign each parcel of land a letter designation. Depending on your home’s letter designation, you will either be required to or have the guaranteed option to purchase insurance.

Miami-Dade County has a great website that you can use to plug in the address of any property in the County to check its flood zone designation. I highly recommend it when you are house hunting.  You can also call the Miami‑Dade County's Flood Zone Hotline at (786) 315‑2847 to confirm your exact flood zone designation. As you hone in on home that you like, take a few moments to understand the flood risks associated with the property. A little knowledge goes a long way.

Miami-Dade County continues to work with FEMA to reduce flood risks. Because of drainage improvements funded through the Miami‑Dade Stormwater Utility, and other enhancements to the community services provided by Miami‑Dade County, effective October 1, 2003 a 25% discount is included in the rate to those residents in unincorporated Miami-Dade who are in a flood zone and purchase flood insurance policies. A 10% discount is also available for those outside of flood zones, with the exception of Preferred Risk policies.

In late 2011, Miami-Dade County added an online storm-surge calculator.  I feel it is a bit over-the-top, but it is still a useful tool to educate yourself.

Happy Home Hunting!
Hal

THE BENEFITS OF A PRE-APPROVAL LETTER
Pre-approval, as opposed to pre-qualification, signifies that the loan application has been taken through a rigorous procedure.  Here's why pre-approval buyers are ahead in the home buying game:

  • If you make an offer on a home and then apply for a loan, you are at the lender's mercy, who is aware that you do not have time to shop around.
  • Pre-approval saves time spent looking at houses you can't afford.
  • A pre-approval letter from a lender gives you an edge when multiple offers have been made on a house.
  • Pre-approved buyers can generally close escrow more quickly, since most of the work has already been done.

Besides that, most Realtors® won't work with you until you are pre-approved for a home purchase.  If you need help getting your pre-approval, I'm ready and able to point you in the right direction.  Most importantly, pre-approvals do not create ANY liability or responsibility on your part.

Happy Home Hunting!
Hal

 

 

 

TERMITES
Termites can be anywhere in the United States.  Being the sub-tropics, South Miami tends to have more than its share of these little buggers; however, we also have homes built primarily from concrete block.  This lowers the potential for catastrophic damage, but it still warrants homeowners' attention.

I use a nationally-recognized firm to protect my house from termites.  In 2006, we discovered termites in our attic and had to have the house tented.  Afterwards, we were offered annual insurance.  By paying an annual fee, the company will perform an inspection each year and cover whatever costs are involved to kill off the termites and repair any of the damage done.

At $200 a year, I think it is a great insurance policy.  Seeing as how a tenting on my size house can cost nearly $2600, it seemed like a fair deal.

Here are some great facts I learned "on the job" about these creatures:

  • You, and not the experts are most likely to know if you have termites.  Look around window sills, door jams and any attic access points.
  • Termites are most active after 6pm!  They like it when it's cooing down, so if you're going to look for active termites search after 6:00.
  • Termites dies when temeratures reach above 115 degrees.  That's why, if they are in an attic, they tend to stay in the insulation, near pipes, or near air conditioning vents.
  • Termites do like light, so they also will tend to eat their way to a light source.  This might be to your ceiling (from the attic) or to the outside eves of your home.
  • Staying with keeping cool, termites like cool wood.  If they had a choice between your attic or a beautiful dining roon table, you'd bet they'd be eating at the table.
  • Regular termites swam and breed May-August.  Sub-terrainian termites are most prevalent December-May.

I hope I educated you a bit and didn't creep you out...

Happy Home Hunting!
Hal