Tag: homeownership

Why insurance is so expensive now.

The insurance industry has experienced significant changes over recent years, with homeowner’s and auto insurance rates increasing rapidly. The reasons behind these trends are numerous, involving a combination of economic, environmental, and market-driven factors.

Homeowner’s insurance on the rise

Homeowner’s insurance rates have risen notably, driven by several unrelated critical factors:

Rising Rebuilding and Replacement Costs: Between 2019 and 2022, the costs associated with rebuilding and replacing homes climbed by 55%¹. This increase is a principal driver behind higher premiums as insurers recalibrate to cover these escalated costs.
Extreme Weather Impacts: A rise in natural disasters, including severe storms and wildfires, has heavily impacted the insurance sector². The increase in these catastrophic events have lead to more large claims, driving up costs for insurers. Costs which, in turn, get passed on to homeowners.
Market Pressures and Area Exits: Worsening financial performance has caused property insurance market to experience significant strains, which are partly due to economic inflation and changes in exposures³. These pressures have resulted higher premiums and, in some cases, insurers exiting certain markets (no longer writing polices in certain regions) or reducing their policy offerings⁴.

Accelerating auto insurance premiums

Auto insurance has also experienced rate increases, with overlapping and unique factors to blame:

Rising Inflation and Repair Costs: Similar to homeowners insurance, auto insurance is impacted by inflation. The cost of repairs, labor, and parts has increased, leading insurers to raise premiums to cover these higher expenses⁵.
More Natural Disasters: Auto insurance companies were also impacted by natural disasters, which can lead to a higher volume of claims. Vehicles damaged by storms, floods, or fires contribute to the overall risk insurers need to manage⁵.
More Technological Complexity: Modern vehicles come equipped with advanced technology, making repairs more expensive. This novel complexity adds to the overall cost insurers need to cover, contributing to premium increases.

Common themes and relationships in insurance

Analyzing the causes behind the steep rise in both homeowners and auto insurance rates reveals common themes:

Impact of Weather Extremes: Both sectors are significantly affected by climate change, leading to an increase in natural disaster-related claims. This trend underscores the growing importance of environmental factors in insurance pricing.
Economic Factors: Inflation plays a crucial role in both contexts, impacting the cost of repairs, replacements, and labor. Economic conditions directly influence insurance rates, reflecting broader market dynamics.
Technological and Material Costs: Just as the cost of modern vehicle technology impacts auto insurance, the rising costs of building materials and construction technology affect homeowners insurance. These factors contribute to the overall increase in premiums.

Looking ahead

Understanding these trends is critical for consumers looking to navigate the changing insurance landscape effectively. While external factors like climate change and inflation may be beyond individual control, there are steps consumers can take to mitigate the impact on their insurance rates. Regularly reviewing policies, improving property resilience, and shopping various insurance providers can help secure more favorable terms.

Given the complex interplay of factors driving insurance rates up, it’s evident that both homeowners and auto insurance sectors are navigating through a period of adjustment. Awareness and proactive management of insurance policies become even more crucial to adapt to these changes.

What’s a future homeowner to do?

It’s no secret that inflation has taken a bite out of the average worker’s spending power. The general cost of living is, on average, higher than it used to be. See the chart below of the latest 5-year trend of the Consumer Price Index in the United States using data from the US Bureau of Labor Statistics:

United States Consumer Price Index: Last 5 Years

source: tradingeconomics.com

If you currently rent your home, you may also have noticed that the average cost to rent has risen as well. Below is a chart of Rent Inflation for the past 5 years, again, using data from the US Bureau of Labor Statistics:

United States Rent Inflation: Last 5 Years

source: tradingeconomics.com

If you are feeling the pinch of inflation and rent increases, you may be tempted to believe that the American Dream of homeownership is slipping away. Headlines have emphasized the increase in mortgage rates, and it’s no secret that demand has buttressed home prices, as indicated in the chart below using data from the Federal Housing Finance Agency (FHFA):

United States FHFA House Price Index: Last 5 Years

source: tradingeconomics.com

What if you could do something now to help prepare for a more expensive future? What if homeownership is more than just a foundational part of the American Dream, but a tool to leverage a better financial future for family, or just for yourself?

Fight rent increases: Fire your landlord. (and become your own)

Maybe you love your landlord. Maybe you really dislike your landlord. Either way, the odds are good that your rent is higher than it was 2 years ago (Remember the rent inflation chart above?).

You know what isn’t higher? The principle and interest monthly payment for a mortgage that started 2 years ago. That’s the magic of a mortgage loan: the monthly payment doesn’t change for the life of the loan. Sure, this doesn’t account for insurance rates, taxes, or HOA fees, but every dollar you pay on the principle is equity in your home that you now own, and your lender doesn’t. You can’t say that about rent.

Your home as a financial asset

As the property you own increases in value, you own every bit of the new value, and your monthly payment (principle and interest) stays the same. Maybe you have a growing family, or you want a bigger garage, office, space to entertain, or whatever you have your heart set on. If you want to get a bigger house, you can take the equity of your existing house, and use it to help pay for your next house.

Over time, as your equity grows (and your monthly principle and interest payment stays the same), your net worth and economic resilience grows with it. In fact, if you want an even lower monthly payment, you may be eligible to refinance your remaining debt into a new mortgage, if rates are favorable. You could also use a portion of the equity in your home for other expenses. (These are referring to various loan products, and the best product for your situation may not be the same the best option for someone else.) The point is, becoming a homeowner gives you options that are not available otherwise.

Know your options

If you firmly believe that homeownership is out of reach, we encourage you to explore your options anyway. There are a variety of programs, and a variety of properties that can work together to help you start building home equity. If qualification is a problem, there are steps you can take to work towards qualification.

The point is, don’t let your own limiting beliefs hold you back. Our team of loan experts thrive on helping buyers overcome challenges to help you fire your landlord, become a homeowner, fight back against rising rents, and start building equity.

If you are ready to get started, fill out our no-obligation form, and your mortgage loan expert will contact you to help you determine your best path forward.

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After all, Benchmark brings you home.

¹ CNN, 2023
² CNBC, 2024
³ Financial Research Government, 2023
⁴ Money.com
⁵ NPR, 2024

What Should You Check Before Making An Offer On Your Next House?

by Jason Haeger

So, you are home shopping, have found ‘The One,’ and you’re ready to make an offer. Are you sure you know what you’re doing? I mean, of course you know that you plan to make an offer, but do you know what comes with the house that you think you are ready to buy? The odds are good that you have not considered everything, and that you may be in for an unwelcome surprise. This is especially true if you are a first time home buyer.

At Benchmark, we want you to be confident in your decisions. It is part of our mission and dedication to helping our clients fulfill their piece of the American Dream of homeownership. Protect yourself by evaluating factors in these 4 categories before placing your offer.

 Finances

You should already be pre-approved for a maximum loan amount. Make sure the asking price is fair, and make sure your offer fits well within your tolerances for your pre-approval amount. It’s also a good idea to check the expenses for the house, like utility bills, property tax, insurance, and HOA dues, if applicable. Make sure the monthly financial obligation fits within your range of affordability. Lastly, make sure you have easy/quick access to your funds for a down payment and earnest money. If your offer is accepted, be ready to pounce!

 Building

Be really sure you are as aware as you can be of what you’re buying. Take another walkthrough, and bring a bright flashlight, a level, a tape measure, or anything else you think you may need in order to go into a 30 year obligation with eyes wide open. Take a look at the seller’s disclosure, so you are in the loop about any upgrades or repairs that may have been done to the top candidate for your future home. This can help give you an idea of any work that you can avoid doing, or that you may need to get done after you’ve become the new fearless owner of the abode.

 Location

Get to know the neighborhood and the general location of the home you have your sights set on. Find the assigned school, its rank, distance from the home, and wether you think it’s a good fit for your family’s values. Check the distance and availability of business you rely on, like gas stations, grocery stores, as well as proximity and availability of entertainment, cafes, and restaurants. How far is it from your place of work? What would your new commute look like? It is important to weigh all of this considerations to prevent a future case of buyer’s remorse.

 Neighborhood

It can also be a good idea to visit the house at different times of the day, and on different days of the week. This can help give you a feel for the overall culture of the neighborhood, as well as what kinds of noises and activity to expect. Doing this may also give you a better idea of traffic congestion spots. You may also want to consider checking crime in the area, and registered sex offenders who may live nearby. Also be aware of neighborhood amenities provided by the HOA, or community cooperation. Last but not least, meet the neighbors! The best way to get a feel for the neighborhood is to talk to someone who has lived there for awhile already.

Now, Go Make Your Offer!

You have checked the financials, decided that you are prepared, and are aware of the total cost to live in the home you want to buy. You are going in with eyes wide open, fully aware of the school situation, access to resources, and the compatibility of your desired neighborhood. Most importantly, you are aware of any issues present in the house itself, and the work that was recently done.

If you are looking for a house right now, and are preparing ahead of time, great job! Researching the next step before you are there is a display of wisdom. Are you pre-approved? Without being pre-approved, any offer you make is unlikely to be accepted without an approved loan amount, unless you plan to buy in cash. (if so, why are you reading this on a mortgage site? You should be writing your own finance blog!)

If you are looking to get pre-approved, we make it easy. More than that, our expert loan officers will match your goals with the perfect loan for your unique situation. We often refer to ourselves as “The Benchmark Family”, and when you choose to work with us, you become part of it, too. Ready to get started?

Find your Benchmark branch and contact them today for a hassle-free experience.Give us a call or contact us today. At Benchmark, we’ve got your back.Give me a call, send me an email, or request a call today. My team and I will take good care of you.

Welcome. Benchmark Brings You Home

Winter, Pets, and Homeownership

by I Am Benchmark

There are a TON of benefits homeownership brings for you and your pets. 68% of American households have a pet, according to the most recent APPA Pet Ownership Survey. The most popular pet being dogs in 48% of households, followed by cats in 38% of households. With our furry friends being such a big part of our lives, there are some real perks to buying a home with your current or future pets in mind!

No More Middle of the Night Walks

Picture this: (If you currently rent with a pet, it doesn’t take much imagination) It’s freezing outside, you live in a second story apartment, and your dog wakes you up at 4am crying to go to the bathroom. You have to get out of bed, bundle up, begrudgingly grab the leash, and walk your pup downstairs, outside to do his/her business.

For renters with dogs, especially in apartments, this scenario is a daily reality. How great would it be to just be able to open the door and let your pup out? Or better yet, what if you could install a doggy door, and they were able to go out on their own? When you’re ready to buy, choosing a home with a fenced in yard can be life-changing for you and your beloved pet.

Give Your Pets the Space They Deserve

The reality is most renters settle for way less square footage than they would find in a house. This makes a huge difference when the temperatures outside are not suitable for taking a stroll. Not to mention, having the bonus of a yard can add a ton of additional space for your dog to run and play without being cooped up inside, and a fenced backyard means access to nature is a whole lot easier when nature calls. Perhaps your puppy has outgrown your current living space, or maybe you want to adopt another dog, but you just don’t have enough space. Buying a home with more square footage can have a positive impact on your pet’s, and your own quality of life!

Be Your Own Landlord and Make Your Own Rules

Many landlords restrict by weight or breed, or simply do not allow for pets of any kind. For families with pets, this can limit your options when looking for housing. For those who are locked into a lease with pet restrictions, it can be heartbreaking not being able to add a new companion to your family when you are ready. When you own a home, you are in complete control.

Say Goodbye to the Pet Deposit

Pet deposits can be a major financial burden for renters with pets. With nonrefundable pet deposits averaging between $200-$500, often per each pet, renting is a big expense for pet lovers on top of the normal expenses for caring for your beloved four-legged family member. At with the recent trend of many landlords charging pet rent, a monthly fee for having a pet, on top of your rent and pet deposit, the costs of renting with pets can really add up.

Ready to get into the perfect home for you and your pet? Call me or contact me to get started today!When to get into the perfect home for you and your pet? Find your Benchmark Branch to get started today!Ready to get into the perfect home for you and your pet? Contact us today to get started!

How To Prepare Your Home For Winter

by I Am Benchmark

It’s That Time Of Year Again

Winter officially begins on Thursday, and if you haven’t already winterized your home, it’s time to take action. Follow these steps to keep the comfort in, keep the cold out, and ensure your family’s safety. The energy cost savings doesn’t hurt, either, so get to it!

Seal Drafty Windows and Doors

Exterior door and window leaks are the biggest source of energy loss when (baby) it’s cold outside. You can help prevent the heat sneaking its way out, and the cold creeping its way into your cozy home by sealing the gaps. For gaps at the edge of windows, you can simply caulk the gaps. (Be sure to cut out old caulk for best results.) For gaps between panes on newer windows, a little bit of weather stripping can go along way in keeping winter out. On older windows, short of reglazing, you can use weatherstripping or caulk to seal gaps.

For doors, check the weather stripping where the door seals. At dusk, you can check from outside for light getting through cracks. For all window and door leaks, you can light a candle, and hold it near potential gaps in windows and doors to check for a flicker caused by escaping warm air, or entering cold air.

little girl sitting by window in winter

Don’t Heat Vacant Rooms

room hvac vent

If you have any spare rooms, or rooms that are rarely used, keep the doors to them closed, and close the vents in them. This will prevent your central heat from working to heat unused space. Unless someone decided to start using the vacant room, no one would notice the sweet savings on your energy bill.

A bonus tip, if your home has more than a single story, you can partially close the vents on the top floor, and keep the doors to frequently used rooms open. Be careful, though. If your air handler is oversized for your house, this could put unnecessary stress on it, causing it to die prematurely.

Blow the Warm Air Down

Ceiling fans are fantastic for cutting cooling costs in the summer. The breeze effectively reduces the perceived temperature, meaning you can turn the thermostat up a couple of degrees to lighten the load on your air conditioner unit. What about in winter?

Most ceiling fans have a switch to reverse the rotation direction that the blades spin. While you don’t want to feel the breeze when you’re trying to stay warm, you do want to generate circulation of the air in the room to even out the temperature between the top of the room and the bottom. Switching your ceiling fans on in reverse direction accomplishes this. No longer will the risen warm air stagnate against the ceiling, leaving the heat from your furnace under-appreciated. You can set your thermostat a couple of degrees lower, to lighten the load on your furnace, while staying comfortably warm when it’s cold outside.

ceiling fan

Check Safety Systems

testing a smoke alarm

Test your fire and smoke alarms, your carbon monoxide sensors, and your security system components to make sure the batteries are good, connections are secure, and CO sensors have not yet expired. Fires and carbon monoxide are both more common during cooler months, and holidays are also a time when thieves may be after the presents under your tree, unfortunately. Don’t forget to check mounting brackets and wiring for external security cameras and motion sensing lights. Being safe is essential to feeling cozy at home.

Stock Up and Be Prepared

Start with keeping a backup stock of food in case you are stuck inside due to snow or ice. It also makes sense to check your first aid kit to see if anything needs to be replenished, or buy one if you do not already have one. Keep extra stock of prescription medications, just in case you are unable to get a refill when running low. Make sure you have a means of opening cans in the event that power is lost. Keep firewood on hand, or another means of keeping warm. Keep emergency numbers handy, and keep your cell phones and any supplemental power banks for them charged. Stock up on batteries, test your flashlights, check your fire extinguisher(s), and keep several gallons of potable water on hand. In the event that you need these resources, your future self will thank you later. So do something nice for yourself and your family: be prepared.

7 Fall Maintenance Tips for Homeowners

by Benchmark

Fall is the perfect time to get all of your home maintenance and winter preparation projects done. It is the time of year when things cool off and it gives you the best opportunity for accomplishing all you need to before the cold winter months.

Help get your home ready for winter with these fall maintenance tips:

1. Check windows and doors.

This is one of the easiest ways to save on winter energy bills and keep your house from getting cold. Make sure there are not cracks, leaks or air coming through the window sills or door frames.

2. Clean you heating and air conditioning.

Having your air conditioner and heater units cleaned twice a year- spring and fall- will help your family stay healthier and expand the life of your units. A professional cleaning is inexpensive and takes a very short amount of time.

3. Check your fireplace.

Many people still use wood burning or gas fireplaces in the winter. Do a visual inspection of your fireplace to make sure that it is in good working order. Give it a test run at some point in the fall, before it gets too cold, to make sure that it will be functioning in the winter.

4. Clean your water heater.

You can clean your water heater by simply draining it. Allow all of the water in the tank to come out. This will get rid of any buildup that is in the heater due to sediment and will help prevent it from building up during the winter.

5. Protect your hose.

To keep your garden hose from freezing and cracking empty it completely and disconnect it from the spigot. Moving it inside is also a good idea to help prevent your hose from freezing and getting destroyed.

6. Check your roof.

When prepping maintaining your home it is important to start from the bottom up. Take a look at your roof- even from the ground- and see if there are any missing shingles or holes in the roof. Make sure your gutters are clear of leaves, sticks and debris.

7. Clean out the garage.

Make sure that any unused gas in equipment is removed and stored properly. Allowing the gas to sit in the fuel tanks can cause sediment in the tank and can potentially ruin the equipment. Since it may be out of use for months, fall is a good time to do this.

Wall Street Journal & Forbes: It’s Time to Buy A Home

by bmadmin

We believe very strongly that now is the time to buy a home. Some will say we are just saying this to create real estate transactions and commissions. Because of that, today we will quote what those outside the real estate profession are saying to the people who look to them for financial advice.

The Wall Street Journal

Last week, in an article entitled It’s Time to Buy That House, the WSJ told their subscribers:

“It’s an excellent time to buy a house, either to live in for the long term or for investment income…Houses aren’t the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.”

In an article two weeks ago, MarketWatch.com (the on-line blog for WSJ) told their readers:

“Now could be the best time in history to buy a home.”

Forbes.com

In a report to their subscribers, Capital Economics reported that:

“The previous declines in house prices and the more recent drop in mortgage rates to record lows have created an unusual situation in which the median monthly mortgage payment is more or less the same as the median rental payment.”

Why is this important? Last week, Forbes explained to their readers:

“If rents simply kept up with inflation at a 3.2% annual increase, a $1,500 rent payment would cost that renter nearly $900,000 over the next 30 years. The same $1,500 payment made to their mortgage would be only $540,000 (because the payments don’t increase with inflation).”

They went on to explain the advantages of homeownership during retirement:

“Even with a dismal 1% growth rate over 30 years, a $300,000 property would appreciate well over $100,000 giving the homeowner an additional nest egg for retirement…

At a time when retirement is becoming much more challenging, an extra $400,000 (or likely more) can make a major difference not to mention the impact of NOT having to pay a mortgage. How much less would you have to save for retirement if you didn’t pay the mortgage?”

Bottom Line

When the iconic financial newspaper and the iconic financial magazine say that it now makes financial sense to purchase a house, perhaps it’s time to buy a home.

Post courtesy of KCMBlog.com

Americans Still Believe in Homeownership – Fannie Mae Survey

by bmadmin

Despite Americans’ pessimistic attitudes about the economy, 69 percent of the Americans surveyed in Fannie Mae’s Monthly National Housing Survey believed that it is still a good time to buy a home.

It was the fourth time in the last year that 69 percent or more of the respondents felt that way. However, that positive sentiment didn’t carry over when it came to whether or not they thought it was a good time to sell a home. Only nine percent of the Americans surveyed thought it was a good time to sell a home, down from 11 percent from the previous month.

And almost just as many Americans, 62 percent, said they would rather buy a home if they were going to move in the next year, while 34 percent said they would rent.

About half of the respondents, 49 percent, expected home prices to stay about the same over the coming year with 27 percent expecting home prices to decline and only 20 percent expecting home prices to increase. On average, respondents expected home prices to decline only 0.5 percent over the coming year, the third consecutive month in which a decline in home prices was expected.

When it came to attitudes about the economy and finances, Americans were significantly more pessimistic with 78 percent saying that the economy is on the wrong track and 16 percent believing the economy was on the right track.Most Americans must have thought that mortgage rates had hit bottom in August as only 11 percent thought that interest rates would be going lower over the next twelve months. Forty-five percent of the respondents felt that mortgage rates would be going up while 40 percent expected interest rates to stay about the same. Of course, this was before the Federal Reserve had announced it latest economic assistance plan.

The majority of Americans, 61 percent, reported that their household income was about the same as it was a year ago but that their household expenses were increasing. It was the third consecutive month that American’s reported that their expenses were increasing.

Forty-one percent said that their household expenses were significantly higher than a year ago, that’s up from 37 percent in June. Forty-seven percent reported their expenses were about the same, down from 53 percent in July, while 11 percent said their expenses were significantly lower.

Most Americans believe their financial situation will stay about the same or get better over the next year, but an increasing amount expect things will get worse.

Forty-one percent of the respondents expect their financial situation to be about the same in a year from now, that’s down from 44 percent in May, and 35 percent expect their financial situation to get better, which is down from 41 percent in May. Twenty-two percent of the respondents expect their financial situation to get worse, which is up from 16 percent in April.

See the full Fannie Mae Survey.

The Rental Economy is Booming for Real Estate Investors

by bmadmin

The rental market is booming for real estate investors right now even though homeownership is the most affordable its ever been.

If you look at the pro’s of purchasing a home right now, we see:

Low 30 year fixed rate loans
Home prices down 30-50% in some areas from the 2005-2006 peak
Lots of homes to choose from

These same reasons can be applied to owning rental property as well. Prices are cheap, loans are cheap, and the rental market is increasing. Those are all good reasons to buy an investment property. Its much simpler to purchase a rental property than you may think and we will guide you through the entire process.

Take a look at this video from CNBC and contact us today:

Low Interest Rates vs. Economy Jitters [VIDEO]

by bmadmin

Historically low interest rates combined with incredible deals on real estate have created the perfect time to buy a home.

“If you don’t own a home, buy one. If you own one home, buy another one. And if you own two homes, buy a third and lend your relatives the money to buy one.” -John Paulson

Check out this video from CNBC.com about the current real estate market and why renters should seriously consider homeownership.

What If You Could Buy Shoes…

by bmadmin

What if there was a shoe store that had:

An unparalleled selection of shoes of every size, color, and price range
The shoes were discounted 30% or more
You had a credit card that would finance the shoes for 30 years at 4.5%

How many shoes would you buy? My bet is there would be a line around the block. Well, today, real estate is like that shoe store (incredible selection, terrific bargains and excellent financing terms). But there’s more….

Shoes go in and out of style. Homeownership is still the American Dream.
Shoes are worth less once you wear them. Homes will appreciate in value over time.
Shoes get disposed of. Homes are lasting.

And while many can recount memories created in certain shoes, everyone can remember their first home, their first family gathering, the countless holidays shared. There is also the ability to decorate to your tastes, the stability (and lower crime rate) in homeownership neighborhoods and the higher level of education achieved by kids who grow up there.

If you’d stand in line to buy shoes, what’s stopping you from exploring a home? Despite some media perceptions, there is mortgage money available with reasonable down payment requirements at extremely low rates…talk to a loan officer. There are some great deals out there with short sales, foreclosures and regular transactions also!

Happy Shopping!