A Beginners Guide to Ensure Every Homeowner Understands their Protection

What is Homeowners Insurance?

Homeowners insurance is an insurance coverage policy purchased to cover losses and damage to your property if something unexpected occurs, such as a fire or a burglary. Homeowners insurance typically covers four kinds of incidents:

● Interior damage
● Exterior damage
● Loss or damage of personal assets/belonging
● Injury

Homeowners Insurance Does Not Cover “Acts of War” or “Acts of God”

What does this mean? As an individual living in the Baytown area – which is considered a high risk area for natural disasters – it is important to understand that natural disasters are not typically covered by homeowners insurance itself; if your property is at high risk for these types of damage, it is recommended that you seek out additional insurance to stay protected. In the 1960’s, flood damage was removed from homeowners policies, and similar reductions in coverage have been increasing ever since. Due to the high cost of damages incurred by natural disasters or severe weather storms, insurance providers typically exclude both “Acts of War,” and “Acts of God” from their coverage.

Acts of War include damage associated with invasions, insurrections, riots, strikes, revolutions, military coups and terrorism.

Acts of God include earth earthquakes and floods and can even include events such as hurricanes and tornadoes.

Do You Need Homeowners Insurance?

When an individual obtains a mortgage on a home, homeowners insurance is typically required. You are provided the opportunity to complete a price comparison between various insurance companies, so you can select the provider that best suits your needs (and is approved by your lender). If you do not have homeowners insurance, your lender could purchase insurance on your behalf and then charge you monthly for the bill.

At the end of the day, unpredictability is one of life’s most consistent traits, so homeowners insurance is always recommended.

What To Consider When Searching For Your Homeowners Insurance

No matter what, you should always read your potential policies carefully. Due to increased expenses, especially from natural disasters and weather patterns, insurance companies are now placing more stipulations in their policies, ultimately reducing their liability for your property. For example, a policy that identifies “Hail Coverage” may only cover new roofs or those which have been replaced within the last 10-15 years. This means that if your roof is 15+ years old, your home will not be covered – sometimes the devil is in the details.

When selecting a policy, ensure that is it the right one for your home – or more importantly, the the location of your home. After reviewing multiples companies policies, you may come to find that your best options are to add additional insurance coverage, such as:

● Flood Insurance
● Windstorm and Hail Insurance
● Earthquake Insurance
● Extra Coverage depending on your needs

What is extra coverage? Let’s look at Storm Harvey. In 2017, many homeowners did not have insurance coverage specifically for sewer and/or drain damage, leaving them without a way to file claims for the damages they incurred. Unfortunately, it is challenging today to identify one perfect policy that will cover all potential losses and damages.

As a resident of the Gulf Coast, you may also want to consider TWIA, or the Texas Windstorm Insurance Association. TWIA provides windstorm and hail insurance in the Texas seacoast. However, in order to qualify for TWIA, you must have already obtained a flood insurance policy and met specific criteria outlined by the organization.

Moving forward, there are additional criteria to consider to help you determine if the company you’re considering is the right right one for you. Consider the following:

1. Deductible: What is the deductible on the policy? Remember, the deductible is the amount you must pay before the insurance company will cover damages. A lower deductible can be less painful if the time comes that you need to use your coverage!
2. Premium: The premium is the monthly amount that you owe to cover the insurance policy. Fortunately for you, Texas law requires insurance companies to offer rates that are “reasonable, adequate, not excessive to the risks for which they apply, and not unfairly discriminatory.”
3. Customer Service Reviews and Ratings: When dealing with property damage, you want to ensure that your policy provider is committed to helping you and honest to their word. The last thing you want is for a company to nickel and dime you when you are facing homelessness or severe property damage. When selecting a provider, review their ratings and read their customer satisfaction reviews. Also, review the ratings related to their claims process. A rapid response from your claims company is essential.

What If My Home Was Damaged, But I Did Not Have The Right Coverage?

This is the unfortunate circumstance no one wants to be in. Sadly, there are thousands of individuals each year who are confronted with home damage and find out too late that their kind of losses they sustained were not covered by their basic policy, leaving them without financial assistance to cover major damage. If this has happened to you, check out our blog: What To Do With A Damaged Home? You could also call us, and we would be happy to assist you with both education about your potential next step and an updated assessment of your home’s value.

If your home was flooded by Hurricane Harvey, and you would like to just sell it as-is please click here

Just a hint…….YES!

The market is changing… but is it a good time to sell your home?

Last month we posted an article titled 5 Things About the Baytown Market You Need To Know, in which we expressed that the current market is a good one for sellers. However, the market is shifting out of your favor; changing trends are creating an urgency for sellers to move quickly.

In this article, we will outline the trends impacting your home’s value in Baytown and discuss why now is a good time to sell your home and prepare for your future.

● Unemployment Rates Are Rising: As of July 2018, unemployment rates in Baytown, Texas remain over 10% and display no signs of improvement. Not only do rising unemployment rates shrink the buying pool, but they also discourage individuals from entering the property market due to personal fears related to their economic futures.

● Foreclosure Rates Are Increasing: The economy in Baytown is struggling, and the area is experiencing an economic decline. Not only are unemployment rates rising, but annual home incomes are also declining, creating an increase in foreclosed homes. How does this affect potential sellers? Foreclosure rates in Baytown here.
1. Increased foreclosure rates indicate a smaller pool of potential buyers, and
2. More foreclosed homes on the market means housing prices shift downwards, creating more competition for you to sell your home (Foreclosed homes offer the opportunity for a discounted price on properties).

● Interest Rates Are Rising: During the week of July 26, 2018, the 30-year fixed-rate mortgage averaged 4.54%, up two basis points according to the weekly data from mortgage provider Freddie Mac. The 15-year fixed-rate mortgage averaged 4.02%, also up two basis points. Why does this matter? Rising interest rates equate to more expensive borrowing.

● Housing Prices Remain High: Despite the economy’s downturn and the increase in interest rates, housing prices remain high. Supply still remains low in Baytown, Texas, providing a competitive advantage to potential sellers. If supply increases however, housing prices drop due to increased competition in the market.

What Does This All Mean?

Many economists are suggesting that the housing cycle is reaching its end. Looking at a broader perspective – that of the housing market across the nation – the supply of homes in the second quarter of 2018 rose to three times the rate of the previous year– the highest jump in inventory the US economy has seen in three years!

By historically reviewing real estate trends, analysts can decipher anticipated trends in the market, and the current shift towards a slowing market in the national housing market indicates that we may be transitioning towards a buyer’s market.

What does this mean for the homeowner? Well, it may be time to sell. If you were thinking about selling now or in the future, it may be time to get on the ball. The downward trend that analysts predict over the next six months will create a small window of opportunity for potential sellers. If sellers are uncertain about their decision, they may risk losing their opportunity to sell when the market is in their favor, ultimately decreasing their potential return on the property.

Selling now may even create a new opportunity for the homeowner to prepare for the declining real estate market.

What Can You Do WHEN You Sell?

1) Move to an economically stronger neighborhood that provides a more secure asset. Purchasing in an area that has higher rental rates and lower unemployment rates can create more stability for the long term value of your home.
2) With the declining market, investing in a property that creates potential for income can be a smart move. If the market does continue to shift downwards, and more individuals are forced out of their homes, a higher demand for rental units is created. Smart property owners will prepare for this shift and purchase an asset the provides an option for monthly income via renting.

Still Uncertain?

If you are still questioning what the best decision is for you or have questions about the market, it may be time to reach out and discuss your options with a professional. There is no Magic 8 Ball that can tell you the future of the real estate market, but there are educated professionals who can give you a research-based analysis of what your future may hold. We here at Gulf State Homebuyers can provide you with a free consultation, educating you not only on the market but also on the value of your home.

To get started, just contact us, and one of our agents would be happy to assist you.

Looking For An All Cash Home Buying Company?

Deciding to to sell your home is NEVER an easy decision – sometimes if feels as though you’ll never find the ideal professional with the right combination of assets to guide you through the process – It can be trying to find an empathetic investor who understands the emotional history of your home or a motivated broker who can maximize the return on your property. We here at Gulf State Homebuyers understand that challenge and are here to be a constructive part of your process: is it time to proceed with selling your house? If so, let us explain why we’re well-suited to help.

After 12+ years of working in the industry, we have received myriad testimonials from clients recognizing the qualities they sought out in an all cash home buying company – we have summarized their experiences to assist you in your own decision making process.

Find An Accredited Company

Selecting a reputable company can make or break your future – too many times have we witnessed a seller fall victim to the best offer or cheapest broker and end up losing it all. To avoid running into problems with your home buying organization, ensure that you sign on with an accredited company; they’ll guarantee a basic level of quality in the services that they provide – speed, professionalism, and exceptional customer service.

Our BBB rating is 5 out of 5, demonstrating that we are not some unrecognizable company from the internet; rather, we are active, present, and consistently held accountable, which is evident in our ratings.  We were also recognized by the BBB the last three years by receiving the Houston Distinction Award for 2016, 2017 & 2018.

Get Someone Who Is Empathetic And Understanding

Empathy means understanding how your actions and words affect others; wouldn’t you want to find this quality in your investor? We choose to prioritize empathy because there are thousands of real estate investors that are eager for your business but may be driven purely by the promise of leveraging your difficulties for their own financial gain. It is crucial that, when selling your home, you find a representative who is genuine in their understanding of your unique situation.

You can’t rush a good decision, and we believe in getting it right. We are sensitive to the emotional difficulties that come with cleaning out your home and preparing to make a substantial transition in lifestyle – we are happy to provide the time you need to prepare for that next step. Our motivation is not to sell your home but to make you the best offer we can and to provide the smoothest close possible.

Find A Company That Is Trustworthy 

TRUST – it’s hard to build and easy to lose. When confronting the loss of an asset as laden with emotion as a family home, it is necessary to have a trusted company in your corner. Not only do they need to have a reputable history, but they should also display knowledge and patience throughout the transaction process. Not everyone is well-versed in nuances of the the real estate process, especially those selling their homes unexpectedly; therefore, locating a company who you can trust will facilitate a smoother closing.

Our top priority at Gulf State Homebuyers is to ensure that you feel safe and secure in the transaction – we are here to build trustworthy relationships and create an open line of communication with our clients. If at any moment you have hesitations, questions, or just plain uncertainty, we are only a phone call or email away.

Get a FAIR offer…not a low ball offer.

Do not sell below market value just because you are in a rush to sell. There are plenty of buyers seeking a fair deal who are willing to pay the right price.

However, do understand that the chief benefit of selling all cash is expediency: a quick close. With this in mind, seek out a fair deal. Typically, all cash offers will be lower than an offer that requires a finance contingency – this is just a standard real estate negotiating skill. That being said, make sure that the offer is fair and comparable to other available all cash offers in the market. (Hint: Review comps for all cash deals!)

We guarantee fair offers. We are not looking to leverage our clients’ misfortunes for our own gain, but rather to provide them opportunities to move forward with their lives. We provide free market evaluations and property assessments to ensure your that you receive a top-notch offer.  Check out our process video here.

Why Choose Gulf State Homebuyers?

We are not just informing your of how we believe we perform – but rather sharing with you the testimonials of our clients past clients. Our most notable recent review stated:

“There is nothing better than doing business with someone who you know cares. These guys will always be like family for what they did.” – 

We will provide you with quality service and support in every stage of the process. We are not seeking a one-time deal but a long term, positive relationship. When you employ our services, we guarantee genuine loyalty and phenomenal customer service.

Find out for yourself! Contact us and we can start a conversation today.

The Truth On How The Tax Cuts and Jobs Act of 2017 Affected Homeowners

When the Tax Cuts and Jobs Act of 2017 passed on January 1, 2018, there was plenty of hype surrounding the notion that it was time to buy. The bill promoted the benefits to new and potential homeowners, including:

– Tax rate reductions
– Mortgage interest deductions
– Standard deductions indexed for inflation
– Deductions for state and local taxes
– Personal exemptions repealed

This all sounds great, right? Well, now that we are in the third quarter of 2018, it is time to assess the truth behind the bill. There were many aspects of the bill that were either overlooked or lacked publicity – but now that homeowners are living the changes, more convincing reports are in. Here are 5 of the recent issues we have found reported as having impacts on homeowners both in Texas and across the nation.

1. There are restrictions on deductibility for refinancing. The deductions for interest on refinances have been eliminated. Prior to the new law, deductions for qualifying mortgage interest plus $100,000 for equity debt were permitted; now, the IRS has eliminated the deductions “unless they are used to buy, build or substantially improve the taxpayer’s home that secures the loan.”

What does this mean? Individuals who refinanced their home for reasons other than those identified by the IRS – such as to improve their debt – have lost opportunities for deductions. This reduces motivation for individuals to refinance, ultimately reducing their ability to manage in the United States debt crisis.

2. PMI has been removed. PMI, or premiums for mortgage insurance, were included with deductible home mortgage interest. This allowed struggling home buyers to receive a loan through the addition of PMI, allowing for a reduction in the expected 20% down on a home; however, now that this option has been removed, home buyers are struggling to meet the minimum criteria to purchase a home and have no alternative around the rules.

Homeownership boosts the US economy, provides social benefits, and develops and distributes wealth. Unfortunately, the removal of PMI is not sustainable and eliminates opportunities for the middle and lower classes. As real estate wealth leans towards the upper class, that of the middle class appears to be shrinking.

3. There are limits on state and local tax deductions. The limit to claim on Schedule A is now set – $10,000 for an individual and $5,000 for married taxpayers filing separately. This is primarily affecting individuals living in high-property-tax states and those in high-income-tax states.

Texas is a high-property-tax state. Have you looked at how this will affect your taxes for 2018 in comparison to 2017? Remember too that Texas does not have a state income tax, but Texans who own a home outside of Texas may be responsible for the additional taxes.

4. Mortgage interest deduction is capped at $750,000. The mortgage limit under the previous tax law was $1,000,000 – this means that any interest exceeding the cap can no longer be deducted unless the mortgage was pre-existing.

This cap will make it challenging for individuals who purchased homes near the $750,000 price point to sell their home in a couple of years. With inflation, the buyer pool may decline. Although individuals expected to get ahead by buying now, they may feel the consequences in later years.

5. No more casualty losses. A casualty loss is defined as damage, destruction, or loss of your property from a sudden unexpected or unusual event, such as a fire, flood, hurricane, tornado, or earthquake. Prior to the new bill, casualty losses could claim a deduction on their filings – however, the deduction can now only be claimed on a federal disaster.

This is an important aspect to consider for any homeowner in the state of Texas, where seasonal storms and heavy rains can dramatically affect the interiors and foundations of homes. With the passing of the Tax Cuts and Jobs Act, homeowners will no longer be protected unless the storm is considered a federal disaster. Homeowners’ insurance is even more important than it was before – but it can be costly at the end of the day.

Is Owning Still Better Than Renting?

The answer to this question is debatable. Although the new tax bill provided many benefits for new and seasoned homeowners, it also created additional challenges. The pros and cons of each side need to be identified to determine if keeping your home is the best option for your long-term financial plan.

Consider the benefits and the risks, and consult with a professional. The changing dynamics of deductions and restrictions could be negatively impacting your future. To learn more, contact us at Gulf State Homebuyers and we can help you understand your position.