Detroit, Michigan Leads the Country for the Highest Number of Foreclosures
Posted by David Schneider

In the U.S., we are seeing an unprecedented event unfold — mass home foreclosures. The hardest hit area of the country is Wayne County, Michigan and the greater Detroit metropolitan area. People are struggling just to get by every month. With a combination of the declining automobile industry, the burst of the housing bubble and the lending of sub-prime mortgages, the challenge these days is to stay afloat.

Detroit Automobile Industry and Highest Number of Foreclosures

One factor in the declining economy in Detroit is the decline in business as consumers purchase more foreign cars. This switch in consumerism comes from a variety of factors. Gas mileage offered by current American vehicles barely rivals European and Japanese automakers.

Price is another factor. Did you know that over $1,000 of the final sale price for each American car goes to paying pensions and another $1,000 goes toward the health costs of current and past employees? Neither Japanese nor European automakers have overhead this high. As a result, the final cost is ultimately less. Finally, Japanese automakers introduced hybrid electric/gasoline cars, which have been very successful. This again results in less American car purchases.

Detroit Housing Market and Highest Number of Foreclosures

From the early 2000s until about early 2006, America experienced a huge housing bubble that drove up the perceived value of homes. In Phoenix, Arizona for instance, homes built and sold in 2001 were selling for $110,000. In 2005 and 2006, they were valued in the low to mid $200,000’s.

While value increases were not as dramatic in Detroit, it did still occur. Therefore, home owners were selling to make a profit. Those folks who purchased homes during this time only have experienced a decrease in the value of their homes.

Sub-Prime Mortgages in Detroit, Michigan

During the housing boom, there were so many properties to be bought and sold, such that larger lenders like the mortgage giant Countrywide, began offering sub-prime mortgages. Sub-prime mortgages are essentially mortgage programs offered to people with below average credit and shaky incomes. In fact, most companies would not even offer them lending packages because of the risks involved.

Once lenders discovered a market in sub-prime mortgages, these people qualified for adjustable rate mortgages. While an ARM has an inflated payment in the future, most of these mortgages sold on what the current payment had to offer. Some programs offered buyers and those looking to refinance with an interest only payment. To many people, this type of mortgage sounds a little risky and they are right. Unfortunately, almost eighty percent of loan originations that have occurred over the past few years have been this type of mortgage.

Home values have now decreased, ARM payments have increased and jobs have been lost. People virtually have no option aside from home foreclose. Not only is the current Detroit housing market in distress, but this scenario has also played out all over the U.S. In the larger picture, many mortgage companies have gone out of business and investors have lost large amounts of money. In fact, Countrywide recently had to borrow twelve billion dollars just to stay afloat and work through this challenge.

How Your Pets May Affect Your Homeowners Insurance Policy
Posted by David Schneider

Roughly one-third of all households are home to cats and dogs. If your home is among them, then you likely consider your pet to be a full-fledged member of the family. As it turns out, so does your homeowners insurance provider. You've probably never thought about it, but owning pets — especially dogs — may affect your homeowners insurance policy. In fact, depending on the type and number of pets you have, you might even have trouble finding approval for insurance coverage.

Why Are Homeowners Insurance Providers Interested in Your Pets?

Unfortunately, the answer isn't just because insurance providers are dog and cat lovers. While this may be the case, they are actually interested in your pets because they can increase your probability of filing a claim and collecting on your policy. This may ultimately require your insurance provider to pay you money, and despite what they may tell you — they hate doing that.

More specifically, pets can affect the liability portion of your homeowners insurance policy. Liability coverage protects you in the event that someone sues you because of injury or damage that occurred due to your negligence. In other words, an accident caused by you, your family or your pet will be covered by your homeowners insurance provider. This includes both accidents that occur on the premises and elsewhere. If found liable, your insurance policy will help cover legal defense fees, as well as any resulting settlement fees.

Assessing the Insurance Risk of Your Pet

A dog bite is by far the most prevalent event that affects insurance policies. Homeowners insurance providers know this, and therefore take the frequency of dog bites for your particular dog's breed into consideration when determining your insurance premiums and coverage. Yes, you may know that your sweet puppy wouldn't hurt a fly, but insurance providers like to play the odds. Therefore, the size of your dog and the breed's general reputation take precedent over your dog's particular personality.

In general, the larger the dog the more you are likely to pay in higher insurance premiums. Breeds that will cost you the most include Rottweilers, Pit Bulls, Doberman Pinschers, German Shepards, Malamutes, Great Danes, Chow Chows and Saint Bernards.

Provide Full Disclosure of Your Pets to the Insurance Provider

You may be tempted to simply neglect to tell your insurance provider about your four-legged friend when applying for your policy. While this may save you money in monthly premium fees, it could end up costing you thousands of dollars in the end. Any claim you file because of injury or damage caused by a pet that is undisclosed to the insurance provider will be denied. This means that you are stuck paying the entire bill for your legal and settlement fees.

Don't think your dog could ever be the cause of an accident? No matter how docile your pet, there's always a possibility. According to the Centers for Disease Control and Prevention, there were approximately 4.7 million dog bites reported in 2005. That's almost 13,000 dog bites a day. With the injuries of these dog bites resulting in $317.2 million in insurance claims, it's no wonder insurance companies are interested in knowing if pets will be living on the premises. Protect yourself, your home and your pet and provide full disclosure to your homeowners insurance provider.

Saving Money When Adding a New Driver to Your Auto Insurance Policy
Posted by David Schneider

It's that dreaded moment in every parent's life — the day your child gets his or her driver's license. Yes, your child is growing up and becoming independent, and part of that process means navigating the hectic streets and highways without supervision. It's a great time for junior, but for parents it means increased insurance premiums.

Of course, you could attempt to teach your child further responsibility by requiring him or her to pay a portion of the insurance bill, but either way you're going to want to save as much money as possible. Here are some tips for saving money when adding a new driver to your insurance policy:

Take Advantage of Student Driver Discounts

Prepare yourself for sticker shock — auto insurance premiums for new drivers are substantially higher than what you're likely paying for yourself. Obviously, this is because young drivers are inexperienced and therefore more likely to get in a car accident.

To help ease the sting a bit, many auto insurance providers offer "good student" discounts. Typically, to qualify for the discount your child must be enrolled in school full-time and maintain at least a B average. Both high school and college students are eligible. If your young scholar meets these criteria, then you can expect to save up to 10 percent on your child's auto insurance premium. In most cases, a copy of your teenager's latest report card will be requested by the insurance provider in order to be eligible to receive the student discount.

Choose Your Child's First Car Wisely

Despite the protests of your child, a safe, sensible car is likely a smart choice for a first car. While teenagers may play the "social outcast" card, a less flashy car can save you plenty of money on your insurance policy. Sports cars, expensive cars and SUVs are usually considered higher risk vehicles, and therefore come with higher insurance premiums. For the most savings, help your child select a sedan or compact car that includes a multitude of safety features (and still matches his or her unique style). A car with airbags, anti-lock brakes, stability control and excellent crash test ratings will not only save you money, but it may even save your child's life.

Take Measures to Deter Theft of the New Vehicle

Vehicles that are less likely to get stolen are more likely to save you money on your auto insurance premiums. Adding a security system or a tracking system (such as lo-jack) to your teenager's vehicle will help to put your insurance company at ease. Also, if you have a garage, you might be able to take advantage of additional savings. Vehicles that are parked in a home garage are less likely to get stolen, and insurance providers often will reward you with a discount for doing so.

Shop Around for a New Auto Insurance Provider

It is recommended that you re-evaluate your insurance options every year or two. With a new driver coming onto your policy, now is the perfect time to shop around for better rates. Not only might you be able to save a decent chunk of change on your teenager's portion of the policy, but you may find extra savings on your own coverage as well. Call several different well-known companies and ask them for price quotes. You might also want to consider asking friends and family for suggestions on insurance providers that offer good rates to teenagers.

Winter-Proofing Your Home
Posted by David Schneider

As cooler temperatures begin to creep across the U.S., now is the perfect time to start winter-proofing your home. Water damage and freezing conditions are to blame for roughly 17 percent of all homeowners insurance claims. Prevent a future headache by preparing now. There are simple steps you can take to protect your property. Here are a few of the more important measures you should consider:

Winter-Proof Your Rain Gutters

Rain gutters are a great place to start winter-proofing. With all the freshly falling autumn leaves and debris, unclogging your gutters can help prevent ice damming. Trapped water in gutters can turn to ice during the winter. Over time, this ice builds up (or dams). As the ice melts, it has the potential of seeping through the walls and causing water damage in your home.

To assist with the flow of water, consider installing gutter guards. These relatively inexpensive doohickeys help prevent future debris from winding up in your gutters and potentially blocking water.

Winter-Proof the Rest of Your Yard

With all of the snow, ice and wind that blows in your yard during the winter, there's obviously potential for damage. Trim trees and remove any dead or broken branches. Sometimes, wind can blow or snow can collect on weak limbs, causing them to fall on your property, or worse — you or a family member.

Reinforcing outdoor steps and handrails is another method for winter-proofing your home. Broken stairs are especially hazardous when covered in ice or snow. Additionally, ice can expand within the cracks of steps or handrails, further compromising the safety of the structure.

Seal Holes and Cracks Outside and Inside Your Home

Cracks in your walls might as well be an open invitation for water damage to your home. Patch any unwanted openings to ensure water and ice stay outside. You should also check roof openings such as skylights to ensure the structures are properly weather-stripped. Finally, check your pipes for cracks and fix them immediately. Use caulking to protect your pipes and improve heat insulation.

Properly Insulate Your Attic from Winter Weather

Simultaneously reduce your heating bill and protect your roof from damage by properly insulating your attic. Excessive heat escaping through the top of your house can cause ice to melt and refreeze on the roof. This can cause ice damming, or might even cause your roof to collapse. Experts typically suggest that your attic should be five to ten degrees warmer than the temperature outside. Properly insulating your home will also reduce the possibility of a pipe to freeze and burst.

Be Prepared in Case Winter Damage Occurs

Take steps to ensure you can act quickly in the event that damage does occur. Locate the main water valve for your home and understand how to turn it off in cases of emergency. For frozen pipes, acting quickly can help eliminate or reduce the potential for a pipe to burst. Double-check to make sure smoke and fire alarms are working properly. The probability for house fires to occur increases during the winter months, and you'll want as much warning as possible, should such a disaster strike your home.

How Will Southern California Fires Affect California Homeowners Insurance?
Posted by David Schneider

The recent wildfires throughout Southern California have caused over $1 billion in estimated damages. As many struggle to pick up the pieces, the inevitable onslaught of homeowners insurance claims are pouring into the offices of California insurance providers. Those properly insured can find consolation in the fact that their insurance policy will cover most, if not all, of the cost to rebuild their homes.

With over $1 billion in potential losses facing California homeowners insurance providers, many are worried that homeowners will see a rate hike because of the fires. While this is a possibility, state officials and experts say increased premiums are unlikely.

Experts Believe Homeowners Insurance Fees Will Not Increase

California has long been the largest market for homeowners insurance. Despite occasional mass insurance payouts for past fires (such as in 2003) and earthquakes, insurance companies enjoy some of the highest profits in California. Thanks to past financial success, insurance companies have more than enough cash reserves on hand to pay the claims of these most recent fires. In fact, profits between 2004 and 2006 are about $6 billion dollars for homeowners insurance companies.

Another factor that works in favor of California homeowners is the fact that the insurance industry in California is one of the most scrutinized and highly regulated in the nation. State authorities may be reluctant to approve rate increases. This is especially true given recent efforts to decrease California insurance rates in the past year.

Skeptical California Homeowners Fear Higher Insurance Rates

Despite the reassurance by state officials, many homeowners are worried about increased rates. Given past experience with rate hikes, few can blame them. After the 1994 Northridge earthquake, many insurers threatened to pull out of the market. The state had to create a special authority to sell earthquake coverage in order to convince them to stay. Others point to increased rates and canceled coverage on the Gulf Coast after Hurricane Katrina in 2005. While profits have rebounded since then, many believe insurance providers will attempt to recoup current losses by raising rates.

Dropped Homeowners Insurance Coverage Also a Possibility

There have already been reports of major insurers threatening to cancel coverage if homeowners in high-risk areas fail to take precautionary measures. For now, a law passed after the 2003 fires protects the coverage of those whose homes suffered recent damage. This law prevents insurance companies from canceling coverage for at least one policy period. However, the law does not protect individuals whose homes were undamaged. This makes dropped coverage and more stringent coverage requirements a possibility for many.

Looking at the issue with the glass half full, the high profit margins enjoyed in California will likely make insurance companies reluctant to leave the market. Even so, Allstate Corp. announced earlier this year (prior to the fires taking place) that they would no longer underwrite new homeowners insurance policies in California, attributed to the risks imposed from natural disasters. Allstate is also attempting to gain approval for a 12 percent rate increase for current customers. Despite this, no other companies have yet to show indications of dropped coverage or increased rates. Whether or not this fact holds true remains to be seen.

Finding the Mortgage Agent that is Right for You
Posted by David Schneider

The mortgage and housing market is a tricky maze to navigate. When planning a move, there is so much information to learn about homes, mortgages, locations, potential problems with locations, property values, loans, credit scores and new neighbors.

With regard to finding a house, your best bet is to use a realtor. Mortgages, however, are a little bit more detailed and require the expertise of a good mortgage agent. Keeping certain things in mind and having a formulated understanding about your needs will help you come out unscathed, with the best mortgage for your particular situation.

Know Your Credit Situation and Find a Mortgage Agent That is Right for You

As in any situation regarding financing, your credit score plays a large part in whether or not you receive a line of credit and at what interest rate. If you do have some blemishes on your credit, are they easily fixable? If so, it’s worth your time to get them cleared up. Doing so will save you a substantial amount of money during the life of you mortgage loan. No matter how good a mortgage agent is, he or she can only do so much with the situation you bring to the table.

Know Your Mortgages

Mortgage agents are great at finding the best mortgage for your particular needs. However, your first visit with the mortgage agent is not the time to be educating yourself on the basic aspects of mortgages. In general, make sure you understand the difference between fixed rate and adjustable rate mortgages.

Questions to the Mortgage Agent

Be sure you are aware of the points a mortgage agent charges for his or her services. They are, after all, on your side and do not make money without your mortgage purchase. However, like any business, mortgage agents are salespeople. While the products they propose appear to meet your needs, ask what is in it for them.

Some smaller companies do not charge fees or points on a mortgage. Rather, they keep the mortgage and service it for the full term. They make money on the interest earned over the life of the loan. When smaller companies do this, they are able to move clients from one loan product to the next, as often as necessary. When this occurs, you as the mortgage holder do not have to pay any sort of fee.

Finally, determine where they are finding mortgage offers and information. Do they themselves us a broker? Are special financing arrangements set up through certain banks?

Knowing all of this information up front and then not being afraid to ask key questions during the interview process will help you arrive at the best decision for you needs. Remember, YOU are interviewing THEM.

Why the Cost of Job-Based Coverage is on the Rise
Posted by David Schneider

Look around at the healthcare system today and it is any wonder that anyone in America has health care coverage. Employers will be the first to tell you that it’s no picnic to sort through the hundreds of proposals for health care coverage that they are bombarded with. Employers want to provide the best possible job-based insurance coverage that they can, but they are finding it increasingly more difficult as job-based coverage continues to rise.

Those with job-based coverage can’t understand the reason for the rise in coverage but analysts, experts and even employers can narrow it down to three rather simple reasons for the rise in health care coverage, which not surprisingly, are all linked in some way.

Medical Costs Growing — Wages Aren’t

A driving force in the rising cost of job-based health coverage is the fact that many Americans aren’t growing financially. That simply means that salaries and wages aren’t increasing as fast as healthcare premiums are. As the standard of living increases and so does the out of pocket costs of healthcare, many families and individuals are struggling to make all ends meet with the weekly paycheck. Some families are simply struggling to get to the end of the week with what they have in their pocket while employers are struggling with whether or not they can afford to finance benefits any further, something that traditionally employers have done since the 1960’s. They (employers) are realizing that this is becoming nearly impossible as managed healthcare continues to make the switch the consumer driven healthcare.

Being Healthy Costs Less

Second to wage increases or lack thereof is the debate over leading a healthier lifestyle in order to keep job-based health coverage low. Let’s face it, Americans are growing more and more sedentary and employers have to pay for that in the form of rising premiums and benefits. With obesity becoming one of America’s top health concerns, waistlines are expanding almost as fast as the cost for job-based coverage. Employers are jumping on bandwagons to keep us healthy by offering incentive programs and wellness programs. The purpose and thought behind these programs is that if we can live healthier lifestyles, then the need to increase healthcare premiums and medical costs won’t be as great.

Treating the Healthy and Unhealthy

Finally, in the link between the cost of healthcare coverage and our lifestyle, is the cost to treat Americans, both the healthy and unhealthy. It isn’t only treatments though, as we discover more about what causes such diseases and how to prevent them, there comes the cost of all the new screening process, testing and procedures, which adds to the rising cost in job-based health coverage. As there becomes an awareness for early detection of such cancers and illnesses, doctors are making testing and screening part of an all over wellness recommendation, but the healthcare companies are not. Some testing and procedures are still not covered or covered at a small portion, which leaves the employees handling the bulk of the out of pocket expense.

Let’s not forget how different the healthcare industry is today. A couple of decades ago, employees working for small businesses or part time employees had few options for healthcare if any at all but as more and more employers look for qualified employees they also are finding that providing job-based healthcare coverage is nearly as important as having skilled employees. If you look at the picture as a whole, our lifestyle changes, the shift in employment opportunities and the healthcare crisis in general it is far easier to understand why there is a rise in job-based healthcare coverage.

Why is it so Hard to get a Stated Income Mortgage Loan Closed?
Posted by David Schneider

For many potential real estate investors, homeowners or investors seeking a commercial real estate property, a stated income mortgage loan may seem very advantageous. This type of loan requires minimal documentation for the loan applicant. A stated income mortgage loan may require the applicant to provide information on his income and credit history, but it does not require proof of the stated income. The lender may verify the income stated by the applicant is feasible, but do not require proof of this stated income.

Although stated income mortgage loans require minimal documentation, applicants for a stated income mortgage loan must have decent credit scores and must be able to prove the existence and worth of assets. While applying for a stated income mortgage loan may be a simple process with minimal documentation requirements these types of loans are often difficult to close.

Sign on the Dotted Line

One of the problems that often occurs during the closing of a stated income mortgage loan is the lenders insistence on the borrower signing documentation enabling the lender to verify the tax information for the previous two years. Loan applicants who stated their estimated income honestly may not have a problem with this request. However, applicants who offered a stated income that was inflated may balk at this request. Lenders may not require proof of income, but may request the authority to review tax records in an effort to determine whether the applicant is fully capable of repaying the loan. If the applicant is found to have committed fraud by stating an inflated income, the loan can be revoked and ordered to be repaid immediately, or the terms of the loan may be re-written to create unfavorable terms.

Clearly Understand the Terms

The terms associated with a stated income mortgage loan may also adversely impact the ability to close on this type of loan. This impact may be a result of the borrower realizing the terms offered are unfavorable. However, lenders are not likely to offer ideal terms to lenders pursuing a stated income mortgage loan because these loans are riskier than traditional loans. As a result, closing may be delayed until an agreement can be reached on the terms of the stated income mortgage loan.

Miscellaneous Complications

Finally, there may be difficulty closing on a stated income mortgage loan for a number of reasons which are not directly related to the type of loan being issued. These problems may include, but are not limited to, delays associated with the title work, schedule conflicts with the closer, delays in getting final financial numbers to the closer, name changes by either the buyer or the seller which are not properly documented and verified as well as failure to show up at the closing with certifiable funds.

One of the things someone can do to make sure closing goes off without a hitch on their end is to make sure all paperwork is in order and all questions have been answered. Prior to a closing, the buyer should determine the amount of money owed at the closing and should bring these funds in the form of a certified check to ensure a smooth closing.

Why Mortgage Rates Rose after the Fed Cut
Posted by David Schneider

Current homeowners who are hoping to refinance, current homeowners who are hoping to make a move to a bigger house and prospective homeowners hoping to acquire a first home all have one thing in common. In each of these scenarios, the individual keeps a close eye on mortgage rates hoping to make a real estate investment at an opportune moment. However, determining the best time to make this large investment is not always easy. Many individuals in these situations keep a close eye on the Federal government believing Fed cuts will result in an ideal situation. This is rarely the case.

No Immediate Benefits for Mortgages After the Fed Cut

The most important thing to understand about Fed cuts is they are not designed to immediately benefit those who hold or are seeking mortgage loans. Mortgage loans are typically long-term loans ranging from 15 to 30 years. These types of long-term loans are not enhanced by a Fed cut as demonstrated by the Fed cut of September 2007. As eager homeowners and prospective homeowners eyed this cut with anticipation, mortgage rates increased slightly after it. Although mortgage rates did not benefit, home equity loans, which are based on the prime rate as well as short-term loans such as car loans and credit cards, received the most benefit.

Declining Rates After the Fed Cut

There are occasions in which mortgage rates do decline with a Fed cut. However, this situation is usually temporary and is rarely intentional. In most cases, a decline in mortgage rates coinciding with a Fed cut is an indication of similar goals by consumers and Wall Street trading houses and foreign banks. This is because Fed cuts are specifically designed to benefit Wall Street trading houses and foreign banks. When a Fed cut is issued, the stock market typically sees a boost because the Fed cut sends a message of solvency that re-assures investors. As a result, investors typically remove funding from mortgage-backed securities, which are considered to be less risky and re-invest the funds into the more tumultuous stock market.

Investor Interest

The shift in investor interest from mortgage-backed securities to stocks generally results in greater gain from these stocks, as a result the mortgage backed securities become even less appealing as the shift to stocks trickles down from big investors to investors without a great deal of capital to invest. With this shift, it becomes necessary for those who issue mortgage backed securities to attempt to make investing in these equities more appealing. In an effort to accomplish this goal, there is a need to provide higher yields to investors. The way to do this is through increasing the rates on mortgage-backed securities. The rates on mortgage-backed securities are linked to the underlying mortgage rates and therefore these rates must rise as well.

By understanding how a Federal cut works and the reasons behind it, it can make understanding why mortgage rates rose in the first place a little easier.

Which Online Companies Offer the Best Free Insurance Quotes
Posted by David Schneider

Choosing insurance can be a difficult and overwhelming process. How much do you need? How much will it cost? Where should you begin? The easiest way to find insurance is to utilize an online company that gives you free insurance quotes. Although there are hundreds of companies like this out there, some are better and more reliable than others are.

One of the most important things you should look for when choosing an online insurance quote company is that they are neutral. It is important that you are able to trust the company and not be “sold” on one insurance plan or another because the website owners will get a commission from your purchase. You need to pick the insurance plan that is right for you, your family and your budget, not what is right for someone else. Let’s look at which online companies offer the best free insurance quotes.

Health Insurance Quotes from EhealthInsurance.com

Ehealthinsurance.com — At Ehealthinsurance, you can find an affordable health insurance quote that fits your needs and apply for your policy right there on the spot. Ehealthinsurance offers health insurance quotes from some of the top health insurance providers within your area and allows you to select up to four policies at a time to compare side-by-side. You can get all the information on a plan, including deductibles, individual and family maximums, whether maternity coverage is an additional option (and how long you have to wait to use it), what type and length of hospital stays are covered, how much mental health coverage is available and much more. Aside from regular insurance options, you can also search for short-term insurance quotes, student insurance quotes, health savings accounts and small business health insurance coverage (you must have a certain number of employees to qualify).

Reliable Automobile Insurance Quotes from Progressive.com

Progressive.com — If it is auto insurance you’re looking for, Progressive will allow you to compare quotes from many different providers. Although they are also a car insurance company, they can be a helpful source in obtaining the lowest car insurance quote for your needs. You can even do side-by-side comparisons to see the true value of what you are getting for your money. If you decide to purchase the Progressive quote, you can do so directly from their website. The downside is that if you want to go with another company, you will need to get the quote from their company website to complete your purchase.

For all Insurance Quotes Needs, Insurance.com

Insurance.com — Insurance.com is a “one-stop shop” where you can compare top company rates for several different types of insurance coverage. Whether you want auto insurance, life insurance, health insurance, or homeowner’s insurance, you can get quotes, compare them through the Insurance.com website and even purchase the one that best fits your needs.

No matter what type of insurance you are looking for, all of these companies can help you find quotes for affordable insurance that fits your needs. There is no need to second-guess the quote you are getting and, since you can buy the quote directly from the website, you know that it is the quote that you will receive. You won’t be talked into purchasing more than you need by a sales representative.