Brian and David ring in the new year by discussing secondary offers on a home, the necessity of flood insurance (or lack thereof), and the current state of the mortgage world.
This week’s highlights:
- If a home has an accepted offer on it, that doesn’t always mean it’s off the market. Secondary offers can help you purchase a home that already has an accepted offer.
- Wisconsin mortgage rates are looking great, with economic stressors like the trade war and Brexit finally looking up.
- Did you know that flood insurance is required for some homes? Brian and David discuss flood insurance in Florida and Wisconsin homes, and when to get it.
What is a secondary offer, and when should you use it?
We recently worked with a couple, Nick and Lauren, who purchased their home on the first business day of 2020 — exciting! — by making an accepted secondary offer.
A secondary offer is, essentially, when you try to get in “second place” with your offer. That way, if the first offer isn’t taken up, your name is next on the list.
Usually, secondary offers are most successful in situations where the original offer is contingent on something. In this case, the original offer was contingent on the sale of the original buyer’s home. Sellers aren’t typically big fans of that. So, Nick and Lauren’s secondary offer was accepted.
Are there downsides to secondary offers?
Well, when you put in a secondary offer, you’re kind of on-the-hook until the seller makes their decision. For example, Nick and Lauren gave the seller one week to accept them as the primary offer — but if they’d found another home they liked within that week, they couldn’t make an offer on it without risk. When you make a secondary offer, you’re kind of on the bench for the number of days you give to move to the primary position.
Mortgage rate updates: January 2020
In recent months, economic uncertainty was helping to keep mortgage rates low. Specifically, there were big concerns surrounding the trade war between the US and China, and the implications of Brexit. However, those stressors have been alleviated (to a degree), bumping mortgages rates up slightly. That is, until the recent assassination of General Qassem Soleimani — the consequences of which are contributing to continued low rates.
At the end of the week, Accunet could offer…
- 3.875% on a 30-year fixed-rate loan with $0 in costs
- 3.75% on a 30-year fixed-rate loan with $1,213 in costs
Ready to take advantage of low loan costs and lower rates? Contact Accunet Mortgage to get started on your next home loan!
Flood insurance requirements during the homebuying process
As a reminder, Accunet is a licensed mortgage lender in Wisconsin, Illinois, Minnesota and Florida — and we recently had an interesting problem pop up with a client in the Sunshine State.
We received a text asking about flood insurance, and whether or not they needed it to close on a new piece of property. The premium was $3,000 per year (hardly pocket change), so we checked it out.
Turns out, FEMA requires flood insurance on homes considered “high-risk.” They define high-risk as any home with a 1% chance of flooding in a given year. Over the course of a 30-year loan, that’s roughly a 26% chance — pretty high.
Now, every mortgage lender automatically does a Flood Determination Certification when lending on a property. We pulled up the automatic Certification for this particular home, and found that, actually, the property was no longer considered high-risk. There was also a LOMA (Letter of Map Amendment) drawn in 2013 that changed flood insurance requirements, meaning the property in question no longer needed flood insurance to close.
So, we emailed the client with the good news, and provided a quote for optional flood insurance at around $729/year — a fair amount less than $3,000!