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Beginners Real Estate Investing Guide
Real Estate Investing - Ask
Questions Before Making an Investment
First Time Real Estate
Investor
Real Estate Investing - Planning
Your Investment Strategy
How to Find Real Estate
Investment Properties
Getting a Professional Home
Inspection
Large Profits From Inexpensive
Real Estate Repairs
Real Estate Investing - Costs
and Fees
Real Estate Insurance
and Risk Management
Real Estate Investment Risk
Part 1
Real Estate Investment Risk
Part 2
Getting The Best Return For
Your Investment
Creative Financing
For Real Estate Investors
Real Estate Investment Tax
Considerations
Real Estate Rental Properties
- Great Investment or Nightmare
Real Estate Foreclosures - Great
Deal or Headache
Flipping Real Estate for Profits
Slow Return On Real Estate
Investments
Negotiating for the Best Possible Real Estate
Deals
Real Estate - A Time to Buy and a Time
to Sell
Creating Your Real Estate
Investment Strategy
Investing and Growing
Your Real Estate Portfolio
Commercial Real Estate
Investing
Real Estate Marketing
Understanding Real Estate Law
Do You Need An Real Estate Agent?
What The Real Estate Mortgage
Lender Sees
Do You Have A Career In Real
Estate?
Rural or Urban Real Estate
Investments?
Real Estate Investing on the
Internet
Real Estate Investing
- Property or Paper? |
Real Estate Investing - Insurance and Risk Management
As recent as 2005, the average price of a home went up about 15 percent from
the year before. In some real estate markets, the price went up even more!
As a result, real estate lenders started issuing Subprime loans - meaning
that they didn't require FICO credit scores to be as high as they once required.
They also did away with some of the documentation requirements, and even
allowed potential home owners to borrow up to 45 percent of their annual
income. At this time, 30% of all new mortgage loans are interest only loans,
with nearly 35% of all mortgages being Adjustable Rate Mortgages (ARMs).
The interest rate has been raised eleven times by the US Federal Reserve
since June of 2004.
Real estate has obviously seen a great deal of growth - growth that has never
before been seen. Of course, anytime we have a fast increase in prices, we
also have increased risk. When the value of an asset increases, the potential
for loss increases. That is why insurance exists - to protect us from those
losses, and now, there seems to be a type of insurance to cover every potential
loss.
The person who owns or invests in the real estate will find that they benefit
the most from Title Insurance and Liability Insurance. Title Insurance covers
anything that may not have been discovered during the title serach before
the closing of the real estate. Title companies routinely search public record
databases to make sure that a piece of real estate is legally clear, and
that the title can pass to a new owner.
As with anything else that requires human effort, the resources can be limited,
and mistakes can be made. While public records are wonderful tools, they
are not necessarily perfect, which may cause the title company to not find
a past tax lien or other problem. This does happen - though instances of
this happening are rare. But Title Insurance will protect you from any potential
financial losses as a result of such mistakes.
Liability insurance, on the other hand, covers the owner in the event that
another person becomes injured as a result of being on or using the property.
If a visitor slips on your front steps, your liability insurance will cover
their medical bills, settle suits if they sue you, and more. There are limits
as to what your liability insurance will pay, as well as to what events the
policy will cover.
There are other forms of insurance, which usually cost even more, to cover
a wide variety of risks and hazards. Hazard Insurance, specifically, typically
covers tornados, hurricanes, earthquakes, floods, accidental fire, and other
disasters that are beyond control. They may even cover wind damage and damage
caused by freezing temperatures as well.
Of course, events caused by man are also covered, such as arson, electrical
problems, and chemical spills. Insurance can cover everything from theft,
to bad plumbing or wiring, and vandalism. It will even cover failure of large
appliances. Those who own rental property can even get special insurance
that protects against loss from non-payment for rents, and damages that make
the property unliveable.
Again, all insurance protection costs money, and the amount of the cost varies
from what is covered, how much it is covered for, and the deductible associated
with each particular event or policy. There are, of course, some instances
where you may have coverage, but the insurance isn't in effect due to zoning,
negligence, environmental concers, or other potential situations. You should,
of course, find out all of the small details, and shop around for your insurance
providor. Nobody can force you to use a particular insurance company, even
though the real estate agent or title company may recommend one.
If your property is financed, you will be required to carry mortgage insurance.
This insurance doesn't pay you at all. Instead, it pays the mortgage lender
in the event of a disaster or if you default on the loan.
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Beginners Real Estate Investing Articles
How to Advertise a Rental
Property
How to Build Equity
in any Real Estate Market
How to Find Motivated
Sellers
Developing a Profitable Real
Estate Investing Strategy
Bird Dogging: Getting Started in
Real Estate Investing
Buying Your First Home
Using Lease Options to Purchase Real
Estate
Real Estate Foreclosures
Increase Your Net Worth Through
Real Estate Investing
Interest Only Mortgages
Real Estate Investing
No Money Down Real Estate
Investing
The Power of the Lease Option
Real Estate Investing Tips
Real Estate Investments
Refinancing Your Mortgage
Loan
Paying Your Mortgage
Selling Your House without a
Realtor
"Subject To" Real Estate
Financing
Using Trusts as a Real Estate
Alternative
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