Just Bought a Condo - Why do I need an HO-6 Policy?

Scenario: You have just purchased a Condo and the lender wants you to purchase an HO-6 Policy as a condition of lending you money.

**Please Consult your Insurance Agent for specific coverage in your area. The following information is deemed liable but George Langford takes no legal responsibility**


What is an HO-6 Policy?

If you think insurance for your condominium is covered by your association fees, think again. Typically, your monthly condo fees are used to fund a building insurance policy. If your unit is robbed or damaged, your building insurance will not provide any coverage for your personal possessions, nor will it offer you any protection from personal liability. An HO-6 Policy covers the interior of your unit compared to the exterior of your unit that is typically covered in your monthly dues.


What does the HO-6 Policy Cover?

Under the general terms of HO-6 condominium owner coverage, your policy should cover your personal property from 16 perils:

Fire or lightning

Windstorm or hail

Explosion

Riot or civil commotion

Damage caused by aircraft

Damage caused by vehicles

Smoke

Vandalism or malicious mischief

Theft

Volcanic eruption

Falling objects

Weight of ice, snow, or sleet

Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance.

Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire-protective system.

Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system, or of a household appliance.

Sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component)

Why is the Bank requiring this Policy if the HOA (Home Owners Association) has an Insurance Policy in place already?

It varies from lender to lender but most banks are now requiring an HO-6 Policy when purchasing a home, and they may require it even with a refinance. This is just an extra step banks are taking to ensure their assets (Properties) they lend on. Most policy run on average a couple hundred dollars a year. I would consult with your Mortgage Broker or Banker for more details.

What is a "Good Faith Deposit?"

So you have found a home that you love and want to place an offer.

The agent says "Bring your check book for the initial deposit." What does this mean?

In the contract on page 1 (California Residential & San Francisco), there is a place for the buyer to state how much of an initial deposit they are placing into Escrow for the home they would like to purchase. This does not mean that the property will be held for you or that it gets taken off the market. Although it does show 'Pending show" on the Multiple Listing Service. This allows the seller to still market the property, but advises agents and buyers that and offer has been place on the property. Until the release of contingencies from the buyer the property is still on the market. Contingencies allows the buyer to investigate the property, disclosures and secure the appropriate financing. The initial deposit is more like a goodwill gesture, indicating to the seller that you are serious about the prospective purchase.

How much is a typical initial deposit?

A typical initial deposit is 3% (Three Percent) of the purchase price. Ex: On a $500,000 home the deposit would be $15,000. The check is made out to the Title Company and dated according to the purchase agreement. Once the offer is accepted or ratified the check is deposited into the Escrow account within 3 business days.

What happens to the Deposit when we close Escrow?

When it's time to close Escrow, the 3% will be applied toward the required funds needed from the buyer. Required funds could include lender closing costs, inspections billed to Escrow, down payment, points paid, escrow fees or anything that is non-recurring.

For a FREE Buyer Consultation on the Home Buying Process call George Today!
(415) 336-8191

Bay Area's Hottest & Coldest Real Estate Markets!

Below is a list of the Bay Area's Hottest & Coldest Zip Code's. Hot Zip codes are determined by the ratio of Sale Price to Asking Price.

Emeryville is actually one of the Top 10 Zip Codes in the Nation as of Today!

Home Priced Right, Good Condition, Good Location = SOLD!!!

HOT BAY AREA ZIP CODES BELOW: These are the Bay Area ZIP codes where houses sold for the highest ratio to their asking price in the third quarter.


City ZIP Ratio (Sales Price to List Price)

Emeryville 94608 105.65%
San Jose 95122 105.22
Oakland 94606 105.06
Berkeley 94703 104.78
San Lorenzo 94580 104.45


COLD BAY AREA ZIP CODES BELOW: These are the Bay Area ZIP codes where houses sold for the lowest ratio to their asking price in the third quarter.

City ZIP Ratio
Rio Vista 94571 93.47%
Napa 94558 93.45
Alamo 94507 93.07
Half Moon Bay 94019 92.94
Los Gatos/
Monte Sereno 95030 92.26

Search for home in your area at www.GeorgeLangford.com

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NEW Offering Price: $735,000

This spacious loft boasts 1255 sq ft (per tax), 2 baths, washer/dryer, secured parking, roof deck and low HOA's. Do you commute? Located just 1 block from Cal Train and Muni pick ups, transportation is a snap. Need Warm Sun? Open the giant blinds and feel the glow of the morning sun from south facing windows or take the elevator to the roof deck and hang out with a drink and a book. Enjoy a day at the baseball park? Save on parking and walk! Safeway, Whole Foods, Tres Agaves, District, South, 21st Amendment, South Park Cafe, Cinque Coffee, The Creamery and entertainment are all with 1-2 blocks. This awesome location has a walk score of 94.




CLICK HERE TO VIEW THIS WONDERFUL PROPERTY!

No loans for condos reported.....FALSE! Please read

Today on SFGate.com the following story was posted in regards to financing in the condo sector of the housing market. There are loans available for condos and with as little as 3.5% down payment. Below are a couple points I wanted to point out in regards to this article.

1) New construction is very different lending and that was a problem in Mr. Hong did not close until July. The unit was not finished at that time
2) The ratio of owners that actually live in the complex vs. renters has always been a determination when buying a condo and is nothing new. Even when times were going great we still had to watch that ratio in certain complex's.


San Francisco Specific: Always remember that in San Francisco we have condo and TIC (Tenancy in Common). Condos will have less of a downpayment than a TIC. TIC will require at least 20% down.

There ARE loans out there for all. If you have a specific circumstance please feel free to contact me at (415) 336-8191 or email at georgelangford@zephyrsf.com.

Condo buyers find it tough to get mortgages

Carolyn Said, Chronicle Staff Writer

Back in September, when Tae Hong signed a contract to buy a condominium in Oakland's new Pacific Cannery Lofts, he expected to move in quickly. With a 20 percent down payment, excellent credit and good employment as an...

Read Full Story

Read more: http://www.sfgate.com/cgi-bin/article/comments/view?f=/c/a/2009/08/04/BUCT190GMM.DTL#ixzz0NKEdyLI8