Cape Coral Florida's Real Estate Guide

By: Mariwyn Evans

Paying all of your bills on time is one good way to improve your insurance score-and, in turn, lower your homeowners insurance premiums.

The most effective way to raise your insurance score is to improve your credit score.

Most people expect the cost of homeowners insurance to go up after a claim is filed. But it may surprise you to know that how good you are at managing your finances can have just as big an effect on your premium as the tree that fell on your house.

Insurers look to your credit history to calculate an insurance score that's used to judge how much of a financial risk you are. The lower the score, the higher the risk-and the higher the premium you'll likely pay on your homeowners insurance. Don't despair. There are strategies, including paying bills on time, that can help improve your insurance score.

Good credit pays off

Wondering what too many credit cards has to do with the limb that landed on your roof? More than you'd think, it turns out. Several studies have found that your credit history is a good indicator of how often you're likely to file an insurance claim. Because more claims translate into more expense for insurance companies, homeowners with low insurances scores tend to be charged higher premiums.

Insurers claim the use of credit-based insurance scores is fair and actually works in favor of fiscally responsible consumers. A 2006 study found that 53% of Oregon policyholders paid lower premiums on homeowners insurance thanks to credit-based insurance scores. ECONorthwest, the group that conducted the research, estimated the average annual savings for policyholders nationwide at $60.

How your insurance score is calculated

Your insurance score starts with your credit report, a history of your credit use. What credit cards and loans do you have? What are the balances? How promptly do you pay? Your report also includes information gleaned from public records such as bankruptcies and liens. FICO is the best-known company that turns the information in credit reports into credit scores. FICO credit scores range from 300 to 850. 

Insurers are less concerned than lenders about your ability to pay back a specific amount than your overall ability to manage money, says Allstate spokesman Adam Shores, especially whether you make late payments and how long since delinquencies took place. Your insurance claims history, as recorded in your CLUE report, also affects your insurance score. So can your age, the construction of your house, and whether you've installed smoke detectors and other safety equipment.

All of these data are crunched to come up with a numerical insurance score. This is where it gets tricky for homeowners. There isn't a single source for insurance scores, and your insurer probably won't tell you your score even if you ask. Some insurers employ proprietary formulas. Others use insurance scores calculated by companies like FICO and ChoicePoint, the latter of which will sell you your score for $12.95. ChoicePoint's Attract insurance scores can range from 200 to 997, with a score over 776 considered good.

Ways to raise your score

The most effective way to raise your insurance score is to improve your credit score. You're entitled to free copies of your credit reports annually from the major credit bureaus: Equifax, Experian, and TransUnion. Order them and look for errors: Is your Social Security number correct? Are all the debts and credit cards yours? Do the balances jibe with your records? Errors can be disputed online.

If the information on your credit report is correct, there are still things you can do to improve your score. Paring down balances on credit cards is a big plus. Paying bills by the due date is another major factor, accounting for 35% of a FICO credit score. Time is also on your side. Most late payments are removed from your credit report after seven years. A few major problems such as a bankruptcy may stay on for a decade or more. 

Judicial Foreclosure

Judicial foreclosure is a lawsuit that the lender ("mortgagee") brings against the borrower ("mortgagor") to get the property. About half of the states, including Florida, use judicial foreclosure. Like all lawsuits, it starts with a summons and complaint served upon the borrower and any other parties with inferior rights in the property (remember, all junior liens, including tenancies, are wiped out by the foreclosure).

If the borrower does not file an answer to the lawsuit, the lender gets a judgment by default. A referee is then appointed by the court to compute the total amount (including interest and attorney's fees) that is due. The lender then must advertise a notice of sale in the newspaper for four to six weeks. If the total amount due is not paid, a public sale is conducted by the referee on the courthouse steps. The entire process can take as little as three months and as much as twelve months depending on the volume of court cases in your county.

The sale is conducted like an auction, the property going to the highest bidder. Unless there is significant equity in the property, the only bidder at the sale will be a representative of the lender. The lender can bid up to the amount it is owed, without having to actually come out of pocket to purchase the property.

If the proceeds from the sale are insufficient to satisfy the amount owed to the lender, the lender may be entitled to a deficiency judgment against the borrower and anyone else who guaranteed the loan. Some states prohibit a lender from obtaining a deficiency judgment against a borrower (See, e.g., Alaska Statutes §34.20.100, Washington Revised Code §61.24.010, California Code of Civil Procedure §580b)

Reinstating the Loan

Many states permit a borrower to "cure" the loan before the date of sale. This simply requires paying the amount in arrears, plus interest and attorney's fees. It is certainly more desirable for a defaulting borrower to reinstate a loan rather than pay off the entire principal balance.

Virtually all states have specific laws requiring a reasonable notice to the defaulting borrower before the lender can accelerate the debt. If you are a lender, make sure you review the default notice with your attorney to ensure compliance with state law. If your attorney or other party sends the notice, be sure he complies with the Federal Fair Debt Collection Practices Act (See, Romea v. Heiberger & Associates, 97 Civ. 4681 (S.D.N.Y. 1998); Law firm held liable for violation of F.D.P.C.A. by signing 3-day demand for rent).

Redemption Rights

Some states give a borrower the right to "redeem" the amount owed and get title to the property back after the sale. The length of the redemption period changes from state to state. The highest right of redemption is from the owner, borrower or guarantor on note. Behind him come the junior lien holders who are in danger of being wiped out by the foreclosing senior lien holder.

In states where there is a long redemption period, investors often buy the junior liens on the property to have the right to redeem the property from foreclosure. The holder of the most junior lien has the last right to redeem the property by paying off all underlying liens. The owner, of course, has the highest right. Obtaining a quitclaim deed from the owner gives you the right to redeem the property yourself.

Like the family in the video above, many homeowners in Lee County are struggling to make their monthly mortgage payments, also making them the target of various loan modification scams. Don't let this be you! There are a variety of options available to you that can help relieve the financial pressure and even allow you to keep your home. The first and most important step you can make is to decide to face the issue head-on and find out what will work best for your situation.

To get started, contact your mortgage lender. Many lending institutions are offering to assist homeowners with loan modifications to make their monthly payments more affordable and allow them to keep their homes. Even if they can't immediately help you with a modification, it is worth a call to open up the lines of communication with your lender. Knowing where you stand is a highly valuable piece of information, even if its not exactly what you want to hear.

Beware of foreclosure rescue scams! You can get help free of charge. Take a moment and check out makinghomeaffordable.gov. This site is the home for all of the information relating to President Obama's HOPE for Homeowners program. You can find out immediately if you qualify for the program, get access to counseling from a HUD-approved housing counselor, and more, all at no cost to you. Never pay any company up front for assistance with your home loan or make payments to anyone other than your mortgage company without their approval. This can lead to disasterous results as you've seen in the above video.

It may turn out that the best solution for you is to sell your home to avoid foreclosure. This is not necessarily the end of the world as you may be able to sell your home to an investor who would be willing to rent it back to you. These types of deals benefit both the seller and the buyer in more ways than one. For more information on selling your home, feel free to contact me to discuss this option further.

Whatever you do, don't wait to seek assistance with your mortgage. Knowledge and communication equal power!

lemence for CNBC.com

When Carole and Jim Gourley started looking at vacation properties in Florida last December, they weren't all that serious. The retired couple, who live in Ontario, had rented in Panama City Beach for five winters. Stuck at home with a sick pet this year, Jim Gourley started browsing for foreclosures down south for fun.

"One thing led to another and we found a condo we liked the look of and decided to pursue it," Carole Gourley says. "We could not believe the prices that some of the properties were being listed for, especially since the one we liked is only four years old."

They ended up buying a three-bedroom condo in Bellasol, a development in Fort Myers, where prices currently range from $39,000 to $170,000. "We paid 25% of the original selling price," she says. "We feel that we got an extremely good deal.

The Gourleys are part of a new surge of buyer interest along Florida's Gulf Coast, where real estate websites are seeing a dramatic increase in traffic and local brokers are experiencing an uptick in inquiries and sales.

In housing markets around the country, there are signs that perhaps the bottom has been reached, and sales are beginning to come back up-with prices hopefully to follow.

To get a handle on these rebounding markets, we asked real estate search firm Trulia to tell us the cities in which they have seen the greatest rise in searches-a proxy for buyer interest-over the last year

The result: Seven of the ten cities were in Florida, a poster state for the real estate boom and bust, and five were on the Gulf Coast side of the state.

Source: Trulia.com

Obviously, this isn't boom buying, wherein people are investing their money because prices are rising dramatically.

"Basically, the market crashed so hard, prices have fallen so much, that places have become interesting to people again," says Mark Washburn, a realtor at Island Coast Realty in Ft. Myers who blogs about the local market.

Sales for Lee County, Fla., which includes Fort Myers and Cape Coral, were up nearly 80 percent from 2007 to 2008, he says. "That's pretty impressive. The caveat is the prices are half."

The same holds true in the other Florida markets, says Stan Geberer, associate at Fishkind & Associates, a real estate consulting firm based in Orlando. "Those are all places that have seen a 30 to 50 percent decline in prices over the past year or so," he says. "From the peak of the market they may be down even further than that."

According to the Office of Federal Housing Enterprise Oversight, in the fourth quarter of 2005, home prices rose 36 percent in the Cape Coral-Fort Myers area, 38.3 percent in the Naples-Marco Island area, and 28.2 percent in the greater Miami area. In just the last quarter of 2008, prices fell 32.9 percent, 32.8 percent and 24.1 percent respectively.

"Those areas saw the greatest levels of overbuilding, the greatest levels of speculation during the bubble," says Geberer. "[Southwest Florida] was a heavy area for starter home investors." 

Those price declines are luring bargain hunters. Some are vulture investors, Geberer observes. Washburn is seeing people from north of the Mason-Dixon line, and many from Canada.

National real estate brokerage Coldwell Banker Real Estate is seeing buyers push life plans up as a result of the economy, and seeking deals on their retirement homes. First-time buyers are coming back into the market, says Jim Gillespie, president and CEO of Coldwell Banker Real Estate, thanks in part to federal incentives, which include a $8000 tax credit for first-time, residential buyers.

In the comeback markets, many of the deals are short sales or foreclosures. In last quarter of 2008, according to the National Association of Realtors, 45 percent of real estate transactions in the US were so-called distressed sales.

But Gillespie points out that there are also markets that have been strong all along; places like Columbus, Ga. Inventory is up there, but prices are too-very, very slightly, about 1 percent. The same holds in Shreveport, La., and San Antonio, Texas, he says. "In most of the heartland of America, the prices are stable."

While it may not be an easy sell to consumers, he argues that it's a great time to buy: Interest rates are at historic lows, with high inventory levels, there's lots of choice, and prices are down. 

"Once the inventory levels are burned off in those hardest hit states we'll have a balanced market," Gillespie says. "And things will start to go up."

© 2009 CNBC.com