Why Is It Required to Have Car Insurance?

In 49 states in the United States, there is some form of compulsory insurance for motor vehicles. Many people ask, “Is car insurance required?” since it may not be immediately apparent if you see yourself as a good driver willing to pay for any potential damages to your car. The answer to “Why is car insurance mandatory?” lies in the type of car insurance. Perhaps you’re looking to why you need car insurance. There are both mandatory and optional coverages to consider.

In this article

Is car insurance mandatory in the U.S.? 

Car insurance isn’t mandatory at the federal level in the United States, though all but one of the 50 states do make some kind of coverage required.

This means that what counts as “state minimum compulsory insurance” in each state will be slightly different. These minimums are what the state considers the minimum you should purchase to cover your liability adequately.

States like Iowa, Ohio, and Wyoming have meager costs. Other states may have high premiums due to the high cost of living in the state, but the minimum coverage is lower, like New Jersey, Michigan and Florida. As a result, the minimum coverage could pay less in a costly accident.

Costs for minimum car insurance are reliant on the amount of compulsory coverage in the state and how common expensive accidents are, and the typical costs of those accidents. States like Michigan have specific laws requiring unlimited personal injury protection coverage that change how much it costs to insure a motorist.

Why do states make car insurance mandatory? 

Mandatory minimum car insurance is liability insurance, making it different from many other kinds of insurance you probably have considered purchasing. If you own a homeowner’s policy, a healthcare insurance policy, or a renter’s insurance policy, those all focus on recouping losses that you experience. You’re buying them to protect yourself or your property.

[ Read: What’s the Average Cost of Car Insurance in the U.S.? ]

However, you don’t drive your house around, potentially harming other people. Car accidents have adverse effects on other people, and liability coverage is mostly focused on the two kinds of harm you can cause if you are at fault in an accident: medical expenses and damage to the other vehicle.

It can be tempting to feel like car insurance should be optional until you consider the results if someone else runs into your car. Suppose you had a big pile of medical bills and a totaled car, all because someone without liability coverage made a careless driving choice. In that case, you probably see why mandatory minimum car insurance gives everyone a base level of protection from other drivers.

New Hampshire, the only state that doesn’t require car insurance, still has it’s own version of liability. You’re allowed to either have the insurance or be willing to pay those costs yourself if you don’t have insurance. It’s not a mandatory insurance policy, but the liability is still there, so most people opt to get coverage.

What happens if I don’t have car insurance? 

Getting pulled over when you do not have car insurance in a state with mandatory minimum car insurance is very costly. Even a first offense of driving without insurance can result in a suspended license, large fines or even having your car impounded in some states. Second offenses are more likely to lead to jail time. All instances of driving without insurance can lead to increases in your insurance premiums in the future when you apply for a policy.

[Read: Caught Driving With No Car Insurance? Here’s What It’ll Cost You ]

If you are caught driving without car insurance because you are involved in an accident, your consequences can become more severe. Rather than a small chance of a warning or a smaller fine, you are much more likely to have your car impounded, and you are likely to have your license suspended. What’s more is that at-fault drivers with no insurance become financially liable for a large variety of costs, especially if the other person in the accident carries none or very little uninsured motorist coverage. You could be forced to pay a large sum or declare bankruptcy.

You may get some reprieve because other motorists carry coverage for underinsured or uninsured motorists. Still, given the high costs of medical bills and car repair, it’s unlikely to cover everything.

How much car insurance is required?

There are a few different aspects of the minimum coverage in each state. Nearly every state will require you to carry some bodily injury liability and property damage liability coverage since those two costs tend to be present in an accident. Most mandated state minimum insurance coverage is abbreviated to a set of three numbers like 25/50/25. The first number is the maximum payout for a single person’s bodily injury in an accident. The second number is the maximum for all individuals harmed per accident. And the third number is the maximum payout for property damage.

Some states structure their minimum coverage to require personal injury protection, where each motorist files with their insurance for damages and medical expenses rather than assigning one motorist as at fault – these states are known as “no-fault states.” Other states have mandatory underinsured or uninsured motorist coverages.

State Minimum Car Insurance Requirement
Alabama 25/50/25
Alaska 50/100/25
Arizona 15/30/10
Arkansas 25/50/25
California 15/30/5
Colorado 25/50/15
Connecticut 25/50/20
Delaware 25/50/10
Florida 10/20/10
Georgia 25/50/25
Hawaii 20/40/10
Idaho  25/50/15
Illinois 25/50/20
Indiana 25/50/25
Iowa 20/40/15
Kansas 25/50/25
Kentucky 25/50/25
Louisiana 15/30/25
Maine 50/100/25
Massachusetts 20/40/5
Michigan 20/40/10
Minnesota 30/60/10
Mississippi 25/50/25
Missouri 25/50/25
Montana 25/50/20
Nebraska 25/50/25
Nevada 25/50/20
New Hampshire 25/50/25, financial responsibility only
New Jersey 15/30/5
New Mexico 25/50/10
New York 25/50/10
North Carolina 30/60/25
North Dakota 25/50/25
Ohio 25/50/25
Oklahoma 25/50/25
Oregon 25/50/20
Pennsylvania 15/30/5
Rhode Island 25/50/25
South Carolina 25/50/25
South Dakota 25/50/25
Tennessee 25/50/15
Texas 30/60/25
Utah 25/65/15
Vermont 25/50/20
Virginia 25/50/20
Washington 25/50/10
Washington D.C.  25/50/10
West Virginia 25/50/25
Wisconsin 25/50/10
Wyoming 25/50/20

Source: Insurance Information Institute

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

Can I Transfer My Car Insurance When Moving Out of State?

If you’re planning a move across state lines, you’ve likely wondered about updating your car registration and insurance. So what do you do with your car insurance when moving out of state? Do you have to change car insurance when you move states? The short answer is yes — but you may not have to completely overhaul your policy to pull it off. In all cases, your policy will need to be updated — at the very least.

Although it’s possible to transfer car insurance from one state to another, you will need a new policy if your carrier does not offer car insurance in the state you’re moving to. So, not only do you need to update your carrier with your new address, you also need to make sure your new policy meets the minimum requirements for the state you’re moving to. Otherwise, you could end up with coverage that doesn’t meet your needs, and that could cause big problems down the road. Here’s what you need to know.

In this article

Your car insurance grace period 

In most cases, your current car insurance coverage will continue to cover you until your policy renewal date, even when you move out of state. But rather than waiting until you’ve unpacked all the boxes in your new place, the best recourse is to notify your insurance company of your move as soon as your new address is confirmed. This gives you time to work with your agent to get your policy updated or purchase a new one altogether if your current carrier does not provide coverage in your new state.

[ Next: Liability vs. Full Coverage Car Insurance ]

The last thing you want to do is let your old policy lapse or cancel before you have your new policy in place. Not only is driving without liability insurance illegal in almost every state, but you also open yourself up to a huge financial risk if you’re involved in an accident without insurance.

Updating your insurance becomes even more critical when it comes time to register your car in your new location. You should also be aware that it’s considered a form of insurance fraud to misrepresent the location you live in, so your best bet is to update your new address right away with your insurance carrier to avoid any issues.

Changing your policy after a move 

Once you move out of state, you need to start the process of updating your car insurance. There are two different possible scenarios that can occur when you do this.

The first is if your current auto insurance provider extends coverage in the new state you’re moving to. If this is the case, contact your agent and notify them once your new address is confirmed. Your agent should be able to easily update your policy to reflect your new location and new policy.

If your current carrier does not offer coverage in your new state, you will need to purchase a new policy. Whatever you do, do not cancel the coverage on your existing policy until your new carrier’s policy is put in place.

Whether or not you stay with your current provider, moving is an ideal time to receive multiple quote comparisons. This way you know you’re receiving the most competitive price for the coverage you need. And remember, your insurance rates are based on where you live, among many other factors, so changing states will likely impact your rates.

[ For You: How Much Car Insurance Do You Need? ]

For example, if you’re moving from North Carolina, where the average cost of auto insurance each month is $79.13, you may be surprised by an increase if you move to another state like Georgia. Georgia’s average rate each month is $131.15, further illustrating the need to get quotes from multiple providers.

Registering your car after a move

Another reason you have to change car insurance when you move to another state is that most states require you to show updated insurance coverage for the car registration process. And, the requirement in most states is that you register your car within 90 days of moving, which means your auto insurance needs to be updated quickly.

It’s important to keep in mind, though, that the grace period for updating car registrations varies state to state, so don’t assume that you’ll have 90 days to do so. For instance, Texas requires you to register within 30 days and Michigan requires you to immediately register your vehicle after you move. If you do not register within the designated time frame, you risk fines and possible citations.

The cost of registering your car varies by state too. Some states charge a flat fee for registration, while others charge a fee based on the weight of your vehicle. Using Texas as an example, the registration fee is $50.75 per vehicle.

The safest bet is to look up your new state’s Department of Motor Vehicles to confirm the registration deadline and required documents (including insurance coverage), along with the testing required to secure your registration. You can also get a confirmation of expected registration fees by doing this.

Tips for moving out of state 

Moving, especially across state lines, means there are plenty of details to keep track of along the way. Adequate auto insurance coverage is extremely important, and there are a few steps you can take to lessen your chances of any missteps, including:

  • Update your agent on your new address as soon as you confirm it. Your agent can advise on getting your policy updated in your new state and tell you any next steps, since most agents are only licensed in the state they live in.
  • If you must purchase a new policy, do not cancel your current policy until the new policy is in place.
  • Prior to moving, you should confirm the registration information with your new state so you are aware of any grace period or deadlines for car registration. 
  • Once your new policy is in place, you can work with your old agent on the steps to cancel the old policy.
  • Be sure your old insurance company has your new address on file in case you are due a refund and the carrier needs to send you a check. 
  • When you have your updated or new policy with in-state coverage, you can proceed with car registration.

[ See: Why Is It Required to Have Car Insurance? ]

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

Does Car insurance Cover Flood Damage?

Flood damage is no fun at all, especially when it comes to your car. But you have car insurance, so the damage should be covered, right? Well, it’s not quite that simple. Flooding isn’t one of the most common issues that car owners face, so it’s not necessarily included in every car insurance policy. Don’t worry; you have options, and we’re here to help. Ahead, we’ll discuss what kind of car insurance you’ll need to cover floods and how to file a claim for a flooded car.

In this article

Does car insurance cover floods?

In short: possibly. If you have comprehensive insurance, your car should be covered for flood damage. If your car is leased or financed, you should have comprehensive insurance already, as it’s required on a car that’s still being paid for. If you aren’t making payments on your car, you might still consider comprehensive car insurance, especially if you live in a state prone to flooding, like those on the coasts, in the flat Midwest, or anywhere near water.

Flooding can cause serious damage to your car. Some of the most common problems with flooded cars are down to the electrical system inside the car, but it will damage just about everything, both under the hood and inside your car. Flood water will even wreck your interior, so if you’re worried about flooding, get that comprehensive insurance so you’re covered.

[ Read: The Best Cheap Car Insurance for College Students ]

Tips for filing your flood damage auto insurance claim

Take plenty of pictures 

The most important thing you can do if you have flood damage is to document it. Take pictures of every single angle of your car and every place that’s damaged. Take close-ups, wide shots, interior pictures, under-the-hood pictures and everything else you can think of. These should be pretty easy to take on your phone, just make sure you don’t lose track of them. Back the photos up on the cloud or your computer, just in case.

File early 

File a claim on your damaged car immediately. You’ll want to contact your insurance company as soon as is safely possible, depending on what you’re dealing with flood-wise. Get in touch and let them know the situation with the flood and how much damage you’re dealing with with your car. You already have your pictures handy, which will help back up your story. But the sooner you file your claim, the sooner the insurance company can start processing it and help you.

Check for hidden damage 

You may not be able to see all the damage under the hood right away. If your car is driveable, you might take it to the local body shop to have a professional look for further damage. If it’s not driveable, see if you can have a mechanic come to your house and look for further damage. Do this early so you can include it in your claim.

[ Read: The Coolest Car Insurance Mobile Apps ]

What to do if a flood totals your car 

If the insurance company determines that the cost to fix your car is more than the car is worth, they might consider it totaled. The damage doesn’t even have to be considered 100 percent totaled, depending on what state you live in. In some states, 75% of the value is enough to be considered totaled. An insurance company may also total your car if it’s determined that it’s simply not safe to fix it and drive again. If this is the case, the insurance company will pay out what you’re owed, depending on the car’s value and your insurance policy. Be prepared here, though, to have your own information backing up the value of the car, as your insurance company might rely on you to have this information or might not come back with a value that you agree with.

If your car is not totaled in a flood 

If your car is damaged in a flood and the insurance agency determines that it can be fixed, you’ll first have to cover the deductible, whatever it is on your policy. The insurance company will cover the cost of the damage after that, but be prepared for this process to not be quick. There is a lot of paperwork and planning in this process to ensure the repairs are made in a way that the insurance company allows. Also, most likely if your car was damaged in a flood, others in your area were as well, which means the insurance companies are busy with claims, and the mechanics and autobody shops in your area are busy with repairs.

[ Read: When Should You Downgrade Your Car Insurance? ] 

How to prevent and prepare for auto damages in a flood

  • Get comprehensive car insurance: The first and most important thing to do is make sure you have comprehensive car insurance. This car flood insurance is the key to your protection.
  • Park your car on higher ground: If you know a storm is coming, move your car to higher ground if possible. This way it’s less likely to get caught in a flood.
  • Seal the doors and windows: Not that this will save you in a total flood, but make sure the doors and windows are properly sealed, as it can help keep some of the water out.
  • Avoid puddles: If you’re driving while it’s raining and starting to flood, avoid driving through puddles or standing water. For one, these are obvious pools of water, which can breach your car. For two, you don’t actually know how much water might be in that puddle, and it could flood your car.

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

What To Do If You Can’t Get Car Insurance

Finding reliable car insurance can be frustrating for anyone. After the carrier who offered your best option for auto insurance denied your application, it can be hard to decide what to do next — but there’s still hope.

Car insurance companies want to insure people whom they think are low-risk. The factors that determine your risk can be improved over time. And some companies are more willing to insure riskier policyholders. If the first or second provider doesn’t work out, you still have plenty of options. Here’s what you can do to find coverage now.

In this article

Why some insurance companies deny applications

Car insurance providers favor people who the provider thinks are less likely to file a claim. To decide who these drivers are, car insurers factor in information like driving record, credit history, age, location and more.

You can affect some factors, but others are beyond your control. If your application was denied, the insurer might not tell you why. But you can always call and ask. Here are a few of the reasons why some car insurance companies commonly deny applicants:

  • Driving record: If you have moving violations or at-fault accidents on your record, it will affect your car insurance cost. If you’ve experienced many violations or accidents, then some car insurers may deny your application.
  • Location: Car insurers commonly draw on location-based crime statistics to determine risk in a policy. If you live in an area that experiences high levels of property crime, such as theft or vandalism, then the insurer may be less willing to insure your vehicle.
  • Previous lapse in coverage: A red flag car insurers commonly look for is a lapse in coverage. If you’ve allowed your car insurance to expire in the past without getting a new policy, it could make it more difficult to find insurance.
  • Credit history: Some car insurers may deny applicants who have a spotty credit history. The insurer could use this as an indication that you have trouble keeping up with monthly payments.
  • Type of car: If you have a car model that’s known to be dangerous on the road, it could make car insurers wary. Some car insurers might stay away from insuring certain types of cars.
  • Outside coverage area: Many car insurers only offer coverage in certain states or areas. If you live outside the insurer’s area of coverage, they won’t be able to provide you with insurance.

[ Read: Non-Owner Car Insurance: What Is It and Who Needs It? ]

What to do if your car insurance application was denied

Having a car insurance application denied is never fun. But it’s not the end of the road. It’s always a good idea to ask why you were denied so you can get an idea of how to improve your profile for future applications. If you’re having trouble finding traditional auto insurance, here’s what to try next.

Short-term options:

  • High-risk car insurance: Some insurance providers offer policies specifically catered to high-risk drivers. If your preferred carrier won’t cover you, a high-risk provider might be able to help. Keep in mind these policies can be more expensive than standard policies.
  • State-run high-risk insurance: Some states have insurance pools for drivers who can’t find insurance with a regular provider. For example, Maryland Auto Insurance is state-run insurance for Maryland drivers who can’t find coverage elsewhere.
  • Family member’s insurance policy: If you can’t find insurance, a family member might be able to add you on to their existing insurance policy. Many providers only allow this if both people live at the same address. But some make exceptions for college students.

[ Read: The Simple Guide to Car Insurance ]

Long-term options:

  • Improve driving record: If you can stay accident- and moving-violation free for a year or more, it could improve your chances of qualifying for standard auto insurance.
  • Improve credit score: If you can boost your personal credit by paying off debt and staying on top of your monthly payments, then it could also help you find auto insurance from a standard provider.
  • Check again in six to 12 months: Companies often shift their guidelines, and your chances of getting approved could change in the future. After six months or a year apply again.

Where to get car insurance when standard companies won’t insure you

People often ask, “can car insurance companies deny coverage?” And unfortunately, they can. If the standard car insurance carriers are not doing the trick, there are high-risk insurers who can help. If you get approved for high-risk insurance, it will probably be more expensive than a standard policy. Here are a few places to try:

[ Read: What’s the Average Cost of Car Insurance In the U.S.? ]

  • State Farm: This well-known provider offers car insurance policies of all kinds, including policies for high-risk drivers. They also have many discounts available, which could offset the generally higher cost of coverage.
  • The General: This provider has specialized policies just for high-risk drivers. If other companies deny you coverage, this company should be able to help. You can even get a quote through their website.
  • Bristol West: This provider is run by Farmers Insurance, and Bristol West had dedicated policies just for drivers who’ve been denied by standard providers due to a driver’s higher risk.
  • State-run insurance pool: If no private insurers will agree to give you coverage, check to see if your state offers an insurance pool for high-risk drivers. This is generally the last option to try.

How to get better deals on auto insurance

If your monthly insurance premium is high, there are many ways to offset the cost. Most car insurance providers offer discounts for a variety of things, and it’s always worth a phone call to see what you might qualify for.

[ Read: How to Switch Car Insurance Companies ]

A few of the most common discounts include a bundling discount for multiple policies such as combining car and home/renters insurance, a discount for setting up auto-pay, a loyalty discount for using the provider for a certain amount of time, and a paperless discount for having your policy and payment details emailed to you.

Another option is shopping around for a new car insurance provider. Getting quotes is now fast and easy using provider websites or a mobile app. Many of the larger car insurers have online quoting tools that you can use to get a quick estimate of how much your monthly premium will cost.

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

What is FR-44 Insurance?

Actions have consequences — particularly when you’re behind the wheel.

Causing a little fender-bender will probably leave you with nothing more than an insurance headache, but more serious offenses come with heftier repercussions. Specifically, if you’re caught driving with a suspended license or you get cited with a DUI, you might be court-ordered to have a specific document filed on your behalf.

In most states, this is called an SR-22. It’s a document your insurance provider files with the state proving that you have enough liability coverage to mitigate the high risk you present out on the road. But if you commit a serious driving offense in Florida or Virginia, you might be required to show a different certificate of financial responsibility (CFR) called an FR-44.

What is FR-44 insurance? And how do you get it if you’re required by your state to do so? Floridians and Virginians need to know.

In this article

What is FR-44 insurance? 

FR-44 insurance isn’t a separate insurance policy or a type of coverage. Instead, it’s a document that gets filed with your state proving you have enough liability coverage. Your insurance provider files it on your behalf, showing your state’s driving authority that you have sufficient amounts of the required liability insurance.

As a quick auto insurance refresher, liability coverage steps in if you cause damage on the road. Most states require two types of liability insurance: coverage to pay for any injuries you cause and coverage to pay for property damage.

When you need an FR-44, you’re required to have more of both types of liability coverage than other drivers in your state. It’s your state’s way of making sure you’re not a huge risk when they let you back behind the wheel. With a filed FR-44, you prove that you have enough insurance to protect others.

[ See: How Much Car Insurance Do You Need? ]

All this isn’t to say that Virginia and Florida don’t have SR-22s. They do — but they use FR-44s for their highest-risk drivers. FR-44s have higher liability coverage requirements than SR-22s.

Who needs FR-44 insurance and why?

When you live in Florida or Virginia, you could be required to get an FR-44 if you commit a major driving violation like:

  • A DWI/DUI
  • Driving without insurance
  • Driving with a suspended license

You might find out you need an FR-44 while in court for a hearing about your driving violation. Alternatively, you could get a letter mailed to your house indicating that you now need FR-44 insurance.

Long story short, if you majorly messed up behind the wheel, keep an eye out. Odds are, you’ll be required to carry more liability insurance. And if you do need an FR-44, don’t wait. Talk to your insurance provider right away.

Most insurance providers offer FR-44s. But if yours doesn’t, you’ll need to switch to one that does. Make sure you get enough liability coverage to meet the now-required limits (more on that later) and that your new insurer will file the FR-44 for you ASAP.

What if I don’t own a car? 

If you committed your violation while driving someone else’s car or you sold your car after the fact, you might be stumped by an FR-44 insurance requirement.

[ More: How Are Car Insurance Costs Determined? ]

In this case, your best bet is to get non-owner car insurance. This is liability coverage designed to cover your risk if you drive someone else’s vehicle and while doing so, cause property damage or injure someone.

Getting an FR-44 with non-owner car insurance can be tricky. Not all insurers offer non-owner car insurance, and not all insurers file FR-44s. You can use our list of the best non-owner car insurance to start exploring your options.

On a positive note, FR-44 insurance for non-owners is generally a lot more affordable than standard car insurance policies for FR-44 drivers.

How much does FR-44 insurance cost? 

There’s good news and bad news here.

The good news is that the actual FR-44 is very affordable. Generally, you’ll pay a flat fee of $15 to $25 for your insurer to file the FR-44 for you.

The bad news is that once you require an FR-44, you’ll be seen by all insurers as a high-risk driver. And that means more expensive car insurance.

The exact amount you’ll pay will depend on your overall driving history, the vehicle you drive, your annual mileage and more. But generally, if you need an FR-44, you can expect to pay twice as much (or more, even) than the average driver because of your history of serious driving violations. For example, we’ve found that drivers with a DUI will see a 79% rate increase, on average, once their insurer learns of the violation.

Ultimately, if you need an FR-44, expect to pay significantly more for your auto insurance than your neighbors.

[ For You: Auto Insurance Quotes, Explained ]

Does FR-44 insurance require more coverage? 

Yes. In fact, that’s the whole point of an FR-44.

Here are the minimum coverages needed for an FR-44:

  • FR-44 insurance Florida requirements: $100,000 of bodily injury liability coverage per person, $300,000 of bodily injury liability coverage per accident and $50,000 of property damage liability coverage
  • FR-44 insurance Virginia requirements: $50,000 of bodily injury liability coverage per person, $100,000 of bodily injury liability coverage per accident and $40,000 of property damage liability coverage

These limits are steep. Compare them against what all Florida drivers need: just $10,000 of bodily injury coverage (called personal injury protection [PIP] in this case) and $10,000 of property damage liability coverage.

Even more staggeringly, you can compare these limits against SR-22 requirements in Virginia. Virginians who need an FR-44 are required to carry twice as much liability coverage as Virginians who need an SR-22.

FR-44 insurance vs. SR-22 insurance

FR-44s and SR-22s are the same in many key ways: they’re both certificates of financial responsibility. They’re both state-required after a serious driving offense. They both get filed by your insurer to prove that you’ve purchased enough liability coverage to meet the extra liability limits to which you’re now subject.

But there are some major differences, too. For starters, every state uses SR-22s, while you’ll only find FR-44 insurance in Florida and Virginia. More importantly, FR-44s come with much higher liability coverage requirements than SR-22s.

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

First Time Home Buyer Programs for Veterans


Peter Warden

Posted on: December 12, 2020

Numerous programs exist to help veterans and service members who are first-time buyers with their closing costs and other expenses.

Indeed, it’s perfectly possible for those who are eligible for VA home loans to become homeowners with very little — or even nothing — in the way of savings.

Check today’s VA rates by completing this quick online form.

Advantages of VA home loans for first-time buyers

The most famous housing benefit associated with the VA loan program is the zero down payment requirement. That can be hugely valuable for first time home buyers.

But it’s just one of a whole range of advantages that come with a VA home loan. Here are some more.

Low mortgage rates for VA loans

According to the Ellie Mae Origination Report, in October 2020, the average rate for a 30-year, fixed-rate mortgage backed by the VA was just 2.75%. That compares with 3.01% for conventional loans (ones not backed by the government) and 3.01% for FHA loans.

So VA home loans have lower rates. And that wasn’t just a one-time fluke. VA mortgage rates are lower on average than those for other loans — month after month, year after year.

Lower funding fees for first-time buyers

When you buy a home with a VA loan, you need to pay a funding fee. However, you can choose to pay it on closing or add it to your loan so you pay it down with the rest of your mortgage.

But, as a first-time buyer, you get a lower rate. For you, it’s 2.3% of the loan amount (instead of 3.6% for repeat purchasers) if you make a down payment between zero and 5%.

That’s $2,300 for every $100,000 borrowed, which can be wrapped into the loan amount. It’s a savings of $1,300 per $100,000 versus repeat buyers.

Put down more and your funding fee drops whether or not you’re a first-time buyer. So it’s 1.65% if you put down 5% or more, and 1.4% if you put down 10% or more.

Although it might seem like just another fee, the VA funding fee is well worth the cost since it buys you the significant financial benefits of a VA home loan.

No mortgage insurance for VA loans

Mortgage insurance is what non-VA borrowers usually have to pay if they don’t have a 20 percent down payment. Private mortgage insurance typically takes the form of a payment on closing, along with monthly payments going forward.

That’s no small benefit since mortgage insurance can represent a significant amount of money. For example, FHA home buyers pay over $130 per month on a $200,000 loan — for years.

Mortgage insurance vs funding fee

Let’s do a side-by-side comparison of the mortgage insurance vs. funding fee costs of a $200,000 loan:

  VA Loan FHA Loan
Payable on closing $4,600* $3,500
Payable monthly $0 $133 per month**
Paid after five years (60 months) $4,600 $11,500

*First-time buyer rate with zero down payment: 2.3%. $200,000 x 2.3% = $4,600
** $200,000 loan x 0.8% annual mortgage insurance = $1,600 per year. That’s $8,000 over five years. $1,600 divided by 12 months = $133.33 every month

It’s clear that mortgage insurance can be a real financial burden — and that the funding fee is a great deal for eligible borrowers.

Better yet, that makes a difference to your buying power. Because, absent mortgage insurance, you’re $133 a month better off. And that means you can afford a higher home purchase price with the same housing expenses.

Ready to buy a home? Start here.

Types of first-time homebuyer programs for VA loans

You may find two main types of assistance as a first-time buyer:

  1. Down payment or closing cost assistance
  2. Mortgage credit certificates

Down payment and closing cost assistance

There are thousands of down payment assistance programs (DAPs) across the United States and that includes at least one in each state. Many states have several.

Each DAP is independent and sets its own rules and offerings. So, unfortunately, we can’t say, “You’re in line to get this …” because “this” varies so much from program to program.

Some help with closing costs as well and down payments. Some give you a low-interest loan that you pay down in parallel with your main mortgage. Others give “forgivable” loans that you don’t pay back — providing you stay in the home for a set period. And some give outright grants: effectively gifts.

Mortgage credit certificates (MCCs)

The name pretty much says it all. In some states, the housing finance agency or its equivalent issues mortgage credit certificates (MCCs) to homebuyers — especially first-time ones — that let them pay less in federal taxes.

The Federal Deposit Insurance Corporation explains on its website (PDF):

“MCCs are issued directly to qualifying homebuyers who are then entitled to take a nonrefundable federal tax credit equal to a specified percentage of the interest paid on their mortgage loan each year. These tax credits can be taken at the time the borrowers file their tax returns. Alternatively, borrowers can amend their W-4 tax withholding forms from their employer to reduce the amount of federal income tax withheld from their paychecks in order to receive the benefit on a monthly basis.”

In other words, MCCs allow you to pay less federal tax. And that means you can afford a better, more expensive home than the one you could get without them.

Speak with a mortgage specialist today.

Dream Makers program

Unlike most DAPs, the Dream Makers Home Buying Assistance program from the PenFed Foundation is open only to those who’ve provided active duty, reserve, national guard, or veteran service.

You must also be a first-time buyer, although that’s defined as those who haven’t owned their own home within the previous three years. And you may qualify if you’ve lost your home to a disaster or a divorce.

But this help isn’t intended for the rich. Your income must be equal to or less than 80% of the median for the area in which you’re buying. However, that’s adjustable according to the size of your household. So if you have a spouse or dependents, you can earn more.

It’s all a bit complicated. So it’s just as well that PenFed has a lookup tool (on the US Dept. of Housing and Urban Development (HUD’s) website) that lets you discover the income limits and median family income where you want to buy.

What help does the Dream Makers program offer?

You’ll need a mortgage pre-approval or pre-qualification letter from an established lender to proceed. But then you stand to receive funds from the foundation as follows:

“The amount of the grant is determined by a 2-to-1 match of the borrower’s contribution to their mortgage in earnest deposit and cash brought at closing with a maximum grant of $5,000. The borrower must contribute a minimum of $500. No cash back can be received by the borrower at closing.”

So supposing you have $2,000 saved. The foundation could add $4,000 (2-to-1 match), giving you $6,000. In many places, that might easily be enough to see you become a homeowner.

You don’t have to use that money for a VA loan. You could opt for an FHA or conventional mortgage. But, given the advantages that come with VA loans, why would you?

The Dream Makers program is probably the most famous of those offering assistance to vets and service members. But there are plenty of others, many of which are locally based.

For example, residents of New York should check out that state’s Homes for Veterans program. That can provide up to $15,000 for those who qualify, whether or not they’re first-time buyers.

Start your home buying journey here.

State-By-State Home Buyer Assistance Programs

We promised to tell you how to find those thousands of DAPs — and the MCC programs that are available in many states.

It takes a little work to find all the ones that might be able to help you. But you should be able to track them down from the comfort of your own home, online and over the phone.

A good place to start is the HUD local homebuying programs lookup tool. Select the state where you want to buy then select a link and look for “assistance programs.”

Your best starting point is probably the state’s housing finance office though it might be called something slightly different. You should find details of programs or just a list of counties with phone numbers. Call the number where you want to buy, explain your situation and ask for advice. It’s their agents’ jobs to point you to local, state, or national programs that can help you.

If you look in the right place, you could secure some very worthwhile financial help to assist you in buying your first home.

Check today’s VA rates by completing this quick online form.

Source: militaryvaloan.com

Placer County, California VA Loan Information

Table of Contents

FAQ

What is the VA Loan Limit?

2021 VA Home Loan Limit: $0 down up to $5,000,000* (Subject to lender limits) /2 open VA loans at one time $598,000* (Call 888-573-4496 for details).

How to Apply for a VA Home Loan?

This is a quick look at how to apply for a VA home loan in Placer County. For a more detailed overview of the VA home loan process, check out our complete guide on how to apply for a VA home loan. Here, we’ll go over the general steps to getting a VA home loan and point out some things to pay attention to in Placer County. If you have any questions, you can call us at VA HLC and we’ll help you get started.

  1. Get your Certificate of Eligibility (COE)
    • Give us a call at (877) 432-5626 and we’ll get your COE for you.
  2. Are you applying for a refinance loan? Check out our complete guide to VA Refinancing.
  3. Get pre-approved, to get pre-approved for a loan, you’ll need:
    • Previous two years of W2s
    • Most recent 30 days paystubs or LES (active duty)
    • Most recent 60 days bank statements
    • Landlord and HR/Payroll Department contact info
  4. Find a home
    • We can help you check whether the home is in one of the Placer County flood zones
  5. Get the necessary inspections
    • Termite inspection: required
    • Well or septic inspections needed, if applicable
  6. Get the home appraised
    • We can help you find a VA-Certified appraiser in Placer County and schedule the process
    • Construction loan note: Construction permit/appraisal info
      1. Building permit
      2. Elevation certificate
  7. Lock-in your interest rates
    • Wait until the appraisal to lock-in your loan rates. If it turns out you need to make repairs, it can push your closing back. Then you can get stuck paying rate extension fees.
  8. Close the deal and get packing!
    • You’re ready to go.

What is the Median Home Price?

As of March 31st, 2020, the median home value for Placer County is $529,595. In addition, the median household income for residents of the county is $84,357 which is higher than the national average.

How much are the VA Appraisal Fees?

  • Single-Family: $600.
  • Individual Condo: $600.
  • Manufactured Homes: $600.
  • 2-4 Unit Multi-Family: $850.
  • Appraisal Turnaround Times: 7 days.

Do I need Flood Insurance?

  • The VA requires properties are required to have flood insurance if they are in a Special Flood Hazard Area.
  • In Placer county, there flood hazard areas around Dry Creek. in addition, there are small flood hazards immediately around the many creeks around the county. Moreover, other flood areas are next to Folsom Lake, and Lake Tahoe, although they are small and away from populated areas.

How do I learn about Property Taxes?

  • Kristen Spears is the Placer county tax assessor. Her office can be reached at 2980 Richardson Drive, Auburn, California 95603. In addition, her office can also be reached by calling (530) 889-4300
  • The state of California offers incentive programs that expand statewide for new, growing, and relocating businesses. Two of these programs are the California Competes Tax Credit which offers qualifying businesses with a tax credit, and the New employment Credit which offers a tax credit for taxpayers who hire full-time employees. Furthermore, the state offers several other incentives.

What is the Population?

  • The county’s population of 398,329 is 72% White, 14% Hispanic, and 4% mixed race.
  • Most county residents are between 18 and 65 years old, with 22% under 18 years old and 19% older than 65.
  • In total, the county has about 140,661 households, at an average of two people per household.

What are the major cities?

The county has five cities and one town, including the city of Auburn which serves as the county seat. Four other cities in the county are Colfax, Lincoln, Rocklin, and Roseville. In addition, the town of Loomis is also within the county.

About Placer County

Placer County, California is home to rich tourism and recreation industries. However, the biggest employment industries are healthcare, retail trade, and public administration. Therefore, the most common types of employment in the county are in the management, sales, and administrative support sectors.

The county is also host to several business development programs that are meant to enable the founding and growth of businesses in the county. For example, the Sierra Small Business Development Center provides no-cost webinars, capital access, and specialty programs to help grow the local economy.

When it comes to education, there are twelve school districts that provide education for students ranging from kindergarten to 12th grade of High School. In addition, higher education opportunities are provided by Sierra College, which offers two-year degrees, and William Jessup University, a private institution that offers four-year degrees and above.

Finally, the natural beauty and plethora of fun outside activities make the county a destination for people who enjoy the outdoors. From its multiple hiking, horseback riding, and mountain biking trails as well as its water recreational activities in gorgeous lakes like Lake Tahoe. Hence, the county sees more than a million visitors every summer and winter.  

Veteran Information

The county is currently home to26,333 veterans, and they all have access to:

  • Placer County is home to three VFW post:
    • Post 904 Placer Foothills – 5945 Horseshoe Bar Road Loomis, CA 95650. 
    • Post 3010 Glen Edwards – 541 5th Street Lincoln, CA 95648.
    • Post-2003 Jess E. Taylor – 22 Sunset Circle Colfax, CA 95713.
  • VA Medical Centers in the county:
    • Sierra Foothills Outpatient Clinic – 11985 Heritage Oak Pl, Auburn, CA 95603.
  • County Veteran Assistance Information
    • Placer County Veteran Services Office – 1000 Sunset Boulevard, Suite 115, Rocklin, CA 95765.

Apply for a VA Home Loan

  • For more information about VA Home Loans and how to apply, click here.
  • If you meet the VA’s eligibility requirements, you will be able to enjoy some of the best government guaranteed home loans available.  
  • VA loans can finance the construction of a property. However, the property must be owned and prepared for construction as the VA cannot ensure vacant land loans.

VA Approved Condos

Name (ID): AUBURN BLUFFS TOWNHOMES (000098)
Address:
AUBURN & FOLSOM ROADS
AUBURN CA 95603
PLACER
Status: Accepted Without Conditions
Request Received Date: 10/24/2013
Review Completion Date: 11/30/2013
Name (ID): KINGSWOOD VILLAGE CONDOMINIUMS (000051)
Address: 
1001 COMMONWEALTH DR
KINGS BEACH CA 96143
PLACER
Status: Accepted With Conditions
Request Received Date: 08/20/2012
Review Completion Date: 10/15/2012
Name (ID): AUBURN HIGHLANDS (000341)
Address: 
PO BOX 6624
AUBURN CA 95604
PLACER
Status: Accepted Without Conditions
Request Received Date: 07/18/2018
Review Completion Date: 08/07/2018
Name (ID): OAK POINTE (000243)
Address: 
758 DOROTHY WAY
AUBURN CA 95603
PLACER
Status: Accepted Without Conditions
Request Received Date: 02/13/2017
Review Completion Date: 06/14/2017
Name (ID): CAMPANIA HOA (000281)
Address: 
1001 DANTE CIRCLE
ROSEVILLE CA 95678
PLACER
Status: Accepted Without Conditions
Request Received Date: 08/20/2017
Review Completion Date: 09/05/2017
Name (ID): PALOMA AT FOSKETT RANCH (007453)
Address: 
JOINER & LAS PALOMAS LOOP
LINCOLN CA 95648
PLACER
Status: Accepted Without Conditions
Request Received Date: 12/19/2006
Review Completion Date: 12/20/2006
Name (ID): CLUB PACIFIC CONDO’S (C00441)
Address: 
PHASES 1 – 17
ROCKLIN CA 95677-0000
PLACER
Status: Accepted Without Conditions
Request Received Date: 01/01/2000
Review Completion Date: 01/01/2000
Name (ID): PARK PLACE -PHASE 6, 7, 8 (007086)
Address: 
937 MARVIN GARDENS WAY
ROCKLIN CA 95756
PLACER
Status: Accepted Without Conditions
Request Received Date: 10/24/2002
Review Completion Date: 01/12/2003
Name (ID): HEARTHSTONE (007386)
Address: 
ROCKLIN CA 95677
PLACER
Status: HUD Accepted
Request Received Date: 03/13/2006
Review Completion Date: 03/13/2006
Name (ID): ROSEVILLE GREENS (C01289)
Address: 
(FHA APPROVAL #860001HAC)
ROSEVILLE CA 95678-0000
PLACER
Status: Accepted Without Conditions
Request Received Date: 08/07/1980
Review Completion Date: 08/07/1980

Oregon VA Loan Information: https://www.vahomeloancenters.org/oregon-va-home-loan-limits/

VA Loan Information by State: https://www.vahomeloancenters.org/va-loan-limit-maximum-va-loan-amount/

Source: vahomeloancenters.org

Current VA Refinance Rates


Nicole Carlson

Posted on: January 14, 2021

Mortgage interest rates remain at historic lows this week. As reported from a weekly survey of 100+ lenders by Freddie Mac, the average mortgage interest increased for all three main loan types — 30-year fixed (2.65% tp 2.79%), 15-year fixed (2.16% to 2.23%), and 5/1 ARM increased (2.75% to 3.12%)..

VA refinance rates are no different. In fact, when compared to other loan types — conventional and FHA, for example — VA home loans offer consistently lower rates than for the average consumer.

Shop and compare your personalized rates with multiple lenders.

VA Refinance Rates 2020

  VA Conventional FHA
September 2020 2.78% 3.02% 3.01%
August 2020 2.86% 3.12% 3.10%
July 2020 3.02% 3.26% 3.26%
June 2020 3.20% 3.42% 3.41%
May 2020 3.24% 3.44% 3.45%
April 2020 3.31% 3.48% 3.56%

Source: Ellie Mae Origination Insight Report, September 2020

When should you refinance?

In general, if you can save money over the life of your loan, then you should consider refinancing. Everyone’s financial situation is different, however, and refinancing can help you achieve a couple of different financial goals. Below are some of the most common reasons homeowners refinance:

  1. Lower your interest rate and monthly payment. Refinancing into a lower interest rate not only reduces the total interest costs you owe over the life of the loan, but it can reduce your monthly mortgage payment as well. This is the most common reason to refinance.
  2. Pay off your current non-VA home loan. VA home loans don’t require private mortgage insurance (PMI) like other loan types (FHA loans, for example, require PMI for the life of the loan if you put less than 10% down). You can also adjust your loan terms and interest rate type.
  3. Fund home projects or consolidate your debt. If you’ve earned enough equity in your home, then a cash-out refinance allows you to tap into that equity for cash. There are no restrictions on how you can use the money, so many homeowners use it to pay for home repairs or remodel projects as well consolidate debt.

What type of refinance should I choose?

There are two types of VA refinance loans: VA streamline refinance and VA cash-out refinance. Both have different benefits and loan processing requirements, so it’s important for homeowners to know what they want to accomplish with a refinance.

VA Streamline Refinance

Also known as an Interest Rate Reduction Refinance Loan (IRRRL), the VA streamline refinance is best if you want to lower your interest rate and monthly payment. In fact, your new monthly payment must be lower than your current one to be eligible for this loan. It has one of the easiest refinancing process — you don’t have to verify your income or credit score, and you don’t need a home appraisal.

VA Cash-out Refinance

The VA cash-out refinance loan is the only refinance option for taking out some or all of the earned equity in your home as cash. Qualifying for this loan is a longer process. You’ll need to meet similar requirements to when you purchased your existing home, including credit score and debt-to-income ratio requirements, plus a new home appraisal.

How do I get the best VA refinance rate?

According to research from the Consumer Financial Protection Bureau (CFPB), almost half of consumers don’t compare quotes when shopping for a home loan. This means many consumers are losing out on substantial savings. Comparing quotes from three to four lenders ensures that you’re getting the lowest refinance rate for you. Some lenders may even waive certain fees and closing costs.

Interest rates determine what you’ll pay monthly as well as the total interest amount over the life of the loan. Even a half a percentage point decrease can mean a savings of thousands of dollars you’ll owe overall.

Average Mortgage Interest Rates 2020

Source: militaryvaloan.com