When preparing their real estate project, borrowers don’t always think about the question of loan insurance, even though it is crucial and mandatory.
The borrower’s insurance guarantees the repayment of the loan in the event of death of the holder. Limited to the duration of the loan, it is usually supplemented by guarantees covering the risk of incapacity, invalidity or loss of employment. Here are five tips to be sure to be well covered!
Group or Individual Contract?
Choose an individual borrower contract and not the collective agreement proposed by your bank could reduce the cost of its insurance. It is now established that a bank may not refuse another contract of insurance as security for a loan other that the house contract, if it has equivalent levels of guarantee. If the bank refuses a competing contract it must then justify its choice.
How Long Should the Insurance be For?
If the loans are granted for 15, 20 or even 25 years, the actual length of detention of the property rarely exceeds 10 years. Consider this fact when choosing an insurance loan as the borrower tends to compare contracts over the duration of the loan that he contracts. However, if some contracts may present a rather low insurance rate, they tend to have heavier monthly payments in the first years. It is therefore especially advised to first-time buyers, who are more likely to quickly resell their first good to acquire a larger.
Not Only The Cost Matters!
Keep in mind that the price is not the only element to be taken into account when comparing insurance contracts, as it is always better to pay a little more in order to be better covered.
You must take into account the exclusions related to the contract, i.e. events that the insurance does not take into account. All contracts cover the death and the complete loss of autonomy, but there are different types of guarantees against occupational incapacity… All contracts do not take into account the so-called “non-potentially disease” – a barbaric term which includes diseases but also widespread diseases from back pain to psychic disorders.
Act Fast and Well
It is recommended to establish your record of insurance as soon as possible, without waiting to obtain a response from your bank on the level of the rate or the term of his loan.
The advise is worth more for borrowers who have health problems – the approach that can hang out in length in the case of complementary medical applications – or who borrow a big asset. As a general rule, once a case is a little complex, having prepared your insurance upstream allows you to obtain a more rapid agreement, and to avoid ending up stuck for an insurance issues.
Save Time on Health Examinations
The borrower shall attach to his subscription file a statement of health or a medical questionnaire, because depending on his age and the amount to ensure, some medical documents attesting to his state of health can be requested (medical report, blood profile, electrocardiogram…).
It is still possible to establish these documents by a general practitioner or a laboratory analysis, but it is recommended to go through an authorized medical center. This solution allows saving money (costs are covered in full by the insurance company which directly pays the medical center) and time. All tests and examinations requested being made in a single appointment by physicians accustomed to this type of situation and familiar with the requests from insurers, there is no risk for the documents are incomplete or lacking some information.
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The last time I payed a visit to my tenants, I discovered my apartment in a horrible state: dust all over the place, dirty dishes everywhere in the kitchen, sticky floors and marks made by posters pinned to the walls… I certainly was surprised because being from a good family, I am not used to that… I went home with the need to reassure myself about the state of the apartment once the current tenant will be gone but mostly about the fact that I had rented it to the wrong person…
For me as for you, here is a brief reminder of the things to know about the obligations of the tenant.
The Tenant’s Obligations
The tenant must answer to any damage and loss that occurs during the term of the contract for which he has the exclusive enjoyment. He also must assume the responsibility for taking care of the house, facilities referred to in the contract such as small repairs unless they are caused by time, dilapidation, construction’s defect or cases of force majeure. The tenant must not change the premises and equipment rented without the written consent of the owner.
Dealing With Small Repairs
The tenant must repair, for the duration of the lease, small repairs necessary for the maintenance of the house:
• Coating of walls and ceilings that must be maintained clean;
• Carpets, floors and other floor coverings must be regularly cleaned. The lessee shall change the damaged windows or opening and closing systems. If he has lost a key, he must replace them;
• Electricity, gas and water. The lessee shall replace the switches, the joints of the water lines, gas lines, and shower hoses connecting pipes. He also must ensure the maintenance of the ductwork venting (chimney) or the boiler.
The Place should be Left as First Found
At the end of the contract, he tenant will have to leave the house according to what is described in the inventory. Accordingly, he must bear for damage suffered during the duration of the lease. But he does not have to bear the costs of refurbishment of the premises, nor that he cannot be required to repair damage due to normal wear and aging of the premises.
Cleaning Issues at The End of The Lease?
If some damage occurred only in respect of the cleanliness of the house (no deterioration requiring repair), you then have 3 solutions:
Do the cleaning yourself: pretty well if you’re a cleaning freak but you will not have the right to withhold fees on the deposit if you are the one who cleaning the place (except for the purchase of cleaning products).
Ask to the next tenant some compensation: you can offer him to reduce the rent for the first month as a compensation for the cleaning. There again, this is a loss for you. Plus, it will affect your tenant opinion on the state of your house is your ad mentioned in good condition. And you will have to rely on the cleaning standards of your next tenant…
Hiring a professional cleaner: pay the bill and hold the same amount on the deposit. You will not lose your time and you’ll have spent nothing from your pocket. This solution is the best: simple, practical and you get your money back!
To begin, we must have a written contract and everything has to be in the written contract. Otherwise you will have problems in exercising your agreements.
Realtors often get potential buyers contracts where they add specific information: address; the names of the buyers and sellers; all that is included in the sale which is not attached to the walls, floor or ceiling (eg oven, fridge, curtains, etc.); the commission of the agent; the date the seller will pay the price and receive the keys (the “closing” is comparable in some measure to what happens in other countries when it comes to the notary to sign the Act); some conditions precedent to the buyer; etc.
Something more and more prevalent in the US is the ability to leave some time to the different parties (usually 10 days) to review the contract with their lawyers. The lawyer will have the opportunity to cancel the contract for legal reasons only – it will not be to negotiate a better price. Also, we add other things to simplify the transfer: acceptance of documents by fax and in counterparts; a way to put money into an escrow account; etc.
In Illinois and other states, the seller has the obligation to know beforehand if serious problems arise with the real estate property. But also, the buyer can choose to include in the contract the right to do visit by an expert to verify that there is no serious problem. If there are any, it can cancel the contract without losing its provision.
As opposed to what happens in other countries, in america the lawyers prepare the documents for the sale: the transfer of title of the property and assets included; explaining, taxes, taxes, and fees; forms to register the transfer with the authorities; etc. The lawyer for the seller is responsible for writing most of the documents and must see them by the lawyer of the buyer few days before the “closing”.
The lawyer or occasionally the agent or seller, also has the obligation to obtain a letter from the company that the mortgage showing the amount to be paid, a letter from the city that all the property taxes are paid, a letter that the house is legal for its area, or, if the property is from a co-ownership, information on co-ownership as well as a letter stating that the seller does not have any money to the board.
There are no notary, as we know it in Europe for example, in the US system. This is the “Recorder of Deeds,” which deals with the transfer of the recording.
Of importance for these transactions is the company that ensures the legality of the transfer (“title company”). It looks geodesy recently by the seller, privileges, old titles and the contract to ensure the buyer that he will receive what he signed for. In addition, he is responsible for purging the mortgage, the calculation and payment of taxes, the current record of the new owner, etc.
In the usa, the seller usually pays the preparation of documents, examination and title insurance, taxes the state and county for the transfer, and some other small expenses. The buyer pays the premium for the mortgage, the costs of the company that will complete documents, registration of the title and the mortgage and some other small expenses. The city tax for transfer is often paid by the buyer, but not always.