Homes

Review Your Home-Insurance Risks

August 2, 2018 By Twila VanLeer

Failure to update your home protection strategies could cost you as much as $10,000. A survey by Chubb recently found that although 90 percent of the included homeowners felt they were doing a good job of protecting their homes, some 64 percent had failed to update their home protection in the last year.

While most owners are concerned about fires, burglaries and other crises, they fail to realize that they can be damaged by water, the survey suggested. In fact, water damage is a more likely scenario than other emergencies that can cause damage.

About 20 percent of those queried said they install pipe insulation, and less than half check their appliance hoses regularly. Only 40 percent said they regularly maintain water heaters.

The best remedy is to talk with an insurance agent about the best coverage for your specific circumstances.

The average claim for water damage between 2012 and 2016 was nearly $10,000. That average includes some very devastating damage in some cases and makes it a very good
idea to assess your insurance coverage.

Most homeowner policies cover damage related to accidental overflow of water or steam from plumbing, heating and air conditioning as frozen pipes. Damage from a general flood is generally excluded unless you specifically pay for it. Knowing that your home is located in a recognized flood plain should be incentive for looking into specific protection.

To prevent water damage, be aware of where the main water valve in your home is located so if an emergency arises, you won’t waste time locating it. Turn off the main valve if you are leaving home to vacation or for other reasons.

Regular home inspections are wise and a safety check by a plumber every year could save money in the long run. Some insurance companies will give you a discount is you can show that you are taking these steps to protect your property. Technology is available to monitor plumbing for leaks.

Avoid Home-Buyer Mistakes

May 7, 2018 By Twila VanLeer

Buying a home is a big deal and not one to dive into without some careful study. Many first-timers in particular suffer homebuyer’s regret for failing to watch for common warning signs such as:

Failure to prepare for additional costs. What is on the price tag isn’t all there is to the financial aspect of buying a home. Be sure you are prepared for taxes, homeowner’s insurance, association fees, yard care and other items that only show up later in the process.

Not being aware of your credit score. The rate of interest you will pay — if you qualify at all — is based on your credit score. Before you start looking for a house to buy, find out what your score is. The three major credit rating companies allow a free assessment each year, so start out well advised. If your rating isn’t where you’d like it to be, make a concerted effort to pay off credit cards and collection accounts. Avoid accumulating new lines of credit and make payments on time to help bump up your score.

Failing to prequalify. Going through the prequalification process lets you go into home ownership knowing where you stand financially. You’ll be certain of what you can afford and not waste time looking at possibilities beyond your reach. A rule of thumb: Monthly costs associated with home ownership shouldn’t exceed 28 percent of your income.

Using the seller’s real estate agent. It’s better for you to have an agent focused on your interests in a possible deal. Use your agent to guide you through the maze of inspections, contracts and negotiations that surround a house purchase. Having the same agent represent both buyer and seller could lead to conflicts of interest.

Bypassing a pre-sale inspection. The best time to know if there are mold issues or leaky roofs on the house you have chosen is before you sign the final papers, not after. It may delay the final transaction briefly, but it’s worth every bit of the wait and cost.

Taking out another loan before signing. The lender will wait until the very last minute before signing to re-check your credit. Another loan may change the debt-to-income ratio and squelch your deal. Particularly if you have prequalified, another loan could significantly skew your figures. Wait on the new furniture until you actually have a place to put it.

Refusing to compromise. When you set out to buy a home, you obviously have a list of “must-haves” to guide the search. But staying within your budget is more important than most of the “must-haves.” Remember that paint can do wonders and wallpaper be replaced. You’re probably wise to limit the must-haves and be ready to be a little flexible so the budget stays intact.

Buying A Home? Check This List

March 30, 2018 By Twila VanLeer

Buying a home, for many Americans, is like slipping into a foreign country. Myths about mortgages abound. Go into the process as well prepared as you can by considering these facts:

• Perfect credit is required. Not so. Having a higher credit score is helpful and may get you a lower interest rate, but it is not the only factor a lender considers when you come to borrow money for your home. If you can show that you are able to repay a loan you probably can swing the loan if your credit score is above 670.

• Rising interest will prevent your owning a home. Rising interest rates do, as a matter of fact, affect how much of a loan you can qualify for and the kind of loan you might be offered, but it doesn’t mean you are out of the market. CoreLogic projections show that an 0.85 percent increase in interest will cost the buyer another $100 per month. That may seem like a lot, but it is less than the period of all-time high interest rates in the early 1980s, when a fixed 30-year mortgage rate was at 18 percent.

• You need a 20 percent down payment. Conventional home loans may make this requirement, but there are other options. FHA loans require only 3.5 percent down. VA loans may be financed for up to 100 percent of the price. Lending institutions often have provisions for loans with a minimal amount down, say $1,000. The downside of a small down payment is that you may be required to buy private mortgage insurance.

• Prequalification means you have the loan. Going through a prequalification process determines how much mortgage you can afford by computing your income and liabilities, but it is not a binding agreement. The potential lender will look at additional documentation before you are fully approved.

• A 30-year mortgage is best. It’s the most popular option, but not the only one. A 15- or 20-year loan can save a lot in interest payments. An adjustable rate mortgage starts with a fixed rate then is adjusted according to market factors. That means your payment will fluctuate over time.

Don’t compare mortgage options based on their advertised rates, but look at their annual percentage rate, which lenders are required to advertise, along with mortgage interest rates. The APR includes estimated fees and other charges, giving you a more accurate picture of what you can expect.

Home Prices Jumped In 2017

March 14, 2018 By Twila VanLeer

WASHINGTON – Home prices in 2017 rose at the fastest pace in three years as potential buyers vied for a limited number of available properties, according to Standard & Poor’s.

The 2017 6.3 percent uptick was the sharpest increase since June of 2014, according to the S&P Corelogic Case-Shiller national home price index. That put the increase in housing costs ahead of wage and inflation growth.

The factors feeding into the jump in housing costs are complex. Although a general upswing in the economy is making home ownership possible for more Americans, fewer people are putting their homes on the market, often because of the rise in replacement homes. Higher mortgage rates also discourage many families from making an upgrade. The number of homes for sale in January 2018 was the lowest for that month since records were begun in 1999.

Volatility in the stock market is causing some nervousness in the housing market as well, according to S&P experts.

Since the low point in the housing bust related to the 2007-08 recession, home prices have leaped 62 percent, according to the Case-Shiller Index. In the same period, the inflation increase has been just 12.4 percent.

Mortgage interest rates are climbing. By historic standards, the current 4.4 percent on a 30-year mortgage is low, but it still is up by .4 percent since the beginning of the year. Sharp interest increases tend to slow sales.

The slowdown in sales may put some brakes on the rate of price appreciation, and that could encourage some homeowners to list their properties in anticipation of the problem escalating.

Unseasonably cold weather this winter may have slowed sales across the board. Existing home sales dropped in January by the greatest percentage in three years, and new home sales also fell.

Not Buying A Home Is A Mistake

January 23, 2018 By Twila VanLeer

The single largest mistake America’s Millennials are making is failing to buy a home, according to millionaire and finance guru David Bach.

Although there is a school of thought that home ownership is the “American nightmare,” Bach holds to his premise that failure to buy a home limits young earners in their quest for financial well-being. “The average homeowner to this day is 38 times wealthier than a renter,” he asserts. “Buying a home is an escalator to wealth.”

Bach, author of “The Automatic Millionaire,” says he bought his first home in San Francisco. It skyrocketed in value. He then moved to New York, purchased another home and again saw a significant increase in value. He now owns a third home.

You have to live somewhere, he reasons, so why not make an investment in something that will pay you back over time? A renter can easily spend half a million dollars in rent over the years and end up with nothing to show for the expenditure.

“Or you can buy a house and spend the same amount paying down a mortgage and in the end wind up owning your own home free and clear.” As an example, he cites the math: $1,500 rent per month over 30 years equals $540,000 – money down the drain, in his opinion.

If you are considering the pros and cons of home ownership, he advises “Start by crunching the numbers. Do the math, starting with the smallest options. When you’re really clear on your goals, start shopping.

Rule of thumb: Make sure your total monthly housing payment doesn’t consume more than 30 percent of your take-home pay. Save for a down payment of at least 10 percent, more if possible. Don’t go overboard. Your first home may not be your dream home, but it is a step toward that end.

Buying a home puts you in the market, and, according to Bach, “You aren’t really in the game of building wealth until you own some real estate.”