February 11, 2012

Real Estate Tips: When is it Time to Refinance?

Filed under: Real Estate — Chuck @ 12:27 pm

Whether you are a homeowner or you work as a real estate professional, one of the most important questions to answer right now is “When is the time to refinance?”

Homeowners need to know how to weigh the pros and cons of refinancing, by calculating their potential savings versus the costs of refinancing, because a smart refinance can save thousands of dollars. Meanwhile real estate agents, brokers, and others in a professional position to advice and educate consumers need to have a way to explain refinance calculations to their homeowner clients and customers.
Most homeowners should only refinance if they are able to shave at least two percentage points off of their interest rate. That way it is possible to offset the required refinance expenses that include such things as application fees, points, and other miscellaneous costs while still saving money on the monthly payment.

Here’s an example:
• If you spend $1,200 to pay for refinance costs and that allows you to lower the monthly mortgage payment by $100, then it will take you 12 months to recoup the closing costs. That means that you’ll start saving money in the 13th month, and will continue to save $1,200 a year for as long as you pay on the loan.

• But spend the same amount to reduce a mortgage payment by $25 and the positive impact will not be felt for 48 months. So if you are planning to sell your house within the next 3-4 years, that strategy does not make sense. You will not even break even on your refinance costs within that period of time, so doing a “refi” will save you nothing and wind up costing you money you can’t recover.

• To make it easy to crunch the numbers you can talk to a knowledgeable mortgage broker or loan officer. Once they figure out what interest rate you qualify for on a refinance loan they can also estimate total closing costs to help you calculate the bottom line.

• If the current loan paperwork includes a prepayment penalty clause that can also trigger additional fees which could be substantial. Prepayment clauses are sometimes added by lenders, so that if you try to pay off your loan early – or refinance out of it into a less expensive loan – you get penalized. So it is always a good idea to consult a real estate attorney before signing any mortgage document, to ensure that you fully understand what it is you are agreeing to.
But when you do a refinance, don’t forget to factor in other things that could affect your net savings, such as where you will get the money to pay for your closing costs. Let’s say you need to pay $1,200 to refinance and save three percent on your mortgage interest. If you also happen to owe $1,000 on a credit card that charges 25 percent interest, it may be wiser to pay off your plastic first. So whether or not you do a refinance should also be considered within the context of your own particular financial situation.

Potential savings will always depend upon the type of loan, any available discounts being offered by lenders, and the time-frame for staying in the house before deciding to sell. Keep in mind that the ultimate goal is not just to capture a lower interest rate, per se, but to realize actual net savings.

Home Maintenance Wintertime Heating System Checklist

Filed under: Home Maintenance — Chuck @ 12:25 pm

Winter is here in full force, and the cold temperatures being felt around the country are a good reminder of how much we depend on gadgets and systems to keep us warm indoors. But that heating equipment needs to be maintained; otherwise it could fail just when you need it the most. So here is a helpful checklist of things to do as a homeowner to ensure that your heating systems are kept it optimum condition.

Natural Gas Furnaces:
If you have a natural gas furnace it should be checked on a regular basis, per the owner’s manual or manufacturer’s guidelines, by a professional heating specialist. You should have your contractor show you how to do any recommended homeowner maintenance or checks, although most modern gas furnaces are relatively self-contained and do not lend themselves to DIY tasks. The big culprit to watch out for with a gas furnace is a cracked, corroded, or leaky heat exchanger. This is a component of the unit that can leak carbon monoxide into your home if it is not functioning properly, and heat exchangers tend to wear out over time. So be sure to have your heating contractor inspect the heat exchanger, especially if your furnace is more than 10 years old.

Heat Pumps:
Be sure that vents and registers are not blocked by furniture, carpets or other items that can interfere with consistent airflow. Filters should be inspected monthly and cleaned or replaced as recommended by the manufacturer, and the coils need to be vacuumed or brushed clean as also recommended in the owner’s manual. (The outdoor coil can be cleaned off using a garden hose.) If you are unsure how to do homeowner maintenance ask you HVAC contractor or home inspector, and have a professional do an inspection once a year to be sure the system is in proper working order.

Boiler and Radiators:
Usually boiler systems that produce steam heat need to have the water inside them drained and refilled on a regular basis. Otherwise the water gets dirty or evaporates to a low level that can impede the performance of your boiler. You should have your local boiler contractor or home inspector show you how to perform this task and then do it as often as they recommend, taking care not to scald yourself while draining boiling hot water from the boiler or furnace. The radiators themselves also need to be checked by a professional to make sure that the valves are working correctly. Otherwise your radiators won’t receive steam or you will not be able to regulate how much heat they put out, which will affect how warm and comfortable you and your family are in wintertime.

Wood burning chimneys should be swept and inspected by a qualified chimney sweep prior to every winter season, otherwise a dirty chimney or leaks in the chimney and fireplace can cause a catastrophic house fire. Store firewood away from heat, and make sure you use a screen to keep hot embers from escaping the fire box. If you use a gas fueled fireplace, then you should have it checked on a regular basis to ensure that the lines are working as they should and that there is no excessive carbon monoxide present when the fireplace is being used.

Space Heaters:
Space heaters need to be in top condition, otherwise they can create a fire hazard. Old units or those with loose or frayed wires, missing settings knobs, or broken screens should be replaced. Never set up a space heater near a flammable source such as window curtains, a laundry hamper, or a trashcan. If the space heater burns gas or kerosene then you may be creating a hazard by operating it indoors, too, so be sure you read the instruction manual and only use space heaters the way the manufacturer recommends. When in doubt ask you local fire department – they’ll be happy to advise you.

Follow these tips and have your heating system professionally checked at least once a year, prior to the winter season. Doing so will guarantee that they perform better and safer, and that will also result in financial savings in the form of lower utility bills and less need to repair or replace your heating equipment.

Homeowner Tips: Prevent frozen pipes this winter.

Filed under: Home Owner Tips — Chuck @ 12:24 pm

Nothing can wreak havoc quite like a frozen pipe in the dead of winter. When a pipe bursts it is often a violent and dramatic event, and you can wind up with cold water spraying all over your house when the temperatures are below freezing. Not only is that an unpleasant surprise, but water is one of the most damaging elements you can unleash inside a home. Water damage can cause catastrophic structural damage, ruin electrical systems, cause ceilings to collapse, create an environment for mold and mildew to flourish, and basically leave your home and all of your belonging a sopping wet mess.

We don’t’ want that to happen, so here are some tips for preventing frozen plumbing pipes this winter.

• If you have a swimming pool, Jacuzzi, or water sprinkler system then you should drain those lines according to manufacturer guidelines. Be careful using antifreeze in the lines, though, and do not use it unless it is called for by the manufacturer. Antifreeze is easy to spill on the ground, where it can poisonous to pets, plants, and small children.

• Police the property, looking for places where water lines are unprotected from the cold such as basements, crawl spaces, attics, and garages. Holes in an outside wall where television, cable or telephone lines enter can also provide access for cold air to reach pipes.

• Then wrap those exposed pipes in insulation material to prevent them from getting frozen. You should wrap both hot and cold water lines, too, because when hot water lines are not being used the water temperature in them drops and so those lines can freeze just as fast as your cold water supply lines do.

• Keep garage doors closed, and make sure that basements are also enclosed. Every winter people forget to close a door or window in a basement, for instance, and when the temperature drops the pipes in the basement burst because all of that frigid air gets into the basement. The same goes for attics and other places where you may have water lines that are outside the perimeter of your home’s cozy heated spaces.

• If the weather gets extremely cold, you may want to let a faucet in your house drip ever so slightly. The trickle of water is usually enough to keep water moving and prevent freezing. You should also know that wind chill affects pipes, just as it makes us feel colder on a windy day. So if the wind chill makes the weather feel colder than it actually is on the thermometer that means you need to take extra precautions to avoid a frozen pipe.
Keep the thermostat set at 55 degrees if you are going to be away from home during wintertime. While you are vacationing in Florida you don’t want the interior of your home to get cold enough to freeze a pipe. Or you can completely drain the water out of your pipes to be extra safe and to avoid having to leave the heat on inside. If you have an empty second home, for example, you may want to drain the system in winter to avoid the headache of pipe damage.

To drain the system, shut off the main valve and turn on all of the hot and cold water spouts in the whole house. Soon the water will stop running because the pipes are empty. You can then close the faucets. When you are ready to restart the system you just turn on the main valve, open the faucets again to get the water flowing, and when the system is flowing properly again you’ve completed the task. Of course it is always a good idea to have a plumber or home inspector help you do your winter home maintenance checklists and teach you how to do such things as winterize your plumbing pipes and locate the main water valve to your home.

Homeowner Safety: Know how to prevent or survive a house fire.

Filed under: Home Safety — Chuck @ 12:23 pm

If you stop and think about it, every heating system in America operates on the same basic principle that the cave dwellers used to rely upon in prehistoric times. In order to generate heat inside their caves, our prehistoric ancestors used to build a fire close to or right inside their caves. Most people in the 21st century would never consider building a campfire in the middle of their living room, of course, but what we do with modern heating technology is really not too many degrees away from that same thing. We find a source of heat, ignite it, and then let it radiate warmth inside the rooms of our home.
Maybe we don’t use an open fire the way cave dwellers did. But if you have a source of natural gas or oil in your basement in the form of a furnace – and you ignite it with electricity using a thermostat control and an electrical spark or pilot light flame – then you are essentially lighting a match and setting fire to a highly volatile and flammable substance – under the roof of your home.

A house fire is one of the most dreaded events a homeowner can imagine, and every winter the number of fires surges because we invite potentially dangerous sources of heat into our homes in order to stay warm and be comfortable. Anyone who has experienced a house fire knows that even if you prepare for this kind of emergency it is still difficult to imagine just how fast fire can move – and quickly smoke can overcome you and become life-threatening.

If you find yourself in a burning building that is already filling with smoke, experts recommend that you crawl to safety in order to get down below where most of the smoke will accumulate – since smoke is warm and heat rises. But they say that some toxic chemical smoke is heavy, so it has a tendency to accumulate along the floor. So instead of crawling on your stomach, flat on the floor where you may be more susceptible to chemical fumes, it is recommended that you crawl on your hands and knees. That helps to keep your nose and mouth below most of the smoke while still above the heaviest toxic chemical fumes.

But you should not let yourself get into that kind of dire situation, because if you are still in your home while the smoke is gathering, you may not survive. According to fire departments, in fact, families only have an average of three minutes to evacuate a home in the event of a fire.

To increase the chance of getting out unharmed, it is vital that every homeowner have a safe evacuation plan, practice fire drills with family members, and follow important precautions such as maintaining an adequate number of properly working and strategically located smoke detectors with fresh batteries that are checked at least every three months, if not more. Keep fire extinguishers on every floor of your home, for example, and add extras in places like kitchens where the opportunity for fire is greater. Be sure that they are properly rated, too, since some fires are, for instance, appropriate for paper and wood fires but not for chemical fires and so forth. Extinguishers also need to be recharged or replaced at regular intervals, and you need to be practiced in the skill of activating and using one. If there is an emergency you won’t be fumbling around to figure out how the gadget works.

Your local fire department can help you devise a smart exit plan for evacuations, and can also give you tips about things like where to locate smoke detectors, how to store flammable liquids such as solvents and lawn mower fuel, and how to prevent accidental fires.