November 15, 2015

Real estate tips: Protect your credit to ensure a successful mortgage application.

Filed under: Real Estate — Chuck @ 11:32 am

There has not been a better, more affordable opportunity to buy a home in decades. Home affordability is typically measured by looking at the value of homes compared to their asking prices and by also factoring in the cost of financing a mortgage. Today we have all-time record low mortgage rates and bargain home prices, and various home affordability indices all confirm that this is a once-in-a-lifetime chance for buyers. But there is a potential obstacle. If your credit is not up to par it is difficult to qualify for a mortgage. Banks and other lenders are enforcing strict underwriting policies and are turning away many mortgage applicants.

How do you solve that potential problem? It is critical that you do everything possible to bolster your credit and improve your credit profile – before you ever submit your mortgage application. Here are some steps to take to help ensure greater success.

Check Your Credit File

There are three major credit reporting agencies in the USA and Canada, namely Experian, TransUnion, and Equifax. For a small fee you can get copies of your credit reports for you to review. But you don’t necessarily have to pay for those if you don’t want to. You are also allowed to get a free copy of your credit report mailed to you in Canada, and you can get access to your credit reports once every year if you are a citizen of the United States. Once you obtain these reports, check them for any errors, omissions, or outdated data. You can request that mistakes be corrected, and if erroneous information is found in your file the agencies have to fix it.

Avoid Frequent Loan Applications

Each time you apply for a loan, the lender checks your credit. Frequent requests for credit information from reporting agencies may indicate that you are desperate for a loan, however, or at least that is how banks view that kind of activity. So multiple loan applications can actually lower your credit score, and should be avoided. A better approach is to shop around for the best lender with the most attractive rates and terms. Then apply only once, when you’re ready to take out your mortgage. In the meantime be careful not to apply for other consumer loans either, including department store charge cards, credit cards, and auto loans.

Monitor Your Debt to Income Ratio

One of the most important components of your credit is the ratio of your debt to your income. Bankers like to see that your household expenses are 25 percent or less of your take-home pay. If you are carrying credit card debt, student loans, second mortgages, or other obligations you need to try to pay those off before applying for your home loan. Having low debt compared to your income will not only help your loan go through without a hitch, but it may also earn you a lower interest rate and more lenient terms.

Postpone Purchases Until After Closing

It used to be that once banks okay’d your loan application they lost interest in tracking your debt and credit profile. But in recent years, since the credit crisis of 2007-2008, they have started monitoring credit all the way through closing. So if your loan gets approved and you have six weeks until closing, for example, be careful not to make any new purchases or take on new debt during that interim period. Otherwise the bank may readjust your loan to a higher rate. In worse case scenarios they may even reverse their decision and decide not to fund the loan. Keep in mind that they typically pay extremely close attention to your credit report and debt levels from at least six months prior to loan application, all the way through funding of the loan and closing on your new home. Exercise financial discipline during those critical months and it can help ensure a smoother mortgage process.

The Value of an Annual Insurance Checkup

Filed under: Real Estate — Chuck @ 11:28 am

Insurance companies that are competing for your business are always running ads about the need to update your insurance. They tell you how you can save money while making sure you have adequate coverage, and there is a lot of value in doing that kind of reevaluation from time to time.

But there is another reason to keep your insurance up to date and monitored, and it’s a topic that your insurance company may not like to advertise. You need to keep an eye on whether or not you are really covered in the event that you file a claim.

Many homeowners buy their insurance when they buy their home, for example, and then just renew it over and over. But sometimes they are not fully covered or they have conditions on their property that give the insurance company a reason to deny paying for losses.

Insurance Doesn’t Guarantee Coverage

• Don’t be misled by the fact that you have a homeowner’s insurance policy. That is a contract between you and your insurance carrier, but it is not necessarily a guarantee that you are covered in the way that you believe you are.

• You might also believe that if a limb falls on your roof then you’re automatically entitled to coverage, since your homeowner’s insurance includes damage to the roof. But that may not be the reality. What if that tree limb fell because the tree was diseased? The insurance company may blame you for not having the tree cut down as a preventative measure.

• Is your electrical wiring up to date, and up to code? Have you added new appliances that might draw so much electrical current that they make your wiring unsafe in the eyes of your insurance company’s adjuster?

• There are lots of exceptions, in other words, that could give an insurance company justification for not paying a claim if you have violated one of the stipulations in the small print of your policy. Review the policy with your insurance provider, or with an attorney. Make sure you know what you’re getting for your premiums, and make adjustments to your coverage as needed.

Refresh Your Inventory List

• You should routinely refresh your insurance inventory list, making both a written list and a videotaped inventory. That means that if you made any large purchases, you need to file away the receipts to prove that you bought those things.

• You can also go around your house and your property every year or two with a video camera, taking a visual inventory of what you own.

• Maybe you bought a new computer, expensive television, diamond ring, antique sofa, or work of art since you took out your policy. If that’s not mentioned then it might not be covered in the event of a theft or other loss. Talk to your insurance agent. Do you need a new rider or addendum to your policy, or do you need to pay a little more to add that costly item that is exempted from your current coverage?

Consider Rental Insurance

• Rental insurance is another kind of policy to consider. This is a special kind of insurance coverage for people who don’t own a home but instead rent or lease it. Millions of people live in rental property.

• Maybe you’re planning to buy a home soon, are renting while your home is being built, or you own a home but have a child who is renting a place while they are away at college.

• For a small premium – usually $150 or less – you can get coverage for a rental to insure you against such things as floods, fires, theft, or liability related to an accident.
While talking to your agent, go over your homeowner’s policy line by line and item by item. There may be some significant opportunities for you to save money, but you’ll only know by reviewing your policy. Extend this review to your auto policy while you’re at it, because you might uncover some ways to save there. Maybe your vehicle is older, worth less, and doesn’t need such costly collision coverage. Maybe you paid it off and don’t have to maintain the same level of coverage that your auto loan lender required. When that teenager reaches a certain age and moves out, perhaps you no longer need them on your own policy – and that could save you a bundle. Do you qualify for safe driver discounts? Did you retire, so that now you don’t use your vehicle for business? That might mean that you can insure it for less. Ask lots of questions, consult with your insurance agent, and maintain adequate coverage while getting rid of any that you really don’t need to be paying for this year.

Homeowner Tips: Caring for Your Tools

Filed under: Home Owner Tips — Chuck @ 11:27 am

Lots of professional contractors believe that whenever they accept a job they should reinvest some of the money they earn from it by acquiring new tools. That’s a pretty good strategy, and it can also help you justify the cost of buying tools. Instead of fretting over the price tag, you may want to see that tool as a solid investment that will pay for itself over time. Most tools maintain decent resell value too, and sometimes the tool you buy today can be sold or traded to a neighbor or friend to help you purchase the tool you’ll need tomorrow.

But if you don’t take care of them, tools have a way of getting broken, rusted, or lost. That’s especially true of those tools that you only use during one season of the year. Since they might wind up in storage for up to nine months, homeowners often have a tendency to forget about them most of the year. But forgetfulness usually equals neglect, and if you neglect a valuable tool for half a year or more it may not get the job done next time you need it. So here are three simple tips to help you care for you tools.

Categorize Tools

• Before knowing how to care for tools, it helps to put them into categories. Some items like gloves, dust masks, and safety glasses are also tools, for example, and it’s good to organize them together in a drawer, trunk, or toolbox.

• You have your hand tools, but you should separate out all of those that require a sharp edge. Everything from hedge clippers and pruning shears to chisels, axes, and machetes belongs in this category.

• Then you have small electrical tools like grinders, sanders, electric screwdrivers, and extension cords. You want to put them in their own category. Finally you have those larger items like lawn mowers, table saws, cement mixers, leaf blowers, chainsaws, and weed eaters.

• Once you have three or four general categories you can create appropriate storage for them, rotating the seasonal items like the leaf blower toward the back in the off season.

Protect Them

• Small hand tools that have a sharp edge or blade should be cleaned and sharpened after every use. Then give them a light coating of oil before putting them away. That will help prevent rusting. If you are storing them long-term, you might also want to put them into a moisture-resistant pouch or cloth.

• Visit any sporting goods or hunting supply store, for instance, and they should have “socks,” pouches, and cloths that are especially made for storing firearms away from moisture and humidity. They are great for stashing chisels, knives, and other tools you want to protect from rust and corrosion.

• No tools should be left out in the elements, not even a riding lawn mower or weed eater. Put them in the tool shed or garage. If you have to leave them under an exposed area such as a carport, set them off the ground on a wooden pallet or concrete blocks, and cover them up with a plastic tarp. Hang those tools like shovels and rakes, and if they are going to be stored for a long time give their metal surfaces a coating of protective oil.

Maintenance Tips

• Before storing tools that burn fuel, drain the fuel or burn it off so that it doesn’t harden and gunk up the engine or fuel lines. If your tools have tires, store them with the weight off the tires.

• If you’re storing your wheelbarrow for a month or more, for example, turn it upside down or stand it on its frame, not on the rubber wheel. That way your tires will last longer. You may also want to hang tools such as hand carts on the wall, as long as you have strong enough brackets to support them.

• You can sharpen many tools yourself with a file or ceramic rod. But if it’s an especially valuable item or made of hard-to-sharpen carbon steel then you can take it to a professional sharpening service. Don’t make the mistake of using dull tools, though, because they have a greater tendency to slip off of whatever you’re trying to cut. When that happens they can glance off and injure you.

Of course many tools can be hazardous in the hands of those who don’t know how to use them and respect them. So keep those under lock and key so that children, for example, don’t accidentally hurt themselves. You should always store tools and toolboxes out of sight, too, so you don’t temp thieves. If you’re carrying them in your vehicle, for instance, throw an old blanket or beach towel over them to camouflage them until you get home and can put them safely away.

Safety for Homeowners: Emergency preparation.

Filed under: Home Safety — Chuck @ 11:25 am

Every household should be prepared for emergencies. Sometimes planning for them will help to prevent them from ever happening. But if you should experience a true emergency, planning and training for it ahead of time will enable you to deal with it in a calmer, more capable, more effective and helpful manner. As they say in the world of competitive sports, “train hard to compete easy.” When the seconds are ticking past and you are in a real life and death situation, the experience will be much easier on everyone if they have at least some prior training. Otherwise people get scared because they don’t know what to do. They panic, and that makes the situation many times worse. Precious time can be lost while people are confused, indecisive, or downright incapacitated by the stress of it all. Here are some tips to help you get prepared for an emergency.

Seek Out Training

• There is no reason to rely on your own intuition or guesswork when it comes to emergencies, because the experts have already done all the research. Every community, no matter how small, is going to have nearby resources to help train you and your family members.

• The Red Cross, for example, offers great medical first responder training. You can find classes at local community colleges and through your fire department. The police department also offers help to educate you about how to prepare for emergencies.

• There are also many great free resources you can access online from the convenience of your computer. These are offered by all sorts of legitimate, official organizations including, for example, the Center for Disease Control (CDC), the Dept. of Homeland Security (DHS), and the Federal Emergency Management Agency (FEMA).

• Take advantage of these sources of information, and if possible have every member of your household get certified through a class in CPR and first aid. Both of these classes can usually be taken in one day. You’ll get a certificate for each of them that can also make you more marketable if you’re seeking employment.
Get Supplied
• While training you’ll also learn what supplies you need for medical emergencies, natural disasters, or events like fires or being a victim of crime.

• Make a checklist of necessary items to have ready and accessible. Buy the core items – like bandages, flashlights, fire extinguishers, and emergency food and water supplies – right away.

• Then budget so that you can gradually expand your inventory and have a robust list of helpful items stored away in your home – with smaller kits in each of your vehicles.

• The investment will pay for itself in immediate peace of mind, and can pay of itself millions of times over if you find yourself in a serious emergency.
Drill Your Plan
• Even if you have training and supplies, you need to refresh your emergency preparedness at regular intervals. Not only does this help you stay sharp and know what to do, but it is also valuable for training you emotionally and psychologically.

• In a real emergency, especially an urgent, life threatening situation, it can be surprisingly hard to function. Adrenaline rushes through the body, making it difficult to think in a calm and rational way.

• Even police officers, for example, often report that when they are in a fearful situation for the first time it is hard to do simple tasks like using a key to open a car truck. Their hands are too shaky and fine motor skills become difficult to manage.

• But by doing drills and putting your body and mind through the motions ahead of time, you will be able to respond much more effectively in a dire emergency. You’ll know what important steps to take so that you can get control of the situation, alert the proper authorities, and get yourself and others to a safe place while help is on the way.
Emergencies happen, and they might happen to you or one of your neighbors. So take a little time to plan for the unexpected. That way it won’t feel so unexpected, and you’ll have more peace of mind and confidence to arm you for dealing with situations that might otherwise rattle your nerves and threaten your health and safety.