Posted by Elizabeth Dennis on February 11, 2010 | No Comments
The personal property coverage on your home insurance policy covers the contents of your home that are not a permanent part of your home’s structure. In the event of loss, theft, or disaster; you will be reimbursed for these items. Have you asked yourself lately what the items are in your home you would want covered if you found yourself in this situation?
Create a Home Insurance Inventory
It is highly recommended that new home buyers compile a home insurance inventory very soon after they move into their home. If you have been in your home for a while and haven’t done this yet; make it a priority. Let us take a look at why it benefits you to have this list before loss occurs or disaster strikes:
- Adequate Coverage – Preparing this list is the only way to be sure you have enough personal property coverage on your home. This is not something you want to learn after it is too late.
- Memory – In a time of crisis, it will be very upsetting and difficult to remember each and every item that was in your home.
- Claims – The insurance claim process will be sped up significantly if you have your home insurance inventory prepared and ready to submit.
- Tax Deductions – Uninsured loss is tax deductible. If you have this list available, it will be much easier to determine this uninsured loss tax deduction come tax time.
Making a List and Keeping it Updated
There a couple of methods you can use to make your inventory list. There are quite a few home inventory software packages out there now; many are built into home finance software. You can certainly go this route or perhaps even easier is to create your own simple spreadsheet. For ideas of the items to put on your list, browse the internet as there are quite a few samples available.
In addition to listing each major item, be sure to record any supporting information about your items. These could be serial numbers, brand names, appraisal values, how much you paid, etc. You can gather this information from product manuals, receipts, and appraisals. If the idea of transcribing all of this information into your list is leaving you overwhelmed, here is a trick. Scan this information or better yet, take digital pictures of it all. It costs you nothing; so simply snap pictures of those receipts and manuals. This is certainly less time consuming than typing or scanning and you’ll immediately have a digital copy of it all. Just make a note in the list next to the item that there is a supporting photograph with more details.
By having your home insurance inventory list on your computer, you will be more apt to update the list regularly. When you buy something new, open up the list and type it in. Or snap a picture of it if your camera is at the ready.
Pictures and Video
The easiest way to record all of the smaller items in your home is to take pictures and/or video. Both are beneficial. As we have seen pictures are a great way to get record the details of an item. Video is a good backup as you are certainly not going to take a picture of every single item; the video will capture it all. The video will also give you and the insurance company a better perspective with regards to the size of your items such as furniture, the size of your curio cabinet, how big your closet is, the size of your rock collection, etc.
Speaking of closets, remember to include all closets, drawers, contents of storage boxes as well as attics, and basements when taking your pictures or video. Transfer these pictures and videos to your computer for easy access to them and be sure to back it all up.
Backing Up Your Inventory List
The final step in this process is extremely important. That is to not only backup your inventory list and supporting pictures and video but to store a copy of that backup somewhere OTHER than your home. Otherwise in the unfortunate event your house is destroyed, your list will be lost. Places off site you may want to consider are a safe deposit box, at work, or at a friend or relative’s house.
Make your home insurance inventory list today. When you have the completed list in front of you, take a few minutes to take a look at your home insurance policy. Make sure you are adequately covered and make it a habit to review your policy every year.
Posted by Elizabeth Dennis on January 31, 2010 | No Comments
In a prior post, we talked about how FHA loans differ from conventional loans. One of the areas of comparison we looked at was the “maximum purchase price.” Let us take a look at how that maximum amount is determined and a major benefit of setting standards.
Who Sets the Limits?
Fannie Mae and Freddie Mac are responsible for setting the loan limits on conventional loans. Fannie Mae (The Federal National Mortgage Association – FNMA) and Freddie Mac (The Federal Home Loan Mortgage Corporation – FHLMC) do not provide loans directly to you; but act as “secondary lenders” which means they lend to the institutions that lend to you.
How and When are the Limits Set?
The calculation Fannie Mae and Freddie Mac uses to calculate loan limits is quite simple really. The limits are set every October. Fannie and Freddie first determine how much the average home price increased during the prior year. They take a look at the current average home price and compare it to the average home price from the prior October. A percentage increase is calculated with these two numbers.
For example: If the average price of homes in the United States is $150,000 in October and one year later the average home price jumps to $165,000 – we know the average home price has increased by 10%.
The following year’s loan limit will simply be the current year’s amount increased by that same percentage increase we saw in the average home prices. In our example, the following year’s limit will be ($165,000 + $16,500) or $181,500.
What are the Benefits of Conforming Loans?
When a loan follows (or “conforms”) to the guidelines set by Fannie Mae and Freddie Mac, it becomes a conforming loan. When loans are underwritten to the same standards, lenders end up selling essentially the same loan (with perhaps a slight variation). In Economics 101 we learned as more and more people sell the same thing; prices for that product eventually go down. In our case, standardizing loans translates into lower rates for borrowers.
Posted by Elizabeth Dennis on January 26, 2010 | 3 Comments
A New Sign in the Neighborhood
Let’s say you are just beginning the home buying process and have not yet hired a real estate agent to help you with your search. You drive by a house that you absolutely must see. You jot down the name and number of the real estate agent that is prominently displayed on the “for sale” sign. Hang on a second. Before you pick up the phone, read on.
An Agent’s Loyalties
Simply put, unless there is a written contact with the buyer, a real estate agent who lists a home works for the seller. To better understand why; try to imagine working for both parties with opposite interests? You can see how difficult and precarious a feat this is. Although this practice does exist (it is called dual-agency), it is uncommon and it is recommended that you do not become a party to it. The agent works for the buyer or the seller, not both.
Why You Might Not Want to See This Home Today
Back to the “for sale” sign. It may go without saying, but the name on the “for sale” sign is that of the seller’s agent, sometimes called a listing agent. This person’s primary goal is to sell the home for the owner while all along looking out for the seller’s best interests, not yours.
If you absolutely must see this house today and the listing agent agrees to show it to you, know that you will not get all the facts about the house during that first visit. The listing agent will not take the chance of revealing any information that can ultimately bring the seller a lower price for the home. There are a handful of things this agent knows but cannot tell you, including:
• The reason the property is being sold unless the seller specifically releases that information
• Any concessions the seller might be willing to make
• The substance of any conversations between the seller and the agent
• Any information that could give you, the buyer, an advantage; including a comparable market analysis
• Even if the agent knows the house is overpriced, she cannot tell you as much
Additionally, you must be very careful not to reveal too much information about your own situation to this agent. Though it may seem harmless to mention for what amount you are pre-approved or what you are willing to pay for a home (these things sneak out in conversations), the agent is obligated to pass this information on to the seller. Imagine making an offer, only to have your offer rejected because the seller knows that you are willing to pay more.
If You Must See This House Today
Ideally, you should hire your own agent, one that will represent only you, when seeing this or any other home. If you must look at it sooner, try to remain tight-lipped and know that the seller’s agent will not be telling you a complete story. Make the visit a quick one and know its purpose is only to learn if you want to pursue the home further; with your own agent of course.
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The personal property coverage on your home insurance policy covers the contents of your home that are not a permanent part of your home’s structure. In the event of loss, theft, or disaster; you will be reimbursed for these items. Have you asked yourself lately what the items are in your home you would want covered if you found yourself in this situation?
