Wednesday, September 17, 2014

What a Deal!

A 30 year fixed-rate mortgage hasn't always been the standard. As part of FDR's New Deal in 1934, the Federal Housing Administration was created to help Americans purchase homes with affordable terms.

Prior to then, many loans had an amount due at the end of the term called a balloon. Most mortgages had adjustable interest rates even though some might be fixed for a short time. While banks would loan money on a home, they retained the right to call the note due at any time which could exert considerable stress on borrowers.

FHA, during this time, introduced mortgages that offered a fixed rate of interest to the borrower for a 30 year term. This fully amortized loan provided borrowers a financial vehicle that would help them achieve the American Dream while minimizing the risk of having a loan called without the resources to pay it off. It brought long-term stability to the housing market and helped stimulate the economic recovery at a very difficult time in our nation's history.

Roughly, a third of the mortgages created in 2011 were less than 30 year terms. Many homeowners, similar to those after the Great Depression, would like to get their home paid for as soon as possible. Shorter term mortgages typically have a lower interest rate but higher payments due to fewer years to amortize the mortgage.

Water Damage - Covered or Not?

A number of things can cause water damage to a home and it's important to know whether they're covered by your insurance policy. Some water damage may be covered and other may not be. Generally, you need an incident to invoke coverage rather than something gradual due to lack of maintenance.

However, some incidents are specifically exempt from homeowner policies such as floods. A flood can be described as rising water due to overflow of inland or tidal waters or unusual and rapid accumulation or runoff of surface water from any source.

Homes in designated high-risk flood areas with mortgages from federally regulated or insured lenders are required to have flood insurance.

Even if you don't live in a dedicated flood zone, you could be affected by flood damage. Review your policy about water damage and call your insurance agent to get a better understanding. Ask if you need to purchase additional coverage or separate flood insurance along with other questions.

Flood insurance can be purchased for the building and the contents. The average flood insurance policy costs about $600 per year. For more information, see the National Flood Insurance Program.

Monday, September 15, 2014

Annual Maintenance

home maintenance 250.jpgA common expectation of homeowners is to want the components and systems in their home to work when they need them. Periodic maintenance is just as important as having a trusted service provider to make necessary repairs.

Victims of Murphy’s Law can attest that their air conditioner goes out on the hottest day of the year or the water heater fails when you have out of town visitors.

If the convenience of having things work doesn’t justify maintaining your home’s systems, consider that it can be less expensive than the results of neglect causing repairs or replacement.

  • Replace burned-out, dim or missing bulbs in light fixtures and lamps. Consider switching to LED bulbs.
  • Dryer exhaust vents build up lint even though you may be cleaning the filter regularly.
  • Fire extinguishers need to be recharged or replaced after expiration date.
  • Establish a recurring appointment on your calendar to change filters in your HVAC.
  • Replace missing or damaged caulk around sinks, bathtubs, showers, windows and other areas.
  • Clean gutters.
  • Schedule an inspection with a pest control a minimum of once a year unless you have a service contract.
  • Schedule a chimney cleaning prior to using the fireplace for the first time in the season.
  • Keep all tree branches and shrubs trimmed away from the home.
  • Pressure wash exterior, deck, patio, sidewalks and driveway.
  • Keep levels of insulation in the attic above your ceiling joists.
  • Check appliances with water lines for leaks or worn hoses.
    • ice maker  • washing machine   • dishwasher   • others
  • Test all GFI breakers and reset.
  • Inspect all electrical outlets for broken receptacles, fire hazards or loose fitting plugs.
  • Have furnace and air conditioner serviced annually.
  • Test smoke and carbon monoxide detectors and change batteries.

The early fall is a great time to take care of these items before the weather becomes harsh.

Changing the Lock is Key

There are times when you need to change the locks on your home to protect your family and possessions. It should always be considered when you move into a new home; when keys are lost, stolen or unreturned; or a cleaning or other service provider hasn't returned the key.

Replacing the lockset would give you a totally new mechanism that should work better and if you go back with the same manufacturer, you'll probably avoid any carpentry. You can order the locks online and have them work with the same key at no extra charge.

Another alternative is to have a locksmith rekey them. The locksmith can easily make all of the locks work with the same key. Compare the cost and decide which would be a better expenditure.

While you're considering your security, a key safe might be a very convenient addition. Most makers say that it is much easier to break into a home than a key safe. The cost is reasonable and you can attach it to your exterior wall. Generally, they're combination locks that would allow you access if you or another family member forgot their key. It's also convenient to give a house keeper the combination and can be easily changed if necessary.

Sunday, September 14, 2014

Cost Across Time [INFOGRAPHIC]

Cost Across Time [INFOGRAPHIC] | Keeping Current Matters

This article originally posted by Keeping Current Matters. Read more articles like this at www.KCMblog.com.

What's the Point?

Pre-paid interest, sometimes called "points", is generally tax deductible when a person pays them in connection with buying, building or improving their principal residence. When points are paid on a refinance, they are not a current deduction but have to be taken pro-rata over the life of the mortgage.

For instance, if $3,000 in points were paid on refinancing a 30 year mortgage, deduction of $100 per year is allowed. When the loan is paid off or replaced by refinancing again or the home is sold and the mortgage paid off from the proceeds, the balance of any un-deducted points may be taken in that tax year.

Your tax professional needs to be made aware of any of these situations so that he can accurately reflect the deduction in your return. Currently, the most common situation is where homeowners may be refinancing their home for the second, third or even fourth time. If there are points that have not been completely deducted, they need to be treated in the year of refinancing.

For more information, see points in IRS Publication 936; there is a section on refinancing in this publication. For advice considering your specific situation, contact your tax professional.

Dripping Dollars

Conserving water to be green while lowering your monthly bill to save green is a beneficial combination. Little things can contribute significantly to a large water bill.

  • Leaky faucets can waste over 1,000 gallons a year
  • Leaky toilets can waste 7,000 gallons a month
  • A five-minute shower saves more water than a tub bath
  • Water running while you brush your teeth or shave
  • Sprinkler heads need to be adjusted to spray on the yard only
  • Install a rain sensor on sprinkler system
  • Pool equipment can be a hidden source of wasted water
A larger than normal water bill can be your first indication you have a leak. Then, you'll need to track it down.
  1. Turn off all the water faucets and appliances; don't forget the ice maker.
  2. Open the water meter, usually located near the sidewalk in the front of the house. You may need a water key that can be purchased from a home improvement store or possibly borrowed from a neighbor.
  3. Locate the dial indicating water usage. It should not be moving since all of the water is off. If it is still moving, verify that you have turned off anything that might be using water.
  4. If it appears to be still, make a mark with a Sharpie and wait 15 minutes. If the flow indicator has moved, you probably have a leak.
  5. Now that you've confirmed that you have a leak, you may need help in locating it. A plumber or leak specialist may be able to help you track it down and repair it.