5 Things to Understand About Homeowners Insurance

1.            Look for exclusions to coverage. For example, most insurance policies do not cover flood or earthquake damage as a standard item. These coverages must be bought separately.

2.            Look for dollar limitations on claims. Even if you are covered for a risk, there may a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.

3.            Understand replacement cost. If your home is destroyed you’ll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you’ll only receive $150,000.

4.            Understand actual cash value. If you choose not to replace your home when it’s destroyed, you’ll receive replacement cost, less depreciation. This is called actual cash value.

5.            Understand liability. Generally your homeowners insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it’s sufficient if you have significant assets.

Choices That Will Affect Your Loan

§  Mortgage term. Mortgages are generally available at 15-, 20-, or 30-year terms. The longer the term, the lower the monthly payment if the same amount is borrowed. However, you pay more interest overall if you borrow for a longer term.

§  Fixed or adjustable interest rates. A fixed rate allows you to lock in a low rate for as long as you hold the mortgage and is usually a good choice if interest rates are low. An adjustable-rate mortgage (ARM) is designed so that interest rates will rise as interest rates increase; however they usually offer a lower rate in the first years of the mortgage. ARMs also usually have a limit as to how much the interest rate can be increased and how frequently they can be raised. ARMs are a good choice when interest rates are high or when you expect your income to grow significantly in the coming years.

§  Balloon mortgages. Balloon mortgages offer very low interest rates for a short period of time—often three to seven years. Payments usually cover only the interest, so the principal owed is not reduced. However, this type of loan may be a good choice if you think you will sell your home in a few years.

§  Government-backed loans. Government-backed loans, sponsored by agencies such as the Federal Housing Administration (www.fha.gov) or the U.S. Department of Veterans Affairs (www.va.gov), offer special terms, including lower downpayments or reduced interest rates—to qualified buyers.

6 Creative Ways to Afford a Home

If your income and savings are making homebuying a challenge, consider these options.

1.      Investigate local, state, and national downpayment assistance programs. These programs give loans or grants to cover all or part of your required downpayment. National programs include the Nehemiah program (http://www.getdownpayment.com) and the American Dream Downpayment Fund from the U.S. Department of Housing and Urban Development (http://www.hud.gov).

2.      Get the seller to provide financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you do a mortgage.

3.      Consider a shared-appreciation, or shared equity, arrangement. Under this arrangement, your family, friends, or even a third-party may buy a portion of the home and thus share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and all maintenance costs, but all investors’ names are usually on the mortgage. There are companies that can help you find such an investor if your family can’t participate.

4.      Get help from your family. Perhaps a family member will loan you money for the downpayment and/or act as a cosigner for the mortgage. Lenders often like to have a cosigner if you have little credit history

5.      Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your downpayment. And in many cases, owners will apply some of the rental amount toward the purchase price. You usually have to pay a small, nonrefundable option fee to the owner.

6.      See if you can qualify for a short-term second mortgage to give you the money to make a higher downpayment. This may be possible if you have a good income and little other debt.

Preparing & Staging Your Property For Sale

FIRST, AN HONEST ASSESSMENT

We need to look at your home from the buyer's point of view and then consider what you will need to do to market your home quickly and effectively to maximize your sale price while minimizing marketing time.  Each of the categories is outlined in order that you understand the parameters we are using to evaluate your property.

LOCATION:  How does your property compare to the other properties in the area?

CURB APPEAL: What are the first impressions of the buyer as he/she views the property?   Does the home show well and draw people in?   Remember: A buyer will often form an opinion in the first few seconds and mentally decide whether he likes the home!

EXTERIOR CONDITION: What is the general overall condition of the exterior of the home?    Does it have curb appeal?  

 Consider the following:

· Roof, Siding, Windows

· Steps, Porches and Decks

· Lawn, Shrubs and Trees

· Fences

· Garages and Outbuildings

· Sidewalks and Driveways

INTERIOR - LIVING SPACE:

· Eye Appeal; how does it look?   (Remember - we are looking from a buyers perspective!)

· Cleanliness

· Space - Are the rooms over crowded?

· Spacious Kitchen - Clean it up and take every thing off the countertops.

 · Closets - spacious (Hint) Remove enough so that they are not filled to give the impression of additional room.

· Clean and Paint as necessary!

· Household Odors - Try to eliminate them.

BASEMENT:

· Remove Clutter; allow buyers to see how big the basement actually is!

· Clean thoroughly; be mindful of odors.

“STAGING” YOUR HOME

So, you’ve made the decision to sell your property sometime in the relatively near future—what’s next?   We suggest that you start thinking of your house as a marketable commodity, and, although it may be difficult to do, attempt to remove emotion from the selling equation. Your goal is to get others to see it as their potential home—to neutralize it, so to speak, for marketing purposes.

REMOVING CLUTTER, THOUGH YOU MAY NOT THINK OF IT AS CLUTTER

You would like buyers to see your home and not it’s contents; to be able to visualize their furniture and their belongings instead of yours.  Try not to get hung up on showing off Grandpa’s collection of trains, the kids’ artwork or your favorite piece of furniture.  Box up everything you do not use regularly and donate it, sell it, throw it, or store it.  Removing clutter is the hardest thing for most people to do because they are emotionally attached to everything in the house.  After years of living in the same home, clutter collects in such a way that may not even be evident to the homeowner.  However, it does affect the way buyers see the home, even if you do not realize it.  Clutter collects on shelves, counter tops, drawers, closets, attics, and basements.

Take a step back and pretend you are a buyer.  Let a friend help point out areas of clutter, as long as you can accept their views without getting defensive. 

• Clutter in the kitchen—the kitchen is a good place to start removing clutter, because it is an easy place to start.  First, get everything off the counters except what you use daily.  Put everything else in  a kitchen cabinet and take it out when you use it.  Of course, you may notice that you do not have enough cabinet space to put everything.  Clean them out. Put things in boxes and store the boxes elsewhere.  You see, homebuyers will open all your cabinets and drawers, especially in the kitchen.  They want to be sure there is enough room for their “stuff”.  If your kitchen cabinets, pantries, and drawers look jammed full, it sends a negative message to the buyer and does not promote an image of plentiful storage space.  The best way to do that is to have as much empty space as possible; create open space.

• Clutter in the Closets—Closets are great for accumulating clutter, though you may not think of it as clutter.  We are talking about extra clothes and shoes—things you rarely wear but cannot bear to be without.  Do without these items for a couple of months by putting them in a box, because these items can make your closets look “crammed full.”  Sometimes there are shoeboxes full of “stuff” or other accumulated personal items too.

• Furniture Clutter—Many people have too much furniture in certain rooms; not too much for your own personal living needs, but too much to give the illusion of space that a homebuyer would like to see.  Builders’ models are a prime example of the setting you’re after to stage your own home—cozy, comfortable and homey.  What you will see is furniture and lighting that are appropriately placed and accessories which are neutral, not gaudy or intrusive.  Also concentrate on traffic flow, can you move easily from one room to another without bumping into things?

• Storage Area Clutter—Basements, garages, attics, and sheds accumulate not only clutter, but junk.  These areas should be as empty as possible so that buyers can imagine what they would do with the space.  Remove anything that is not essential and take it to a separate storage area.  Or, have a garage sale---now there’s an idea!

Once you have cleared out the clutter, cleaned out every corner, re-arranged the furniture and tastefully accessorized, leave your house.  Go grab a friend and bring them over.  Walk in together and pretend you are a potential buyer.  Does your home look and feel inviting?  Are you distracted by the stuff, or does this home appear clean and well cared for, a home you could immediately settle into?  Is this a home you would want to buy?

FIXING UP THE HOUSE INTERIOR FIRST

Most real estate advice tells you to work on the outside of the house first, but unless there is a major project involved, consider starting on the inside.  There are two main reasons for this.  First, the first steps in preparing the interior of the house are easier.  They also help develop the proper mindset required for selling—beginning to think of your “home” as a marketable commodity.  Second, most professionals will agree that the exterior is the most important.  Once you have developed the proper mindset for selling by working indoors, the more important exterior work should come easier.

Whether you start fixing up the inside or the outside first, it might be wise at this point in time to consider having a pre-inspection by a licensed home inspector.  A complete inspection of your property will include areas such as plumbing, electrical, heating systems, fireplaces, foundation, roof, exterior and interior wall surfaces, windows and appliances.  This eliminates worries and offers you peace of mind about the condition of the home.  In addition, the inspection report generated for you by the inspector will itemize in great detail just what items need to be addressed in this pre-list “fixing up” stage.

• Plumbing and Fixtures—all of you sink fixtures should look shiny and new.  Make sure all the hot and cold faucet knobs are easy to turn and that the faucets do not leak.  Check to make sure you have good water pressure and no stains on any of the porcelain.  All sinks, tubs etc. need to drain quickly and toilets need to flush efficiently.  Potential homebuyers will check these things out, if they are serious about your home!
• Ceilings, Walls and Painting—check all ceilings for water stains.  Sometimes old leaks leave stains, even after you have repaired the leak.  Of course, if you do have a leak, you will have to get it repaired whether it is a plumbing problem or the roof leaks.  You should do the same for walls, looking not only for stains, but also areas where dirt has accumulated (behind furniture) and you just may not have noticed.  Painting can be your best investment when selling your home.  It is not a very expensive operation and often you can do it yourself.  Choose an off-white color that will appeal to the widest possible number of buyers and also help your rooms to appear bright and spacious.
•  Carpet and Flooring—unless your carpet appears old and worn, or it is definitely an outdated style or color you probably should do nothing more than hire a good carpet cleaner.  If you do choose to replace it, do so with something inexpensive in a fairly neutral color.  Repair or replace broken floor tiles. Remember, you are not fixing up the place for yourself, so be conscious of your return on investment.  Your goal is simply to leave as few negative impressions as possible upon those who may want to purchase your property.
• Windows and Doors—check all of your windows to make sure they open and close easily.  If not, a spray of WD40 often helps.  Replace any cracked or broken windowpanes before you begin showing your home.  Do the same things with the doors; make sure they open and close properly, without creaking.  A shot of WD40 will also make hinge creaks go away.
• Odor Control—for those who smoke, you might want to minimize smoking indoors while trying to sell your home.  You could also purchase an ozone spray that helps to remove odors without creating the tell-tale perfumed masking odor, which indicates that you’re trying to cover up something objectionable.  Pets of all kinds create odors that you may have become used to, but are immediately detectable to those coming into your home from the outside.  Be sure to clean kitty litter boxes daily or oftener, even if they are in the basement.  For those with dogs, keep them outdoors as much as possible.  You might also try sprinkling carpet freshener on the carpets on a periodic basis.  If there are serious pet odor problems, consider hiring a cleaning service to eliminate them with special products and types of service specifically made for that purpose.

FIXING UP THE HOUSE EXTERIOR

Take a walk across the street and have a good look at your house.  Look at nearby houses too, and see how yours compares.  Curb appeal is essential since a buyer’s first impression is formed by viewing the outside of your property.  A mowed lawn or shoveled walks, trimmed hedge and weeded gardens, all help to create a great first impression! 

• Landscaping—Is your landscaping at least average for the neighborhood?  If not, buy a few bushes and plant them.  Don’t bother with trees; mature trees are expensive, and you’ll not get back your investment.  If you have an area for flowers, buy mature colorful flowers and plant them.  They add a splash of vibrancy and color, creating a very favorable first impression.  Bulbs or seeds will not mature fast enough to create the desired effect and you certainly don’t want a patch of brown earth for homebuyers to view.  Lawns should be evenly cut, freshly edged, well watered, and free of brown spots.  If there are problems with your lawn, take care of them before starting on the inside of your home, since lawn treatments frequently take time to become readily apparent.  Back yards need to be tidy also.  For those with dogs, be sure to constantly keep the area clear of “debris”.
• The Front Door and Entryway—the front door should be especially sharp, since it is the entry through which your potential buyers will probably come.  Door windows should shine and the doors themselves be refinished or newly painted if necessary.  Get a new plush doormat.  Make sure the lock works easily and the key fits properly.  When a buyer comes to visit your home, the agent uses the key from the lock box to unlock the door.  If there is trouble working the lock while everyone else stands around twiddling their thumbs, it sends a negative first impression.
• House Exterior—the big decision is whether to paint or not to paint.  When you look at your house from across the street, does it look tired and faded?  If so, a paint job may be in order.  It is often a very good investment and really spruces up the appearance of a house, adding dollars to offers from potential homebuyers.  When choosing a color, it should not be something garish and unusual, but a color that fits well in your neighborhood
• Roof—As for the roof, if you know your house has an old leaky roof, replace it.  If you do not replace a leaky roof, you are going to have to disclose it and the buyer will want a new roof, anyway.  Otherwise, it is a judgment call on the condition.  If it is deteriorated enough that a buy will most likely take an issue with it, then replacing may still be well worth the effort and cost.

IT’S A TEAM EFFORT!

Enlist the help of all household members to get the house ready—and keep it ready—for prospective buyers.  A few minutes spent tidying up each morning can make the difference for a showing in the afternoon.  Your home is your most valuable merchandise on display for sale, so display it in the best possible light!

Security and Safety Tips

 PGP (Pretty Good Protection) Policy

Common sense is the theme here.  It’s about taking reasonable steps to secure your property and protecting your privacy.  Do a couple of walk-throughs, looking for obvious things and using a common sense approach for removing items that may tempt someone, may be broken, or may not be a public display item.  Having someone less familiar with your home can make this easier as they will see things that you simply walk by because of familiarity.  A friend or neighbor can be helpful in this regard.

 · Valuables

Money, Jewelry and small valuable items (anything easily removed)

· Prescription drugs

Secure all prescription drugs in a locked or secured area

· Documents/Information

Credit card invoices, Account numbers, Bank statements and Passwords

(Any personal information you wouldn’t leave out in a public office space)

· Keys

Any keys secured areas such as gun safes, document storage and etc.

· Breakable/valuable objects

Collectables, antiques, heirlooms, etc.  (Think of child proofing your home)

Conclusion

A home is often the largest asset investment we make.  Properly preparing and staging the property will pay dividends both in the sale price attained and in a quicker timeframe.  You are displaying merchandise for a buyer to see, make sure they are seeing it in the best possible light!!

Good Luck and happy staging!

Sincerely,

Shane Maki

Broker

Midwest Realty of Minnesota

651-472-4012

www.MidwestRealtyMN.com

10 Things a Lender Needs From You

1.      W-2 forms or business tax return forms if you’re self-employed for the last two or three years for every person signing the loan.

2.      Copies of one or more months of pay stubs from every person signing the loan.

3.      Copies of two to four months of bank or credit union statements for both checking and savings accounts.

4.      Copies of personal tax forms for the last two to three years.

5.      Copies of brokerage account statements for two to four months, as well as a list of any other major assets of value, e.g., a boat, RV, or stocks or bonds not held in a brokerage account.

6.      Copies of your most recent 401(k) or other retirement account statement.

7.      Documentation to verify additional income, such as child support, pension, etc.

8.      Account numbers of all your credit cards and the amounts of any outstanding balances.

9.      Lender, loan number, and amount owed on other installment loans—student loans, car loans, etc.

10.  Addresses where you lived for the last five to seven years, with names of landlords, if appropriate.

10 Questions to Ask Your Lender

Be sure you find a loan that fits your needs with these comprehensive questions.

1.      What are the most popular mortgage loans you offer?

2.      Which type of mortgage plan do you think would be best for us? Why?

3.      Are your rates, terms, fees, and closing costs negotiable?

4.      Will I have to buy private mortgage insurance? If so how much will it cost and how long will it be required? NOTE: Private mortgage insurance usually is required if you make less than a 20 percent downpayment, but most lenders will let you discontinue the policy when you’ve acquired a certain amount of equity by paying down the loan.

5.      Who will service the loan? Your bank or another company?

6.      What escrow requirements do you have?

7.      How long is your loan lock-in period (the time that the quoted interest rate will be honored)? Will I be able to obtain a lower rate if they drop during this period?

8.      How long will the loan approval process take?

9.      How long will it take to close the loan?

10.  Are there any charges or penalties for prepaying the loan?

Used with permission from Real Estate Checklists & Systems (http://www.realestatechecklists.com).

10 Questions to Ask Your Condo Board

Before you buy, contact the condo board with the following questions. In the process, you’ll learn how responsive—and organized—its members are.

1.      What percentage of units is owner-occupied? What percentage is tenant-occupied? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.

2.      What covenants, bylaws, and restrictions govern the property? What grandfather clauses are in place? You may find, for instance, that those who buy a property after a certain date can’t rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. And have an attorney review property docs, including the master deed, for you.

3.      How much does the association keep in reserve? How is that money being invested?

4.      Are association assessments keeping pace with the annual rate of inflation? Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs. To determine if the assessment is reasonable, compare the rate to others in the area.

5.      What does and doesn’t the assessment cover—common area maintenance, recreational facilities, trash collection, snow removal?

6.      What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board’s fiscal policy.

7.      How much turnover occurs in the building?

8.      Is the project in litigation? If the builders or homeowners are involved in a lawsuit, reserves can be depleted quickly.

9.      Is the developer reputable? Find out what other projects the developer has built and visit one if you can. Ask residents about their perceptions. Request an engineer’s report for developments that have been reconverted from other uses to determine what shape the building is in. If the roof, windows, and bricks aren’t in good repair, they become your problem once you buy.

10.  Are multiple associations involved in the property? In very large developments, umbrella associations, as well as the smaller association into which you’re buying, may require separate assessments.

Check your home warranty policy to see which of the following items are covered. Also check to see if the policy covers the full replacement cost of an item.

• Plumbing
• Electrical Systems
• Water Heater
• Furnace
• Heating Ducts
• Water Pump
• Dishwasher
• Stove/Cooktop/Ovens
• Microwave
• Refrigerator
• Washer/Dryer
• Swimming Pool (may be optional)

What Your Home Inspection Should Cover

• Siding: Look for dents or buckling
• Foundations: Look for cracks or water seepage
• Exterior Brick: Look for cracked bricks or mortar pulling away from bricks
• Insulation: Look for condition, adequate rating for climate
• Doors and Windows: Look for loose or tight fits, condition of locks, condition of weatherstripping
• Roof: Look for age, conditions of flashing, pooling water, buckled shingles, or loose gutters and downspouts
• Ceilings, walls, and moldings: Look for loose pieces, drywall that is pulling away
• Porch/Deck: Loose railings or step, rot
• Electrical: Look for condition of fuse box/circuit breakers, number of outlets in each room
• Plumbing: Look for poor water pressure, banging pipes, rust spots or corrosion that indicate leaks, sufficient insulation

• Water Heater: Look for age, size adequate for house, speed of recovery, energy rating
• Furnace/Air Conditioning: Look for age, energy rating; Furnaces are rated by annual fuel utilization efficiency; the higher the rating, the lower your fuel costs. However, other factors such as payback period and other operating costs, such as electricity to operate motors.
• Garage: Look for exterior in good repair; condition of floor—cracks, stains, etc.; condition of door mechanism
• Basement: Look for water leakage, musty smell
• Attic: Look for adequate ventilation, water leaks from roof
• Septic Tanks (if applicable): Adequate absorption field capacity for the percolation rate in your area and the size of your family
• Driveways/Sidewalks: Look for cracks, heaving pavement, crumbling near edges, stains

5 Property Tax Questions You Need to Ask

1. What is the assessed value of the property? Note that assessed value is generally less than market value. Ask to see a recent copy of the seller’s tax bill to help you determine this information.

2. How often are properties reassessed and when was the last reassessment done? Generally taxes jump most significantly when a property is reassessed.

3. Will the sale of the property trigger a tax increase? Often the assessed value of the property may increase based on the amount you pay for the property. And in some areas, such as California, taxes may be frozen until resale.

4. Is the amount of taxes paid comparable to other properties in the area? If not, it might be possible to appeal the tax assessment and lower the rate?

5. Does the current tax bill reflect any special exemptions that you might not qualify for? For example, many tax districts offer reductions to those 65 or over.