Unexpected Consequences - Insurance woes.

Earlier this year, I helped a very nice lady sell her home in Stockbridge.  She had lived there for 20 years.  She was devastated about the sale.  It was a very hard decision for her.  She had taken care of the home, lovingly.  It was in excellent condition.  The reason she sold – she no longer felt safe.  A new “element” had moved into the nearby apartments and into this cute little subdivision.  Now, there were numerous rentals in her sweet little subdivision and she was no longer sure of who belonged or didn’t belong in the subdivision.  She had been broken into twice – horrifying for someone who lives alone.  As anyone would, she placed two insurance claims to cover the damages and the loss of her valuables.

So, we put the home on the market and it sold almost immediately.  It was purchased by an investor; it, too was going to be a rental.  We got through the next few weeks without incident until the day of closing. 

My client had moved out of the home early, even though she had a couple of days after closing to actually move.  She had been moving a little at a time.  The day before closing, she took some things down from the attic and left them on the counter.  They were the last things that she was going to move out on the day of closing.

So, the day of closing, she went to her house for the last time and her key no longer worked. There was a mechanical (non-Realtor) lockbox on the door. The locks had been changed.  She called me in a panic. I immediately called the selling agent to see what she knew about this.  Apparently, the buyer’s staff had mistakenly gone to the house and changed the locks.  But, the most horrifying thing was that her possessions had been taken as well.  She was devastated and in tears. 

When an investor buys a home, they hire people to go in and empty the home - they call this a "trash out".  The good news is that we tracked the workers down and I insisted that they come to closing with her items with an admonition that if anything was missing, we were not going to close.  They came with everything and we closed – end of story, right?

Not so fast.

We started looking for her new house after about a month or so.  We eventually found the cutest home.  She worked with my preferred lender and everything was going along just beautifully.  Until… She started to arrange for her homeowner’s insurance. 

Typically, insurance for such a well-qualified buyer on a purchase price of just over $200,000, should have been between $750 to $1,000.  Imagine her surprise when she couldn’t get insurance from her previous company, nor the next several “big names” she tried.  Imagine her greater surprise when she was quoted $1,800!  Why, because she had had two claims in the same year.  Imagine what this cost would do to a less qualified buyer.  That additional $65 per month could have easily derailed her purchase.

Moral of the story – if you are planning to buy a home and have had recent insurance claims, you may be rendered uninsurable or may have to pay much more than the going rate. This could impact your qualification and force you to buy a smaller home.

To avoid this problem - when you get pre-qualified for your mortgage, don't wait to get a quote on your insurance.  Usually, you only have a set number of days, per your contract, to get full approval for  your mortgage.  Since the amount of your insurance will impact what you are qualified for, you should check on your insurance within your financing contingency period.  

Qualifying for your home purchase

Everyone wants the same thing.  I am not going to reinvent the wheel.  Instead, I am going to direct  you to this article from a trusted lender.

Need a good lender - check out Premier Capital Mortgage and Joe Farro's team of experts.  This is a recent email Joe sent out to keep folks informed:

Shopping for a Low Interest Rate

Buying a home is likely the biggest purchase you will make, and even more likely a purchase that will require a loan. When dealing with a financial commitment such as this, understanding how to get the lowest possible interest rate could mean a difference of thousands of dollars. Home loans are a complicated business, so here are a few tips to help you shop for the lowest interest rate.

Qualifying for the Lowest Rates

Computer models fix a large percentage of the costs of a home loan with strict prequalification.  Loan officers are not able to give every client that walks in the door the same deal.  It is a good idea to be aware of your own credit score and equity, while also comparing rates in your local market, so you know what to expect.
For the best interest rates you'll likely need a credit score of at least 740 and have 20 percent equity. These figures are a general guide and are always changing.  However, if your score is considerably lower than this and you have low equity, be prepared for heavily increased rates compared to the best that are offered.

Be Prepared

The best thing you can do for yourself to make the loan process easier is to plan ahead and be prepared.  Be sure to gather all the necessary documents before you begin; to ensure timeliness and organization.  You should also prepare for the down payment by saving up monthly.  Depending on the lender and type of loan, you may be required to put anywhere from 2.25% to 20% of the purchase price down.  In addition, keep in mind the estimated closing costs, as many tend to forget to budget for these fees.  It’s never too late to start saving.
Another factor to consider is home insurance costs.  If insurance costs for your area are particularly low, it may free up some additional cash for loan repayments.  Tools like the home insurance calculator allow you to plug in all of your information to get an estimated cost for your home insurance.

Understand your Needs

Before going to speak to anyone about getting a home loan, be sure you are clear about what it is that you're looking for and what parameters you have set.  If for any reason they can't be met, be cautious of alternative offers that are suggested to you, as you may be persuaded down a different path.  

Looking Will Lead to the Right Rate

There’s no easy way around it if you want to find the lowest interest rates on a home loan.  You have to spend a long time looking, and you need a strategy.  It may not be something you're particularly interested in but if it saves you a large sum of money, it’s worth it.
You must compare similar policies; otherwise you're wasting your time, as a sensible comparison is almost impossible.  Consider the closing costs, interest rate, and lock period to ensure that they are comparable offers.

Move Quickly

As they say, time is money. Be sure to respond promptly to your lender if they require any additional information from you so you can keep the process moving.
If you've managed to find a great deal on your home loan, waiting around for ages while you try to better it or find the equity required to close the deal, is likely to end up costing you. Shopping around is certainly in your best interest. However with today’s market on the rise, rates are not likely to stay stagnant. So if you find a great rate that fits your needs don’t wait long to close it.
Also look into getting prequalified for a loan. This process is rather simple and can put you in a much better place to buy, as well as give you a great idea as to what you can expect to borrow.
Taking out a home loan is one of the biggest financial commitments you are likely ever going to make.  Make sure you put in the time to do your research and look around for the best possible deal.

Carpet Dents Be Gone! It really works!

Don't let carpet dents keep you from rearranging your furniture.  I had read about using ice cubes to take out carpet dents.  Guess what?  It really works.

I have a night stand that left a rather large indentation on the carpet.  The new night stand is much smaller.

So, I tried the icecube trick - first on a small spot - Success!

and then I did the whole thing!

Love it! All you have to do is lay the ice cubes on the dent, let them melt in, fluff up the carpet with y our hand and let it dry.  (I waited until it was dry before I put the piece back. Didn't want to take the risk of causing a stain on the damp carpet with the furniture leg.)

Make your House Store More

I live in what I consider to be a very nice home.  Just under 2400 square feet.  It's just me and my husband, so we don't use two of the 3 guest rooms.  One room is a home office/kid's hangout room/sewing room. (Ths will be featured in a future post). The other two are truly reserved for guests.

Check out more pictures below!

I hate it when the whole house is junked up with stuff and there is no room for guests.  So, we have made a conscious effort to leave open space in the closets in the guest rooms and to keep the dressers empty.

With that said, we had become busy in our jobs and a little disorganized.  My house was built in 1999. In all closets, the builder had the top-most shelf at 29" from the ceiling. That is an incredible amount of wasted space! My husband is a gem!  He added shelving for me in all the closets.

The coat closet (located in the kitchen area) now has room above the coats for seldom used serving items, the bread maker, the electric griddle and other sundry kitchen items.

The linen closet now has room for all the linens plus other items that need a home and don't get used much. Those have been relegated to the top shelf or two.

The first guest room's closet has lots of open hanging space for guests and holds the few board games we keep for the grandchildren and it houses wrapping supplies and artificial flowers that I change out seasonally.

The second guest room closet has now been maximized and is now the best (second only to my closet - will be featured in another story)!

Over 18" of space inside the closet on either side of the door

add a 16" support - made out of  a 2x3 cut to size

2 x 3 supports on each side, painted the same color as the walls

add melamine covered 16" deep shelving

Top shelf - placques we want to keep and not hang. Other shelves to store items for gifting
andstored for swapping out seasonally.

Added top shelf - some dead storage, seasonal items, linens for this room;Lower shelf haolds craft supplies

Lots of open hanging space for guests

Right side has hanging space for shower curtains, table cloths....

So, this whole project was done for $42 plus about 4 hours of cutting, painting, screwing into the wall.

If someone was "living" in this room, the side shelves could hold sweaters, hats, purses.  And, if this was the case, I would change up the middle section to have one ventilated shelf (where the top melamine shelf is) and have half for long hanging clothes (dresses) and half for for short-hanging clothes (shirts/pants) and would add a lower ventilated shelf at the appropriate height for this purpose.

I guess the whole point is - you have to re-think what the builder gives you and tailor the storage for your needs!