27 New Year’s Resolutions for Homeowners

Heading into a new year, we feel an obligation to make resolutions.

Personal resolutions can be motivating, exciting or just plain silly. This year I will… eat healthier, save money, run the Long Branch 5K, learn to surf in Monmouth Beach, do the Asbury Park Polar Bear Plunge.

As a homeowner, resolutions can also be empowering. Some are mission-critical for a solid financial year, others maybe fall in the wish list.

homeowners-new-years-resolutions

Need ideas?  This list should get you started:

1. “Lose weight.”
Losing the weight of excess possessions save time (you know, like looking everywhere for your shoes in a cluttered bedroom), money (where did I put that bill?) and your mind (psychologists agree that clutter and stress go hand-in-hand).

2. Get organized.
The logical next step to decluttering is to find a logical place for what’s left.

Need inspiration? Walk through a home storage store or get yourself on Pinterest for some seriously clever organizational ideas.

RELATED: 7 Clever Weighs to Hide Things in Plain Sight

3. Save energy.
Saving energy is good for the planet and it’s also great for your pocketbook. EnergyStar appliances are just the start.

• LED bulbs are much more efficient and now come in warmer tones and dimmable options for a more homey feel. Use a lighting calculator to measure energy and cost savings.
• Water heaters expend energy storing hot water. The Department of Energy says tankless water heaters are 8 percent to 34 percent more energy efficient than standard water heaters, depending on usage.
• Going solar no longer has to be ugly roof additions. Have you seen the new Tesla solar tiles?

Saving on energy can even have some great tax implications! Check out our article on the best energy enhancements for optimal tax write-offs.

4. Build green.
Going green is more than energy usage. It’s also about sustainability and healthful choices in finishes.

• Change out laminates and carpets for natural hard surfaces.
• Remove asbestos (with a professional).
• Use sustainable and recycled materials like bamboo, cork and Vetrazzo.
• Need to paint? Go with a low- or no-VOC non-toxic paint.
• If you’re texturizing a wall, try Earth plaster instead of gypsum.

5. Get healthy.
Create a workout space, so there’s no excuse when the weather turns. If you’re looking to move, check out neighborhoods with nearby trails, fitness centers and amenities.

RELATED: How to Choose the Perfect Neighborhood for you and your Family

6. Just fix it.
You’ve walked by that broken switch plate how many times?

Go through the house like a home inspector and create a checklist of repairs that need to be done. When it comes time to sell and appraise your house, you’ll be glad these were done.

RELATED: The Benefit of An Advance Home Inspection

7. Set yourself (debt) free.
Those who carry debt and struggle to pay it off are twice as likely to develop mental health problems, according to a study by John Gathergood of the University of Nottingham.

Paying off debt sets you free in so many ways, plus it’s great for your credit score. Think of all the things you could do in the future with the money you save on payments and interest (maybe even pay off your home early — see #20).

8. Remodel right.
Is it time to update a dated bathroom? Replace the garage door?

If you’re wondering what improvements will lead to a better return on investment when you sell, check out our article on which home renovations offer the greatest return on investment. Our Agent’s can also tell you what improvements are best for your neighborhood and house type.

9. Maximize your mortgage.
A recent Zillow study showed that Americans spent more time researching a car purchase than their home loan. Since the Fed announced that it’s planning three rate hikes in 2017, it’s wise to refi sooner than later.

Have you reached the loan-to-value needed to remove your mortgage insurance? Make an appointment to talk to a lender for a mortgage checkup.

10. Learn to DIY.
The more minor fixes (and if you’re really skilled, major fixes) you can do yourself, the more money you save.

Thanks to YouTube, there are a lot of great how-tos. Other great sites include Instructables, How Stuff Works, Do It Yourself and myriad home improvement shows/channels.

11. Plan to maintain.
Create a maintenance calendar to remember those routine maintenance tasks, such as replacing furnace air filters, changing smoke detector batteries and winterizing sprinklers.

Whether it’s a paper calendar or your iCal on your phone, plan out scheduled maintenance so you won’t hear that relentless beeping of the smoke detector in the middle of the night — or run out of propane before the steaks are done (tragedy!).

12. Invest.
Is this the year to buy a rental property? Or a vacation home?

This will really require you to understand your financial situation, so talk to your financial advisor and an Agent who understands investment properties.

13. Take an inventory.
That new flat screen television and 360 viewer you got for Christmas are going to need coverage. If disaster happens, do you really know what’s in your house?

At minimum, make a list and save it on the cloud. Sites like Know Your Stuff and DocuHome help you document items in a room by tagging pics.

14. Do the double check.
The Insurance Information Institute says a standard policy covers the structure and possessions against fire, hurricanes, wind, hail, lightning, theft and vandalism.

Most other disasters are add-ons. Talk to your insurance agent and make sure you have not only enough property coverage but also enough liability coverage.

15. Get a “CLUE”.
Your homeowners’ insurance premiums are dependent on a number of factors, such as credit score and the Comprehensive Loss Underwriting Exchange (CLUE) report of claim history.

You can request a free report from LexisNexis.

16. Make your neighborhood better.
Get involved with your local HOA, neighborhood watch or community events. The first step to a better neighborhood is your personal involvement.

For news, information about issues that effect your community and to keep in touch with your neighbors; you can also join the Community Facebook Pages and Group we maintain. Like the Bradley Beach, New Jersey Facebook Page or join the Groups for Bradley Beach, NJ Residents, Ocean Township, NJ Residents or our Jersey Shore and Monmouth County Lifestyle Group.

17. Save water.
Dry climate areas struggle for water in dense population centers. Watering restrictions can turn your grass brown and overuse can cost you with tiered billing. Even the New Jersey climates experience seasonal droughts or below average reservoir levels.

Xeriscape what you can outside and look for indoor appliances that use less water. If you live in a state with conservation legislation, get those regulators on your shower heads and hoses.

18. Get dirty.
Landscaping is essential to curb appeal. So this year, really plan to keep up with it or think about going to a more easy-care style.

RELATED: Enhance the Value of Your Home with Landscaping

Out back, consider a garden to save money on better produce. Get a composter for garden and food waste.

19. Plan for emergencies.
Natural disasters and social disruptions are unwanted, but they happen. To be ready, you actually need to prepare!

Do you have a family evacuation plan? Emergency supplies? Go to ready.gov for a ton of ideas on prevention and disaster preparedness.

20. Get smart.
Smart home features make your home more efficient and easy to use, even remotely. Look for these to be the “wow” factor that could make your house stand out. Who doesn’t love Alexa-enabled appliances?

RELATED: Increasing the Value of Your Home with These Most Popular Smart Home Accessories

21. Make extra mortgage payments.
You can take thousands of dollars and years off your mortgage by putting an extra amount towards the principal each month. For a $400,000 at 4.25 percent interest with 25 of its 30 years left, you could save $21,107 and take two years off by paying an extra $100 per month.

RELATED: How To Pay Your Mortgage Off Early

What could you save? Try Bankrate’s handy extra payment calculator.

22. Pay off your second mortgage.
Whether it’s a one- or multiple-year plan, it won’t happen if you don’t budget for it.

23. Scrutinize your property tax.
If you live in an area where your home value has dropped since the last assessment, you need to really look at that bill.

Is the assessment correct? Is it going up faster than the sale prices of comparable homes? You can appeal via your local appraisal review board.

24. Optimize your withholding.
If you’re a first-time homeowner, you’re going to enjoy those new deductions. Be sure to talk to your tax advisor about adjusting your paycheck withholding accordingly (unless you like Uncle Sam making money off your income instead of you!).

RELATED: Check Out Patrick Parker Realty’s Annual Tax Season Blog Series Articles and Resources

25. Pay bills, especially your mortgage, on time.
It goes a long way to improving your credit. “The longer bills are paid on time, the higher the FICO Score should rise,” says myFICO. “That’s because as recent “good payment” patterns appear on a credit report, the impact of past credit problems on a FICO Score fade.”

26. Cook dinner.
You know that fabulous kitchen you had to have when you bought your home? Use it!

The USDA’s 2016-17 Food Price Outlook shows the price of groceries decreased in 2016, with a less than 1.5 percent increase in 2017, but restaurants will continue to climb beyond 2016’s 2.4 percent increase.

You’ll also eat healthier at home by controlling what goes into your body. If you own a home with a less-than-stellar kitchen, cooking will probably motivate you to make some appliance and feature upgrades that will pay off when you sell.

27. Get hip.
Dated cabinets and 1980s fixtures don’t help your resale value. Evaluate your style and start looking at upcoming (not past) trends.

Although we’re still in a “sellers’ market” that will likely change in the next few years. A modern home (unless it’s a historic property) is simply more appealing and makes the buyer feel like it’s move-in ready.

YOUR TURN

Your house is your biggest asset. While not all of these resolutions are essential, aim to start out by focusing on your mortgage and personal finances. What do you have to add? Where might you start? Sound off on the Patrick Parker Realty Facebook Page, on our Twitter or LinkedIn feeds. And don’t forget to sign up for our monthly HOME ADVICE eNewsletter for articles like this one delivered straight to your inbox.

Here’s to a healthier, happier and successful New Year!

9 Home Safety Tips for the Holidays

The holidays are a wonderful time full of food, family get-togethers and traditions, but the holidays can also pose many safety concerns, so it’s best to be cautious. From lighting candles to hanging Christmas lights, there are plenty of safety hazards that can occur during the holidays. Let’s take a look at nine home safety tips for the holidays to keep you and your family safe.

holiday-safety-tips

1. Inspect Lights
Carefully look at your holiday light strings every year, and be sure to throw away any cracked lamp holders, frayed cords or loose connections. When you replace bulbs, you need to unplug the lights and match the voltage and wattage to the original bulb.

2. Buy a Fresh Tree
If you buy a live Christmas tree for your home, try to purchase a fresh tree since they are more fire resistant. Always keep your tree watered, and keep open flames away from it.

3. Lights Out
When you leave your house or go to sleep, make sure to turn off your holiday lights.

4. Timed Lights
Use a certified CSA International outdoor timer to switch on and off your holiday lights. Your lights should be turned on after 7:00 p.m. to avoid the electricity “rush hour.”

5. Check for Certification
Your holiday lights, extension cords, spotlights, carbon monoxide alarms, gas appliances and electrical decorations should be certified by an accredited certification organization like CSA International, UL or ELT to make sure they comply with safety standards and performance. Look for the certification mark on the product package to ensure you are making a safe purchase.

6. Don’t Connect Extension Cords
You should never connect two or more extension cords together. Only use a single cord that is long enough to reach to the outlet you need without stretching.

7. Keep Electrical Connectors Off the Ground
If you are hanging lights outside, keep electrical connectors off the ground and away from metal gutters. Also use insulated tape or plastic clips to keep lights secure.

8. Choose the Right Ladder
Make sure you select the right ladder size for the job if you are putting up lights on your house. Check for a certification mark to make sure the ladder complies with safety standards.

9. Check Your Furnace
Prevent CO hazards in your home by hiring a professional heating contractor to do a maintenance checkup of your furnace and ventilation system. You will want to clean or replace your furnace filter often during the winter months.

YOUR TURN

How will you keep your home safe during the holidays?  Sound off on the Patrick Parker Realty Facebook Page, on our Twitter feed or on LinkedIn. And don’t forget to subscribe to the monthly Patrick Parker Realty HOME ADVICE eNewsletter for articles, tips and guides like this delivered straight to your inbox.

6 Mortgage Terms to Know

mortgage-new-jerseyBuying a house is an exciting and busy time. Once you’re pre-approved for a mortgage, you can start looking at homes in your price range. Whether you’re a first-time homebuyer or have been there before, it’s easy to feel overwhelmed. Not only will you have to find a home inspector and a real estate lawyer, you’ll also need to choose a mortgage lender. A mortgage represents a serious amount of money, so it’s important to fully understand it.

Before diving into these key mortgage terms we think it is important to briefly describe the difference between a Mortgage Broker and a Mortgage Lender.  A Mortgage Broker is an intermediary who brings mortgage borrowers and mortgage lenders together, but does not use its own funds to originate mortgages. A mortgage broker gathers paperwork from a borrower, and passes that paperwork along to a mortgage lender for underwriting and approval.

Here are 6 mortgage terms to know as a homebuyer:

1. Amortization Period
Do you aspire to be mortgage-free? Well, you’ll want to know your amortization period. Your amortization period is the period of time over which your mortgage will be fully paid off. Generally, a standard amortization period on high-ratio mortgages (a down payment between 5% and 19.99%) is 25 years. On conventional mortgages (a down payment 20% or greater), 30 year amortization periods are still available. By shortening your amortization period you’ll pay less interest over the life of your mortgage, but your mortgage payments will be higher. A few years ago homeowners could choose an amortization period as long as 40 years, but that has recently been reduced by the federal government in an effort to avoid a housing bubble.

2. Appraisal
Even though you may of have purchased your home for $550,000, it doesn’t necessarily mean your lender agrees with its value. Most mortgage lenders will require an appraisal to determine your property’s value. You shouldn’t confuse market value and appraised value, as they aren’t always the same. It’s important to not get caught up in a bidding war and pay a lot more than the appraisal value, as you’ll have to come up with the extra money if the appraisal comes in a lot less. Homebuyers cover the cost of appraisals, although some lenders may be willing to foot the bill.

RELATED: Market Value vs. Appraised Value

3. Home Insurance
Protects your home in most cases from fire and other named perils. Insurance is paid by monthly premiums. Most lenders require you’re fully insured before they’ll approve your mortgage.

RELATED: 12 Ways to Save Money On Home Insurance

4. Interest
Lenders don’t simply offer you a mortgage out of the goodness of their heart. The interest on a loan like a mortgage covers the cost of borrowing. When you start paying your mortgage, you’ll notice your interest payments are quite high, but as you get closer to paying it off your interest payments will get smaller. That’s because as you pay down your principal, your interest payments become less and less.

RELATED: Four Areas of Financial Wellness That Mortgage Lenders Love

5. Principal
Nobody wants to pay only the interest on their mortgage. A portion of each mortgage payments goes towards principal and interest. Most closed mortgages come with prepayments privileges. When you make lump sum payments, it’s applied against principal. This can help you shave years off your mortgage and save thousands in interest.

RELATED: Will I Qualify For A Mortgage?

6. Term
Not to be confused with the amortization period, a mortgage term is the length of your current mortgage agreement. Although a mortgage term can be as short as six months or as long as 10 years, most homebuyers choose the stability of a five-year fixed rate mortgage term. Once your mortgage term expires, you can repay your balance in full or renew your mortgage with the same or another mortgage lender.

Home Contractor Warning Signs…
What are some red flags for industry professionals?

home-contractor-warning-jersey-shoreHiring a professional to work in your home is a touchy thing. You want to get the best work for your dollar, but not all of the “professionals” out there will give you the kind of quality work you’re looking for, or even be honest about how much it will cost you in the end.

To help homeowners figure out how to tell the true professionals from the scam artists, we turned to our home industry experts to find out what the red flags are for the home expert industry. So what are some home contractor warning signs?  Here’s a list of the biggest red flags…

1. Lack of a track record
Any professional worth working with will have references for you to check, so you can see the quality of their previous work. If you can’t find any information about a professional’s work online, or they’re cagey about giving you references, you should be very suspicious.  Please do not be fooled by sites like Yelp or Angie’s List.  Anyone can purchase their way onto these sites and invest more to highlight only their best reviews.  Actually, a Jersey Shore Real Estate Agent will likely have a number of contacts they can refer you to.

2. Get it in writing
Some old-timers in the industry might advocate their word as their bond, but as a homeowner you should always get the plan in writing. A written contract can save you a lot of heart ache, and a true professional shouldn’t have a problem with it.

3. The contractor is late
Showing up late to a first meeting is a huge red flag for a contractor, just like it would be in any other situation. If they don’t respect your time or make an effort to behave professionally on your first meeting, don’t expect that to change after you’ve hired them. That goes double if they swear excessively, smoke, wear shoes into your house without slip covers, or otherwise behave unprofessionally.

4. Be suspicious of too-low prices
It’s tempting to go off lowest price offered when you’re looking for a home professional, but you should think twice before picking that one outlier company. Ask yourself: what corners are they cutting to get a price that’s so much lower than anybody else is offering?

5. They want you to get the materials
If you don’t have a lot of experience hiring home professionals, you might not know that home professionals usually include material costs in their quotes. If a professional is asking you to do the buying up front, it means that they don’t have a good relationship with supply houses and can’t get credit there. This means they aren’t on top of their finances, and you might find yourself holding the short end of the stick if you hire them.

6. A disorganized truck
If you get a chance to see the contractor’s work space and it’s disorganized or not well cared for, it’s an indication that they are not taking their work seriously or professionally. A disorganized professional will treat your space the same way they treat their truck. If you don’t want to find your house littered with tools, don’t hire someone who’s disorganized about their work.

7. Try and gauge their subject matter expertise
It might be difficult, but try and ask questions that gauge the contractor’s subject matter expertise. While an older, more seasoned contractor may not be a red flag, it’s possible they haven’t kept up on their education since entering the business. Getting the appropriate training up front is important, but the home industry changes all the time, and what was sufficient training a few years ago may not be up to snuff now. Staying up-to-date with codes is the bare minimum here.

So keep an eye out for these early signs that the contractor you’re considering isn’t a true professional.

Your Turn

Recently hire a home contractor or tradesman to perform work in your home? What home contractor warning signs did you spot? Did you learn anything the hard way? Sound off on our Facebook or Twitter pages and don’t forget to sign up for our monthly Patrick Parker Realty eNewsletter for articles like this delivered straight to your inbox!

10 Things a Burglar Doesn’t Want You to Know

Successful burglars have lots in common — home owners who unwittingly give invitations to robbery. Here’s how thieves thank you for your generosity.

Leaving boxes by the curb alongside the trash lets burglars know you’ve got new toys inside. You come home to an open front door, a ransacked house, and missing valuables. How did a burglar know you’d be gone? How did they get in?

RELATED: Clever Security Tricks That Will Fool Any Burglar

In these 10 thank-you notes, your friendly neighborhood burglars share advice on how to stop lending them a helping hand:

sony1. Thanks for the ladder!

Call me a social climber if you will, but I did discover a ladder in your back yard. Thank you for leaving it where I could lean it against your home and easily reach a second-story window. I really love it when upper story openings aren’t wired to a home security system!

So, if you want to keep me out, store your ladder in the basement or a locked garage. And call your security company to wire upper-story windows into your alarm system.

Vertically yours,
A rising star

2. Loved your trash

Can’t tell you how much fun I have driving around neighborhoods on trash day (especially after big gift holidays) when the empty boxes on the curb reveal what wonderful new toys you have. Your thoughtfulness made it possible for me to land a new laptop and a flat-screen television in one easy trip to your home!

Next time, break down the boxes and conceal them in the recycling or trash bins.

Happy shopping!
Curbside Cruiser

3. Dear Can’t-Get-Around-to-It

Recently, I noticed you hadn’t trimmed trees and shrubs around your home, so I knew I’d have a wonderful place to hide while I worked to break into your home. I really can’t thank you enough for all the great new things I grabbed.

Next time, trim back bushes and trees near windows and doors. Make sure entry points to your home are easily visible from the street — I much prefer to work in private! While you’re at it, install motion-sensor lighting. I’m scared of bright lights!

Cordially,
The Tree Lover

4. Su casa es mi casa!

I was sincerely relieved to find your back door was a plain wood-panel door. I had no trouble kicking it in (my knees appreciate how easy that was!) Imagine how silly I felt when I discovered that your windows weren’t locked anyway.

You may want to take a cue from your neighbor and install steel-wrapped exterior doors with deadbolts on all your entries. And be sure your windows are locked when you’re away.

All the best,
Buster Door

5. Bad reflection on you.

You’d be surprised how many home owners position a mirror in their entry hall so I can see from a window if the alarm system is armed. (Yours wasn’t, but I’m guessing you know that by now!) Thanks for taking a lot of pressure off of me.

A little free advice: Relocate the mirror so your alarm system isn’t visible if someone else would peer through a window.

Fondly,
Mr. Peeper

6. The telltale grass

Wow, isn’t it amazing how fast the grass grows these days? I swung by now and then and noticed your lawn was uncut, newspapers were piling up on the front steps, and your shades were always closed. To me, that’s an open invitation.

Next time, hire someone you trust to mow regularly, pick up around the doorstep, open and close various window shades, and turn different lights on and off (or put a few on timers). One more thing: Lock any car you leave in the driveway, or I can use your garage door opener to get in quickly.

Best,
Your Trip Advisor

7. Getting carried away

Many thanks for putting your valuables into an easy-to-carry safe that I could carry right out your back door. (Nice jewelry, and thank you for the cash!)

You may want to invest in a wall safe, which I rarely attempt to open. Or, rent a lock box at your bank.

With appreciation,
Mr. Safe and Not-So-Sound

8. Dear BFF

Thanks for alerting a professional acquaintance of mine via your social network that you were away for the week in Puerto Vallarta, having the time of your life. Me? I enjoyed a very relaxing visit to your home with no pressure of being caught.

If only you had known that posting comments and photos of your trip on social networks is fine — but do that after you return so you won’t broadcast your absence!

Sincerely,
Cyber Savvy

9. Tag, you’re it!

Where are you? When you use popular geo-tracking apps, such as FourSquare and Glympse, I might know if you’re not home. Web sites such as www.pleaserobme.com help me keep track of your whereabouts.

If you prefer that I not visit your home, be careful about geo-tagging. But, otherwise, thank you for the loot!

Respectfully,
Just Tagging Along

10. Thanks for the appointment

Thanks for inviting me into your home to view the laptop you wanted to sell. I do apologize for the scare I gave you when I took it (and your purse).

Did you know that some large U.S. cities are averaging one so-called “robbery by appointment” per day? If you want to sell high-ticket items to strangers, I suggest you arrange to meet at the parking lot of your local police station. I definitely won’t show up, and you’ll still have your valuables (and your purse!)

Regards,
A Tough Sell

YOUR TURN

Have you been victim of a break-in? What advice would you give to other homeowners to prevent intruders? Sound off in Comments, on the Patrick Parker Realty Facebook or Twitter pages and don’t forget to sign up for the monthly Patrick Parker Realty eNewsletter for more articles like this delivered straight to your inbox.

Clever Security Tricks That Will Fool Any Burglar

A little ingenuity can make your house more secure when you’re home alone or away on vacation.

You don’t have to install a pricey or crazy security system to feel safer in your home. Here are some low- and no-cost ways to keep burglars at bay:

Don’t Sleep Alone   If you’re sleeping solo these days, take your car’s remote control to bed with you. If you hear suspicious noises, push the remote’s “panic” button and let the alarm scare away intruders.

fakeitFake It   Pretend you’re home watching “Downton Abbey” and deter burglars with FakeTV a small gizmo that glows and flashes like the flicker of a television set. FakeTV uses the same energy as a nightlight, and has a built-in light sensor and timer, which turns it on at dusk and off when you wish.  FakeTV is available at Amazon for less than $30.

Slippery When Wet   In the U.K., they slather “anti-climb” paint, which never dries, on downspouts, gutters, and anything they don’t want an intruder to shimmy up.  Anti-climb paint is readily available at retailers… here are some examples of anti-climb paint at Home Depot.

Footsteps In the Snow   Virgin snow is a sure sign that no one’s home. If you’re away after a snowstorm, ask a neighbor’s kid to tromp around your yard, creating footprints that will fool a burglar into thinking you’re around but just haven’t gotten around to shoveling your snow yet.

Parked Car   Again, if you’re out of town, ask a neighbor to occasionally park their car in front of your house, making it look like you’re entertaining visitors. And ask them to remove any fliers that may be wedged into your door or mailbox. Burglars sometimes case a home by planting a flier and checking to see if someone retrieves it.

RELATED: 10 Things Burglars Don’t Want You To Know… And Their Thank You Notes

YOUR TURN

What do you think of these tricks? Do you know any others? Sound off in Comments, on the Patrick Parker Realty Facebook or Twitter pages and don’t forget to sign up for the monthlyPatrick Parker Realty eNewsletter for more articles like this delivered straight to your inbox.

How to Cut Your Homeowner’s Insurance in Half

home-insurance-discountsFire, flood, earthquakes, hurricanes, wind, falling trees, and burst water pipes are just some of the villains that could damage or destroy your home and its contents. Or maybe someone will trip not so lightly down your stairs and decide to sue. Don’t forget about thieves, who could ransack your abode and steal your valuables.

Whether you own or rent a raised ranch, brownstone, McMansion, or two-bedroom condo, having the right kind of home insurance – and enough of it – is both costly and vital. Yet with a little effort, you can cut your premium in half.

But first…

Make the Crucial Decision to Spend More on Homeowner’s Insurance
Most policies cover homes and personal property (the items inside your home) for “actual cash value” which is based on what they’d be worth today, considering wear and tear. If the roof is 12 years old, it will be valued at that amount – not what it will cost you get a new roof.

To insure the full cost of replacing your home and possessions, you need to buy a more expensive “guaranteed replacement cost” policy. While it will run you in the range of 10% to 15% more, virtually every personal finance expert we’ve come across recommends guaranteed replacement cost coverage for your home and belongings.

If you have a cash value policy and disaster strikes, the check you get from the insurer will be for a lot less than you’ll need to rebuild. Think about that roof. Every house in the neighborhood needs a new one. There’s a high demand for roofers, the cost of labor and materials has gone up … and if you’ve got a cash value policy, you’ll only get reimbursed for the value of your 12 year old roof. Yet it will probably cost you thousands more to get a new one. Yikes!

With cash value coverage, you’ll take a hit on your personal property losses as well, since you’ll only be reimbursed for the depreciated value of each piece of personal property. For example, consider a couch that cost $1,000 when it was purchased 10 years ago. With a cash value policy, you might only get $500 for it – regardless of what it might cost to buy a couch like the one you lost.

Is It Really Guaranteed Replacement Cost?
You might think that if you spend the extra 10% to 15% for guaranteed replacement cost insurance, the policy will actually pay the entire replacement cost. Not necessarily. Some companies will pay the actual replacement cost; others limit their payment to 125% or 150% of the face value. Be sure you know exactly how your policy defines this coverage.

A ballpark figure on your home’s value is a useful starting place, but that won’t tell you how much it’s going to cost to rebuild. You’d be wise to get a professional estimate of the replacement cost of your home – not its market value. Ask insurers, get a friendly local builder to give an estimate based on current local conditions, and crunch the numbers with an online replacement cost calculator. Then insure your home for 100% of its replacement cost.

Also be sure that your policy has automatic inflation protection, which increases its face value each year based upon construction costs in your area. It’s another way to make sure your home remains sufficiently insured.

Although they’re not identical, home insurance policies are standardized to some extent. Still, they can be complicated. Before signing on the dotted line, take the time to understand what the various policies will cover and what they won’t.

Renter Alert!
If you’re like most people who rent, you probably don’t have home insurance. That could prove very costly. Your landlord’s policy will not protect your possessions against loss or damage. Nor will it protect you against personal liability if, say, your babysitter trips on the rug and sues you. Yet according to the Independent Insurance Agents & Brokers of America, it only costs $12 per month for about $30,000 of property coverage and $100,000 of liability coverage.

The tips we offer here for homeowners can also help renters find the best deal on a policy.

How to Cut Your Homeowner’s Insurance in Half:

It’s well worth investing the time to lower your home insurance costs. With a little effort, you really can cut your premium by as much as 50 percent, not just this year, but for years to come. Of course, in certain parts of the country, homeowner’s insurance rates are going up and up. If you live along a coastline, for example, your costs are going to be high no matter what you do. It’s all the more important for you to follow these steps. The more you do what we suggest here, the more you’ll save.

1. Make sure you look your best on paper.
Insurers believe that reliable bill payers file fewer claims, which is of course what they want. So check your credit report for accuracy and get errors fixed. Otherwise, you will pay more and may even be denied coverage.

2. Don’t be clueless.
Before agreeing to give you a policy, insurance companies check to see if you have a history of filing claims – even small ones, like for theft or fire.

TIP: Consider covering some claims on your own – or even withdrawing a claim you’ve made – to avoid falling into the bad risk zone. Ask your insurance agent for some guidance on this. (Don’t blame us, we’re just the messengers!)

3. Shop around. Policies are not identical.
Costs, coverage, and conditions can vary as can the financial stability of the insurer. Compare coverage and prices for your home and belongings.. Start with a couple of sites that will get you multiple quotes, for example, Insure and Insweb.

But don’t stop there. Make sure you get quotes from a range of insurers, including:

  • “Independent” agents, who sell the policies of several different insurance companies. While they can help you get the best deal among the insurers they handle, their commission structure is the highest. Still, there are often benefits to working locally with someone who you know and can contact quickly in an emergency. But even if all you want to do is look at the pros and cons – say, of registering your kid’s car at school or at home – a good independent agent should help you figure out what makes sense. Your best bet is going to be to ask friends and relatives for recommendations of local independents they’ve worked with and liked.
  • “Captive sellers,” who work for a single insurance company such as Allstate and State Farm – companies that have their own sales forces. Their commissions are typically lower than those of the independent agents, so you may pay a bit less for your policy.
  • ”Direct writers,” who can give you a quote on the phone or online. They can generally offer the lowest-priced policies because they sidestep commission fees. Examples: Amica (800-242-6422) and GEICO (800-841-2964). Members of the military and their families should definitely consider USAA (800-531-8080). Be aware, though, that direct writers tend to be the choosiest. If you have anything that hints at a real risk (a wood stove, for example), it’s quite possible they’ll say, “No thanks.”

4. Go for the highest deductible you can afford.
Compare quotes for the replacement value of your home and its contents with different deductibles, say, $500 and $1,000. They’ll shave 10% to 25% off your premium annually. If you can go for a still higher amount of $2,500 or $5,000, your annual savings will be 30% or higher.

5. Put smoke and carbon monoxide detectors on every floor, and make sure the agent knows about them.
A smoke detector may not only save a life, it will pay for itself in a year or two with the 2% to 5% that it will save you on premiums.

6. Get fire extinguishers, deadbolt locks for all the doors, and consider other safety devices.
Ask if there are other low-cost safety features that might save even more money on the policy. And depending on the location and condition of your home, you may want to invest in costlier fire and theft protection. Fire sprinklers, anyone? They can save you money – although a home security system that’s connected to the local police and fire departments can save you more, in the range of 15% to 20% annually.

7. Ask the agent or company that writes your car insurance for a “multiple policy” discount.
Find out if you’re eligible for a price reduction if you let them write both your home and car insurance. You could save 10% to 20%. Also ask other insurers what their multiple policy discounts are.

8. Be loyal – if it’ll save you money!
Many insurers reward good customers to keep them. Does yours offer discounts to long-time customers? Ask!

9. Get money off for “good behavior.”
Have you been claim-free for a few years? Some companies offer discounts from 2% to 5%.

10. Are you retired?
Some companies offer retirees discounts of 10% to 20%.

11. Be sure to ask about all possible other discounts.

Here’s a handy checklist:

  • Was your home built with fire-resistant materials?
  • Is yours a non-smoking household?
  • Got a newish house, built with state-of-the-art construction materials? If so, it should cost less to insure.
  • Recently renovated? You might be eligible for a price break – but if you made a significant improvement, you may need additional coverage.
  • If you normally keep some of your gems in a safe deposit box, and if they’re worth more than the standard policy limits, ask if you would be eligible for a discount.
  • Does your membership in an organization – whether it’s AARP, AAA, a labor union, or an alumni group – make you eligible for a discount?
  • Insuring a second home? See if you can get a multiple policy discount. You might need to accept less coverage for the contents of your second home or install an alarm system.

NOTE: Protect Yourself from Mother Nature
Even though some 25% to 30% of flood insurance claims come from areas that weren’t considered to be high risk, basic policies don’t cover floods. For more information, contact the National Flood Insurance Program (888)FLOOD29.

Your Turn
What are your homeowner’s insurance policy experiences?  Tell us the good, bad and ugly in Comments or on the Patrick Parker Realty Facebook or Twitter pages and don’t forget to sign up for the monthly Patrick Parker Realty eNewsletter for more articles like this delivered straight to your inbox.

From the Patrick Parker Realty Tax Season Blog Series
5 Ways Buying Your First Home Affects Your Taxes

new-jersey-taxesIf you’re a first-time home buyer, plenty of things are working in your favor. Mortgage rates are still hovering near all-time lows, and despite home prices beginning to rise, they’re still low relative to pre-recession averages. Whether you buy your first home in a bear or a bull market, however, you’re always going to contend with tax implications. As long as you’re aware of relevant regulations and benefits, buying your first home should be the rewarding experience you’ve always dreamed it would be.

1. Home Mortgage Interest Tax Deduction
The most valuable tax deduction for a first-time home buyer is the mortgage interest tax deduction. Your tax return may take more time to complete than in past years since you’re going to have to itemize your deductions in order to take advantage of it, but doing so is in your best interest as it can result in a significant deduction. Be on the lookout for Form 1098 from your lender at year-end, which details how much mortgage interest you’ve paid.

2. Points Are Tax Deductible
When you pay “points” on a mortgage you’re paying extra money to your lender upon execution of the loan in order to lower your interest rate. Each point equals 1% of the purchase price of the home. This amount is tax deductible, however, the rules surrounding how and when you can deduct points paid are complex. In some cases, you cannot deduct the full amount in the year you pay it – you may have to deduct it over the life of your mortgage. For additional information, seeIRS Publication 936.

3. You Can Deduct Property Taxes
As a homeowner, you are required to pay property taxes. These are typically due once per year, although you may be able to pay them in two installments. Depending on property tax rates in your area, these can be significant expenditures. You can ameliorate the effect of property taxes on your finances by setting up a mortgage escrow account and paying your taxes in monthly increments. This is going to increase your monthly payment, but it protects you from having to write out a big check twice per year.

4. Private Mortgage Insurance is Usually Tax Deductible
If your down payment is less than 20% of the purchase price of your new home, you are often required to pay premiums for private mortgage insurance, which your lender takes out to protect against your potential default. In many cases, this payment is tax-deductible as well. The annual amount may be also included on your 1098 Form from your lender. Just be sure to cancel this insurance as soon as your level of home equity reaches 20%, if possible. Again, you can referenceIRS Publication 936 for all details.

5. Advantages of Getting Cash Back from the Seller
When purchasing your first home, you have the ability to request cash back from the seller, known as seller concessions. If you agree in advance, you can pay a higher sale price for the home, if the seller returns that money to you to use toward closing costs or home repairs.

There are limitations as to what you can use these funds for, usually determined by the lender or type of loan you’re applying for. Consult with a mortgage professional to find out which limitations apply to you. Although this plan results in a higher monthly payment, you can reduce your out-of-pocket expenses when purchasing the home, as well as boost your mortgage interest deduction.

And one more thing…
As a first-time home buyer, the first few years of your mortgage interest tax deduction are going to be significant. Make sure you use these funds effectively. The last thing you want is to blow your windfall on unneeded purchases. Instead, consider longer-term goals such as creating or building an emergency fund (which can come in handy in the event you need home repairs), setting these funds aside for retirement or your child’s college education.

Keep in mind that this is general information designed to help you put these valuable deductions on your radar. Patrick Parker Realty Agents and Realtors are not certified accountants. Please be sure to check with your tax adviser to see if you qualify for a particular credit or deduction.
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Follow The Patrick Parker Realty Tax Season Blog Series on Facebook and Twitter using #taxseasonblog.

Check back in with the Patrick Parker Realty Blog each Tuesday, Thursday and Saturday for more Tax Season Blog Series’ Posts and sign up for the Patrick Parker Realty eNewsletter to have updates delivered to your inbox monthly.

The Blog Series will cover many topics such as How do I qualify for a home seller break?, How do I qualify for a home buyer break?, Do I have to report the home sale on my return?, What is the gain on the sale of my home?, What Are Home Renovation Tax Credits?, Deducting Mortgage Interest, Taking the First-Time Homebuyer Credit, How to Avoid Taxes on Canceled Mortgage Debt, Tax Incentives as they relate to Life’s biggest transitions, such as Marriage, the Birth of a Baby, Divorce, or the death of a Spouse and much more. New posts in this Blog Series will be published twice weekly.

More info about the Patrick Parker Realty Tax Season Blog Series >

For more information about paying taxes on the sale or purchase of your home or any other questions you have about this article please speak with your tax professional or visit www.irs.gov.


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