Real Estate Blog

Sunday, 03 November 2013
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No one is able to predict the demise of their major appliances, and most people are unprepared when they do go on the fritz. Home appliance and system repairs are about as inconvenient as they are expensive. That’s why I always recommend that my clients be protected by a home warranty. Home warranties protect the seller and the buyer in the home-selling process, and they cover the systems and appliances that homeowner’s insurance does not cover.

For sellers, a home warranty is a great marketing tool to make a home stand out more. A Gallup Poll reports that 8 out of 10 buyers prefer a home with a warranty, because no one wants to walk into a new home with unexpected, costly repairs that you as the seller might not even know about. Bill Smith of HMS warranty company says, “A home warranty not only reduces the seller’s liability if something should break, it also reduces the amount of money a seller has to spend when they are trying to sell their home.”

For buyers, a warranty is peace of mind that repairs will be taken care of without a huge out-of-pocket payment. If someone has just bought a home, he or she shouldn’t have to empty out what’s left of their emergency fund to take care of a broken appliance. If the warranty is already in place from the seller, it easily transfers to the buyer at closing. If the seller does not offer a warranty up front, I always recommend that my buyers ask for one in their offer.

If you are the one making the warranty purchase, be aware that all warranties have terms and conditions that you need to be aware of. Bill Smith says, “Of course there are limitations with any warranty, so be sure to read the entire policy, and be sure to choose a company that is reputable and already established in your area.”

Be aware that even with new construction homes, it is recommended to have a warranty, because the first year of a new-construction manufacturer’s warranty does not include labor. If you buy a warranty specifically for new construction, it is significantly less expensive, as it covers the first four years of your home for almost the same price as a typical one-year warranty costs on an existing home.

Be prepared and get the protection and peace of mind you need for your home’s inevitable repairs. 

 

If you need a quote in the Brentwood, Tenn. area, contact Bill Smith at HMS:
bsmithhms@charter.net
615-456-6923
http://www.hmsnational.com

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Posted on 11/03/2013 5:01 PM by Jarod
Monday, 28 October 2013
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 . . . And why has it been added to my mortgage statement?

Mortgage statements can sometimes be confusing. A bill that you thought would only show your principal plus interest totals might also contain charges for an escrow account that covers your home insurance, taxes, and PMI. You might be wondering, “So, who is this PMI and why is he also getting my money?”

PMI stands for Private Mortgage Insurance. If you put down less than 20% when you bought your home, you’re probably paying PMI. It is an insurance that protects the lender from default on a loan. Many first-time homebuyers don’t have 20% saved up when they buy a home, so the lender is taking on a bigger risk to loan more money on the home purchase. The amount of your monthly PMI charge is determined by the percentage you put down, the amount you borrowed, and your credit score.

So, how long will you have to pay PMI if it is currently on your statement? That was determined up front by your amortization schedule. According to the Homeowner’s Protection Act of 1998, as long as you are current on your mortgage payments and do not have an FHA loan, the lender is required to cancel PMI once the balance reaches 78% of the original purchase price.

If you are trying to pay more toward the principal every month to reach the 80% more quickly, you can call and request that the lender drop the PMI, but that is a case-by-case determination. Also, if you get improvements on your home that you believe have raised the value of your home, you can request a new appraisal and submit that for consideration to have your PMI dropped.

If you have just started the home-buying process and want to avoid PMI all together, you need to either find a way to put down 20% up front or take out a piggyback loan. With this loan, you could put down 10%, take out a main loan for 80%, and you would get a piggyback loan for the remaining 10%.

If you have questions about any of this, give me a call and I’ll walk you through everything. Don’t let a seemingly confusing mortgage statement keep you from experiencing the joy of being a home owner!

 

A short synopsis of PMI:

http://www.youtube.com/watch?v=dqDkLXCptR4

 

 

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Posted on 10/28/2013 10:32 PM by Jarod
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