Monday, August 19, 2013

Should You Buy Flood Insurance?

Should You Buy Flood Insurance?

Article From

By: Dona DeZube
Published: June 19, 2013

If you have a mortgage ( on your home and you live in a high-risk flood zone, in most cases, your lender requires you to buy flood insurance.
However, if you live in a moderate- to low-risk zone, and your community belongs to the National Flood Insurance Program (most do), then you have the option of buying it.
If you're in the latter category, your first question probably is, "How much does it cost?" Federal flood insurance can cost just a few hundred dollars or as much as $10,000 a year, depending on your risk factor.
Some other facts that can help you make up your mind:

Your Homeowners Insurance Doesn't Cover Flood Damage
It only covers water falling from the sky. Once water touches the ground and enters your home, it's a flood (, and only flood insurance will pay for the damage.
For example, if a tree limb pokes a hole in your roof during a rainstorm, and rainwater damages your ceiling and floor, that's covered by your homeowners insurance. But if heavy rain causes the creek in your neighborhood to overflow into your home, that's covered only by flood insurance.
To be more precise, the National Flood Insurance Program uses this definition of a flood:
A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from overflow of inland or tidal waters, from unusual and rapid accumulation or runoff of surface waters from any source, or from mudflow.

Everyone Lives in a Flood Zone
It's just a matter of how much risk of flood there is. The NFIP can tell you your home's exact risk of flooding. But in a nutshell, zones A and V are high risk areas. Moderate- to low-risk areas are zones B, C, and X. If you're in zone D, the risk isn't clearly known because it hasn't been mapped yet. But you still can purchase flood insurance. The zones are used to help determine policy rates.

More Than 20% of Flood Insurance Claims Come From Moderate-to-Low Zones

That's 1 out of 5. And that's not counting homeowners who weren't insured and, therefore, couldn't file claims. No one knows how many uninsured there are, although only 18% of homeowners have flood insurance.

You Can't Count on Government Aid

Government aid comes largely in the form of loans, which you will have to repay. Before you can even qualify for a loan, your area has to be declared a federal disaster area, and federal disaster assistance is declared in less than half of all flooding events.

The Average Flood Claim is $30,000

But if you live where the water rises so high that emergency responders have to cut roof holes to rescue people, your potential flood loss could be quite a bit higher.
Cost of damage to a 2,000-sq.-ft. home by 6 inches of floodwater:
 Finished floor, wood, carpeting $15,870 Doors, base trim, windows
$2,150 Electrical, plumbing $320
$2000 Kitchen and bath cabinets $4,500 Appliances $180 Washer, dryer $150 Repairs to furnace/AC $270 Bedroom furniture $1,800 Kitchenware and food $330 Living room furniture $2,700
Computer accessories $1,100 Media equipment $150 Accent furniture and accessories $450 Personal items $650 Total $39,150 1,000 sq. ft. home is $20,150

If You Decide You Want to Purchase Flood Insurance

To get an idea of how much coverage you'll need, create a home inventory ( and then estimate the cost of repairing or rebuilding your home. Together, those two figures are your total potential loss.
A federal flood policy would cover rebuilding costs up to $250,000. You can also get a NFIP to cover up to $100,000 in possessions. One or both of those.

What Flood Insurance Covers (
 If your home would cost more than $250,000 to rebuild, you have to buy a private flood insurance policy called "excess coverage" to insure the value of your home above $250,000. Ask your insurance agent for options.

Questions to Ask Your Agent
FEMA's online flood map locator ( can estimate your premium and help you find an agent who sells federal flood insurance in your community.
When you talk to an agent, make sure you get answers to these questions:
          What will and won't be covered?

          Are there additional expenses or agency fees?

          Will my policy insure me for the actual cost of replacing items, or just what the items are valued at?

          Can my zone change, and therefore, my rates? The NFIP is reworking its maps, which is resulting in some potential rate changes.

Related: 7 Myths About Flood Insurance (

7 Smart Strategies for Kitchen Remodeling

7 Smart Strategies for Kitchen Remodeling

Article From

By: John Riha
Published: May 30, 2013

Follow these 7 strategies to get the most financial gain on your kitchen remodel.

Homeowners spend more money on kitchen remodeling than on any other home improvement project. And with good reason: Kitchens are the hub of home life, and a source of pride.
And if done right, a kitchen remodel can recoup much of its cost. Kitchen remodels in the $50,000 to $60,000 range recoup about 69% of the initial project cost when the home is sold.
A minor kitchen remodel of about $18,500 does even better, returning more than 75% of your investment, according to the most recent Cost vs. Value ( data from Remodeling magazine.
To maximize your return on investment, follow these 7 strategies to keep you on budget and help you make smart choices.

1. Plan, Plan, Plan
Planning your kitchen remodel should take more time than the actual construction. If you plan well, the amount of time you're inconvenienced by construction mayhem will be minimized. Plus, you're more likely to stay on budget.

How much time should you spend planning? The National Kitchen and Bath Association recommends at least six months. That way, you won't be tempted to change your mind during construction and create change orders, which will inflate construction costs and hurt your return on investment.

Some tips on planning:

Study your existing kitchen: How wide is the doorway into your kitchen? It's a common mistake many homeowners make: Buying the extra-large fridge only to find they can't get it in the doorway. To avoid mistakes like this, create a drawing of your kitchen with measurements for doorways, walkways, counters, etc. And don't forget height, too.
Think about traffic patterns: Work aisles should be a minimum of 42 inches wide and at least 48 inches wide for households with multiple cooks.
Design with ergonomics in mind: Drawers or pull-out shelves in base cabinets; counter heights that can adjust up or down; a wall oven instead of a range: These are all features that make a kitchen accessible to everyone - and a pleasure to work in.
Related: Test Your Ergonomic Design Knowledge (
 Plan for the unforeseeable: Even if you've planned down to the number of nails you'll need in your remodel, expect the unexpected. Build in a little leeway for completing the remodel. Want it done by Thanksgiving? Then plan to be done before Halloween.
Choose all your fixtures and materials before starting: Contractors ( will be able to make more accurate bids, and you'll lessen the risk of delays because of back orders.
Don't be afraid to seek help: A professional designer can simplify your kitchen remodel. Pros help make style decisions, foresee potential problems, and schedule contractors. Expect fees around $50 to $150 per hour, or 5% to 15% of the total cost of the project.
More tips on planning a kitchen remodel:
Keep the same footprint (
Get real about appliances (
Don't underestimate the power of lighting (
Be quality-conscious (
Add storage, not space (
Communicate clearly with your remodelers (
 2. Keep the Same Footprint
Nothing will drive up the cost of a remodel faster than changing the location of plumbing pipes and electrical outlets, and knocking down walls. This is usually where unforeseen problems occur.

So if possible, keep appliances (, water fixtures, and walls in the same location. ??Not only will you save on demolition and reconstruction costs, you'll cut the amount of dust and debris your project generates.
More tips on planning a kitchen remodel:
Plan, plan, plan (
Get real about appliances (
Don't underestimate the power of lighting (
Be quality-conscious (
Add storage, not space (
Communicate clearly with your remodelers (
 3. Get Real About Appliances
It's easy to get carried away when planning your new kitchen. A six-burner commercial-grade range and luxury-brand refrigerator ( may make eye-catching centerpieces, but they may not fit your cooking needs or lifestyle.

Appliances are essentially tools used to cook and store food. Your kitchen remodel shouldn't be about the tools, but the design and functionality of the entire kitchen.

So unless you're an exceptional cook who cooks a lot, concentrate your dollars on long-term features that add value, such as cabinets and flooring.

Then choose appliances made by trusted brands that have high marks in online reviews and Consumer Reports.
More tips on planning a kitchen remodel:
Plan, plan, plan (
Keep the same footprint (
Don't underestimate the power of lighting (
Be quality-conscious (
Add storage, not space (
Communicate clearly with your remodelers (
 4. Don't Underestimate the Power of Lighting
Lighting ( can make a world of difference in a kitchen. It can make it look larger and brighter. And it will help you work safely and efficiently. You should have two different types of lighting in your kitchen:

Task Lighting: Under-cabinet lighting should be on your must-do list, since cabinets create such dark work areas. And since you're remodeling, there won't be a better time to hard-wire your lights. (Here's more about under-cabinet lights ( Plan for at least two fixtures per task area to eliminate shadows. Pendant lights are good for islands and other counters without low cabinets. Recessed lights and track lights work well over sinks and general prep areas with no cabinets overhead.
Ambient lighting: Flush-mounted ceiling fixtures, wall sconces, and track lights create overall lighting in your kitchen. Include dimmer switches to control intensity and mood.
Related: How to Choose the Best Bulb for the Job (
 More tips on planning a kitchen remodel:
Plan, plan, plan (
Keep the same footprint (
Get real about appliances (
Be quality-conscious (
Add storage, not space (
Communicate clearly with your remodelers (
 5. Be Quality-Conscious
Functionality and durability should be top priorities during kitchen remodeling. Resist low-quality bargains, and choose products that combine low maintenance with long warranty periods. Solid-surface countertops, for instance, may cost a little more, but with the proper care, they'll look great for a long time.

And if you're planning on moving soon, products with substantial warranties are a selling advantage.
 Kitchen Remodeling Decisions You'll Never Regret (
 White: The Savvy and Chic Kitchen Color Choice (
 More tips on planning a kitchen remodel:
Plan, plan, plan (
Keep the same footprint (
Get real about appliances (
Don't underestimate the power of lighting (
Add storage, not space (
Communicate clearly with your remodelers (
 6. Add Storage, Not Space
Storage ( will never go out of style, but if you're sticking with the same footprint, here are a couple of ideas to add more:

Install cabinets that reach the ceiling: They may cost more - and you might need a stepladder - but you'll gain valuable storage space for Christmas platters and other once-a-year items. In addition, you won't have to dust cabinet tops.

Hang it up: Mount small shelving units on unused wall areas and inside cabinet doors; hang stock pots and large skillets on a ceiling-mounted rack; and add hooks to the backs of closet doors for aprons, brooms, and mops.
Related: Storage Options that Pack More Space in Your Kitchen (
 More tips on planning a kitchen remodel:
Plan, plan, plan (
Keep the same footprint (
Get real about appliances (
Don't underestimate the power of lighting (
Be quality-conscious (
Communicate clearly with your remodelers (
 7. Communicate Clearly With Your Remodelers
Establishing a good rapport with your project manager or construction team is essential for staying on budget. To keep the sweetness in your project:

Drop by the project during work hours: Your presence broadcasts your commitment to quality.
Establish a communication routine: Hang a message board on site where you and the project manager can leave daily communiqués. Give your email address and cell phone number to subs and team leaders.
Set house rules: Be clear about smoking, boom box noise levels, available bathrooms, and appropriate parking.
Be kind: Offer refreshments (a little hospitality can go a long way), give praise when warranted, and resist pestering them with conversation, jokes, and questions when they are working. They'll work better when refreshed and allowed to concentrate on work.
More tips on planning a kitchen remodel:
Plan, plan, plan (
Keep the same footprint (
Get real about appliances (
Don't underestimate the power of lighting (
Be quality-conscious (
Add storage, not space (

7 Tips for Buying Your First Home in the U.S.

7 Tips for Buying Your First Home in the U.S.

Article From

By: Dona DeZube
Published: April 09, 2013

Help finding your way through the complex U.S. real estate market.

Nothing says you're truly an American like owning a home. And just over half of all foreign-born households living in the U.S. own their own home. If you're ready to join them, try these seven tips for American-style home buying success - the process here may be quite different from what you're used to.

1. Be ready to prove who you are. You don't have to get your citizenship, a green card, or any particular type of visa before you buy a home. But you do need:
          An Individual Taxpayer Identification Number. ( That's a number assigned by the Internal Revenue Service to foreign nationals who need to file income tax returns. 
         A valid foreign passport, or two or more current photo identifications, such as a driver's license, to show who you are.

Although property ownership isn't tied to immigration or visa status, there are rules about how long you can stay, so if you're not a citizen, check out U.S. visa requirements before you purchase.
2. Plan to get a mortgage, so you don't have to save your money for years to become a home owner and start building equity. The U.S. home loan market offers many safe, affordable mortgages, including ones that allow Muslims to buy a home without violating Islamic laws against paying interest.

To get a U.S. mortgage, you must establish credit and earn a good credit score ( To boost your score:
          Open U.S. bank and credit card accounts.

          Report all your income on your tax returns. Lenders use tax returns to verify your income and decide how much you can afford to borrow to buy a home.

When it's time to apply for a mortgage, you'll find major banks with global operations have experience working with foreign buyers and tend to have a process for verifying credit established in other countries.

3. Work with a REALTOR® who is a Certified International Property Specialist (CIPS) and who has experience, training, and education in helping foreign-born home buyers. An experienced real estate or title attorney can help you protect your interests, too.

Tell your REALTOR® how the home buying process works in your native country and ask her to explain U.S. home-buying customs to identify any differences. Even within the U.S., local differences exist in how people buy and sell homes. Knowing how homes are sold here and what to expect with closing costs, inspections, and the negotiation process ( reduces your stress and helps you get a good deal on your first home.

4. Don't be shocked by Americans' casual attitudes toward buying or selling real estate; it's a byproduct of the relaxed U.S. business culture. Although real estate contracts must be in writing, the process leading up to the sales contract signing may be more informal and casual than it would be in your home country.

5. Learn to convert from the U.S. standard measurement into metric, or pick up a metric converter app so you can better estimate room and home sizes while shopping.

6. If you're not fluent in English, or prefer speaking in your native language, choose inspectors, mortgage bankers, and REALTORS® fluent in your own language. Although it's possible to get translated copies of standard real estate documents, you'll likely have to sign the English versions during your home purchase.

7. Consider all the real-estate related expenses you'll have as a home owner, including property taxes, home owners insurance, and maintenance costs. Set up a financial plan for your home ( so you know how much money to set aside for ongoing expenses.

Help for Homeowners Who Are Behind on Mortgage Payments

Help for Homeowners Who Are Behind on Mortgage Payments

Article From

By: Donna Fuscaldo
Published: June 14, 2013

The Making Home Affordable program offers at-risk homeowners a chance to modify mortgages to avoid foreclosure on their homes.

If you're behind on mortgage payments (or about to be), which is putting you at risk of foreclosure, the Home Affordable Modification Program (HAMP) could be your lifeline.
Making Home Affordable, the federal program aimed at aiding struggling home owners, offers two options: refinancing (known as HARP ( ) and loan modification, which this article explains.
Unlike refinancing, HAMP pays your current lender to rework your existing loan terms to lower your monthly payments.
But don't expect to breeze through the qualifying process. You'll need a lot of documentation and patience.
Qualifications for HAMP
          Your home must be your primary residence.

          You must owe $729,750 or less on a first mortgage that was originated on or before Jan. 1, 2009.

          You must also demonstrate financial hardship - such as a jump in mortgage payments or a drop in income.

A loan modification makes sense if you can't afford your current mortgage payment but could manage to stay current if your monthly payment were lowered. Homes of up to four units are eligible, with higher loan limits, as long as you occupy one of the units. HAMP is scheduled to expire at the end of 2015.
If you've failed at a prior loan modification, you may still apply for HAMP, so don't let an earlier bad experience deter you from applying again.
The First Steps to Getting a Loan Modification
HAMP begins with a trial phase. Contact your lender to initiate the process, or call 1-888-995-HOPE to get free assistance from a housing counselor approved by the U.S. Department of Housing and Urban Development.
The lender will calculate a lower monthly payment, which you must make on time for at least three months. After successfully completing the trial phase, your lender should make the loan modification permanent.
While lenders may accept some undocumented information up front to begin the process, eventually you'll need to file detailed paperwork to earn a permanent modification. It's better to get your documentation ready in advance. HAMP administrators say the leading reason trial modifications fail to be made permanent is missing paperwork. ??Start by gathering paperwork on:
          Your income (pay stubs)

          Expenses (mortgage statements, tax and insurance bills, debt balances)

          Assets (bank and non-retirement savings statements)

You'll need that information to fill out the Request for Modification and Affidavit (
You also need to complete IRS form 4506T-EZ (, which allows your lender to review your income tax returns.
File a Hardship Affidavit ( as well.
If possible, send all documents together in one package by certified mail to your lender. That will lessen the likelihood of lost paperwork and delays, says Nicole Hall, editor of
How Your Mortgage Payments Get Lowered
A lender can modify a mortgage in several ways:
          Lower your interest rate

          Reduce your principal

          Extend the term of the loan

The basic goal is to use one or more of these approaches to get your monthly mortgage payment, including real estate taxes ( and homeowners insurance premiums, down to a more affordable payment. Lenders are allowed to cut your interest rate to as low as 2%, if necessary. The average HAMP modification has reduced monthly payments by $546.
To get a ballpark figure of how much a modification might lower your monthly payment, run the numbers for yourself. If, for example, your current mortgage payment is $2,000 and your monthly gross income is $4,000, then you're paying 50% of your pre-tax income toward the home loan. A typical modification to bring that figure down to 31% would reduce the payment to $1,240, a savings of $760 a month.
If You're Already Facing Foreclosure
Even if you're already facing foreclosure (, HAMP is worth a shot. The foreclosure process is suspended while you're in the trial phase of the modification.
Foreclosure can be avoided altogether if you can demonstrate the ability to keep up with the new, lower payment and graduate to a permanent modification. Keep in mind that the foreclosure process can resume if you miss payments during the trial phase or fail to get approved for a permanent modification.
Some owners won't be able to stay in their homes, even with a mortgage modification. To avoid foreclosure (, look into the federal Home Affordable Foreclosure Alternatives ( program.
HAFA offers lenders financial incentives to opt for a short sale ( or deed-in-lieu ( rather than a foreclosure. ??In a short sale, a borrower sells a home for less than the outstanding mortgage, and the lender takes the proceeds and considers the debt paid off. In a deed-in-lieu, the homeowner turns over the home to the lender, and the mortgage is closed. Although neither option is ideal, either can make sense if a loan modification isn't attainable or sufficient.
Learn more about stopping foreclosure from our Foreclosure FAQ. (

Does a Pool Add Value to a Home?

Does a Pool Add Value to a Home?

Article From

By: Julie Sturgeon
Published: July 10, 2013

Learn how a pool affects the value of your home, and get advice on construction and maintenance costs.

Does a pool add value to a home? No. And yes.
In general, building a pool is not the best way to add value to your home. You're better off making physical improvements to your actual house instead of adding a pool to your yard.

Related: What Home Projects Give the Most Value? (

However, a pool can add value to your home in some cases:
          If you live in a higher-end neighborhood and most of your neighbors have pools. In fact, not having a pool might make your home harder to sell.

          If you live in a warm climate, such as Florida or Hawaii.

          Your lot is big enough to accommodate a pool and still have some yard left over for play or gardening.

Still, that's no guarantee you'll get a return on your investment. At most, your home's value might increase 7% if all circumstances are right when it comes time to sell. Those circumstances include the points made above, plus:
          The style of the pool. Does it fit the neighborhood?

          The condition of the pool. Is it well-maintained?

          Age of the pool. If you put a pool in today and sell in 20 years, you probably won't recoup your costs, especially if the pool needs updating.

          You can attract the right buyer. Couples with very young children may shy away from pools because of safety issues, but an older childless couple may fall in love with it.

But only you, the homeowner, can determine the true return on investment. A pool can add value to your quality of life and enhance the enjoyment of your home. You can't put a price tag on that.

But we can put a price tag on how much a pool costs to build and maintain.

The Cost to Build a Pool
The average cost in the U.S. to install, equip, and fill a 600-sq.-ft. concrete pool starts at $30,000.

Add in details like safety fences (most states require them), waterfalls, lighting, landscaping, and perhaps a spa (, and you're easily looking at totals approaching $100,000.

Costs also depend on the type of pool you choose.

Gunite is the most popular in-ground pool. Gunite is a mixture of cement and sand, which can be poured into almost any shape. It has replaced concrete pools as the sought-after standard.

Fiberglass shells and those with vinyl liners fall on the lower end of the budget scale, but the liners typically need replacing every 10 or so years. Changing the liner requires draining the pool and replacing the edging (called coping), so over time, costs add up. Most homebuyers will insist that you replace a vinyl liner, even if it's only a few years old.

Related: Fences for Pool Safety (

Filtration and Heating
The filtration pump is the biggest energy hog in a pool system, so you want to get the most efficient pump possible. The good news here is that new, variable-speed pumps use up to 80% less energy than old single-speed pumps, cutting operating expenses dramatically. At about $500, these cost more up front, but some local utilities offer rebates through participating pool dealers. You can further cut energy costs by setting the pump to run at non-peak times, when rates for electricity are lower.

If you're planning to heat your pool, gas heaters are the least expensive to purchase and install, but they typically have the highest operation and maintenance costs. Many pool owners opt instead for electric heat pumps, which extract heat from the surrounding air and transfer it to the water. Heat pumps take longer than gas to warm the pool, but they're more energy-efficient, costing $200 to $400 less to operate per swimming season. Regardless of heating system, covering the pool with a solar blanket to trap heat and reduce evaporation will further lower operating costs.

Related: Solar Pool Heater Costs and Facts (

Maintenance Expenses
All pools require that the water be balanced for proper pH, alkalinity, and calcium levels. They also need sanitizing to control bacteria and germs, which is where chlorine has traditionally entered the picture.

These days you have a variety of options, including systems that use bromine, salt, ozone, ionizers, or other chemical compounds that can be less irritating to skin. Chlorine remains the most popular because the upfront costs are reasonable, and you don't have to be as rigid about checking the levels on a set schedule. But as far as your wallet is concerned, they all even out in the end.

In a seasonal swimming climate, budget about $600 annually for maintenance if you shoulder the chemical balancing and cleaning yourself; in a year-round climate, it's more like $15 to $25 per week.

To save yourself the task of once-a-week vacuuming, you can buy a robotic cleaning system for between $500 and $800 that will do the job for you. In locations where the pool must be opened and closed for the season, add another $500 each time for a pro to handle this task.

Related: Natural Swimming Pools (

Insurance and Taxes
A basic homeowners insurance policy typically covers a pool structure without requiring a separate rider, but you should increase your liability from the standard amount.

It costs about $30 a year to bump coverage from $100,000 to $500,000. Many underwriters require you to fence in the pool so children can't wander in unsupervised.

In some areas, adding a pool may increase your annual property taxes (, but it won't necessarily add to your home's selling price. For that reason, try to keep your total building cost between 10% and 15% of what you paid for your house, lest you invest too much in an amenity that won't pay you back.

Survey: More Renters Want to Become Homeowners

Survey: More Renters Want to Become Homeowners

Article From

By: Dona DeZube
Published: August 05, 2013

Homeownership as a priority is on the upswing. And a look back shows perceptions about owning weren't as negative during the recession as the media suggested.

Americans have favored buying over renting, even during the recent Great Recession, and this year is no different. The 2013 National Housing Pulse Survey, by the NATIONAL ASSOCIATION OF REALTORS®, found Americans overwhelmingly believe owning a home is a good financial decision, and a majority of renters say homeownership is one of their highest priorities for the future.

During the recession, much media coverage of homeownership focused on the idea that lots of people thought renting was much smarter than buying. But that wasn't necessarily the case as a look back shows.

The decline in home prices and turmoil in the housing markets did influence consumers' perception of housing as a sound investment -- but not by nearly as much as the media made it appear.

From 2007 to 2011, based on earlier Pulse surveys, the share of people who thought buying a home was a good financial decision dropped from about 85% to 73% and the share of people who were "not so strongly" positive grew. By 2013, we're back to 80% thinking homeownership is a sound financial decision.

You can interpret that dip two ways. Some would say homeowners were resilient as prices declined. Others would say the recession was a wake up call for investors who viewed the real estate market as a short-term investment.

Regardless of which way you see it, most of us have returned to the much more realistic viewpoint that real estate is a solid, if long-term, investment.

This year's Home Pulse survey also found:
          Eight in 10 Americans think buying a home is a good financial decision.

          68% believe now is a good time to buy a home.

          36% of renters are now thinking about purchasing a home, up from 25% last year.

          The proportion of renters who say they prefer to rent dropped from 31% to 25%.

          Half of renters say that eventually owning a home is one of their highest personal priorities, up to 51% from 42%.

Those renters should be in a good position to buy given that home prices are pretty affordable (unless you're a bus driver in San Francisco). Rising interest rates could come into play, but anything around 6% looks good compared with the double-digit interest rates of the 1980s.

Attitudes toward the housing market have also improved over the years. Nearly four in 10 Americans (38%) said their local market was more active this year, compared with 51% of people who reported a slowdown in local activity last year.

There is also less concern than in the past about the drop in home values; almost half (49%) said housing prices in their area are more expensive than a year ago.