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You've found a new house, but your hold one is
still on the market. How to juggle two homes and
bridge the financing gap.
Your best bet, if you haven't already put your home up for sale, is the home-equity line of credit, says Tucker Watkins, a financial planner in Irvine, Calif. It's cheaper (recent average rate: 8.75 percent), with fees generally under $300 (if you pay fees at all). And a credit line is still easy to get these days, even with the credit crunch, as long as you've built up sufficient equity in your house. Just make sure your lender doesn't impose any prepayment penalties or exit fees. Your alternative is the more expensive bridge loan, typically a one-year interest-only loan specifically designed to cover the financial gap between buying a new home and selling the old one, using the older house as collateral. Rates run one to two percentage points higher than a credit line, and you'll also have to pay up-front points and closing costs equal to about 2 percent of the amount you're borrowing. Fewer lenders offer this type of loan, so expect to call numerous banks to find one. To qualify you'll have to show that you have enough in the way of income and assets to temporarily cover the mortgage payments on both houses and other costs of ownership. Not so easy, eh? So here's a radical thought: Unless you have to move - for instance, if you're relocating for a new job - maybe borrowing more isn't the answer. What you should do first is get more aggressive about selling the house you already own - say, sharply lowering the price or hiring a stager to make it look more inviting to buyers. After all, in this market it could take months, even more than a year, to sell your house. Or at least make your offer for the new house contingent on the sale of your old one. If the seller refuses, walk away. Given the flood of houses hitting the market, another dream home will likely turn up - really - maybe even at a better price. Info from CNN Money |
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Smart homeowners know how to save on their
homeowners insurance policies. Here are the primary
ways to reduce your homeowners insurance
premiums:
1. DON'T INSURE FOR THE AMOUNT OF THE MORTGAGE. Many homeowners blindly insure for the amount of their mortgage balance. The result can be either too much insurance coverage or not enough. The mortgage balance has absolutely nothing to do with how much insurance you need. Over-insurance usually occurs when high land value (which won't be destroyed in a fire) is included in the homeowners insurance policy. A better approach is to determine replacement construction costs for your type of house. For example, suppose you have a 2,500-square-foot home and the three insurance agents you consult agree it would cost about $200 per square foot to rebuild your house if it burns to the ground. The result is your homeowners insurance policy should be for $500,000 even if comparable home sales in your neighborhood are around $700,000 including the land value. 2. RAISE YOUR DEDUCTIBLE TO LOWER YOUR INSURANCE PREMIUM. If you can afford to pay for small claims yourself without involving the insurance company, raising your policy deductible from $500 to $1,000 will usually reduce your annual premium about 20 percent. If you can afford to raise the deductible to $2,000, your premium savings will be even greater. 3. LOWER YOUR LIABILITY COVERAGE, RAISE YOUR UMBRELLA POLICY COVERAGE. If you have a net worth of more than $500,000, it can pay to lower your homeowners insurance liability coverage and raise your umbrella liability insurance policy to $1 million or $2 million, perhaps more. For example, several years ago my insurance agent recommended cutting my homeowners policy liability coverage to $300,000. That means if someone is injured on my property because I am negligent, the policy will pay up to $300,000 damages. If the person were seriously injured, then my umbrella insurance policy with the same insurance company takes over and pays up to its policy limit. Umbrella insurance policies usually cost just a few hundred dollars for $1 million or more of liability coverage. These policies also provide automobile liability coverage if I should be at fault in an auto accident. Be sure to have all your insurance policies with the same company so, in the event of a loss, there is no arguing between insurers. 4. DON'T MAKE SMALL INSURANCE CLAIMS. In case you haven't heard, some insurers are either nonrenewing or raising premiums for homeowners who file too many insurance claims. If you have a large claim, by all means file an insurance claim. However, if you have a modest loss slightly above your deductible amount, it's often best not to file a claim and to pay the entire loss yourself. The number and amount of claims can also be important when you sell your home. If you have filed many claims, your buyer might have difficulty purchasing homeowners insurance because the house is "loss prone." 5. CARRY ACTUAL CASH VALUE PERSONAL PROPERTY COVERAGE. A controversial way to save on homeowners insurance personal property coverage is to insure for the depreciated actual cash value rather than the full replacement cost. That means in the event of a covered loss, such as a fire or theft, the homeowners insurance company will pay only the depreciated cash value of the personal property. However, full replacement-cost coverage, which is more expensive, will pay the full cost of replacing the personal property at today's prices. If you have valuable "scheduled items" such as jewelry, furs, artwork and collections, the extra insurance premium can be substantial. It may pay to shop among other insurance companies for separate special coverage on these items. 6. ASK ABOUT MULTIPOLICY DISCOUNTS. Many insurance companies offer savings of 5 percent or more if you have two or more insurance policies, such as automobile and homeowners, with the same insurer. Also ask about other available discounts such as for burglar alarms, smoke detectors and dead-bolt locks. If you need a great local insurance agent, contact Chris Altobell with Farmers Insurance. He's worked with a number of my clients who have all been pleased with his service and ability to save them money. Click the link below for his contact info. Info from Inman News |
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FOR A FREE MARKET ANALYSIS OF YOUR HOME AND ESTIMATE OF VALUE CALL OR EMAIL ME! I WILL GET YOU THE INFO WITHIN 24 HOURS OF YOUR REQUEST. Please contact me with all of your real estate needs and questions. I am always available to you, your family and friends!
Sincerely,
Kia Kapci
Lyon Real Estate
email:
kkapci@golyon.com
phone:
916-782-0558
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