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ISSUE #1267
FEATURE REPORT

Prepare for the Unforeseen: Safeguarding Your Home and Finances

Emergencies can happen in the blink of an eye—fires, hurricanes, floods, earthquakes, tornadoes—they can strike without warning, anywhere, at any time. While your utmost concern is the safety of your loved ones and your property, it's equally essential to shield yourself from the financial aftermath of a disaster. A sudden catastrophe can inflict substantial harm to your property, force temporary relocations, disrupt income streams, and jeopardize valuable financial records.




Also This Month...
6 Mistakes To Avoid When Trading Up to a Larger Home

Unlike the experience of buying a first home, when you're looking to move-up, and already own a home, there are certain factors that can complicate the situation. It's very important for you to consider these issues before you list your home for sale.


 
 

Choosing the Right Contractor for Your Home Improvement Project

When it comes to home improvements, choosing the right contractor can make all the difference in ensuring a successful outcome. To guide you in this crucial decision-making process, we've compiled essential considerations to keep in mind.


Quick Links
Prepare for the Unforeseen: Safeguarding Your Home and Finances
6 Mistakes To Avoid When Trading Up to a Larger Home
Choosing the Right Contractor for Your Home Improvement Project

 

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Prepare for the Unforeseen: Safeguarding Your Home and Finances

Emergencies can happen in the blink of an eye—fires, hurricanes, floods, earthquakes, tornadoes—they can strike without warning, anywhere, at any time. While your utmost concern is the safety of your loved ones and your property, it's equally essential to shield yourself from the financial aftermath of a disaster. A sudden catastrophe can inflict substantial harm to your property, force temporary relocations, disrupt income streams, and jeopardize valuable financial records.

Outlined below are practical steps that make sense and are easy to implement. Before taking any measures, remember to involve your family or friends in decision-making and planning whenever possible. Consider seeking guidance from professionals like Certified Financial Planners, insurance agents, or similar financial experts.

The key is to initiate your preparations now, preventing the unexpected from becoming a harsh reality.

Safeguard Your Property

Start by identifying potential disasters in your area—whether it's fire, flood, earthquake, hurricane, or tornado. Take proactive steps to reduce potential physical damage to your property in case of a disaster. Not only does this enhance safety, but it can also lead to reduced insurance costs. For instance, you can:

  1. Install smoke detectors to ensure early warnings of fire.
  2. Elevate utilities to upper floors or attics.
  3. Clear vegetation around your property to protect against wildfires.
  4. Anchor your home to its foundation and secure the roof to the main frame.
  5. Secure objects that could fall and cause harm during an earthquake.
  6. Install hurricane shutters for windows and prepare covers for glass doors.
  7. If possible, move possessions to a safer location or cover windows in advance of an impending hurricane or flood.
  8. Consider relocating if your property is in a high-risk flood area, near a fault line, or susceptible to coastal erosion.
  9. Have your house inspected by experts to identify structural enhancements that could mitigate disaster damage.

If you're in the market for a new home, factor in construction type, as different materials offer varying levels of protection against different types of disasters.

For guidance, reach out to local authorities like fire departments or utility companies, especially in earthquake-prone areas, to learn safety practices and procedures.

Create a Household Inventory

Document all your possessions by creating a comprehensive list. In the event of a disaster, this inventory can serve multiple purposes:

  1. Validate the value of damaged or destroyed possessions.
  2. Expedite insurance claims for losses.
  3. Support tax deductions for losses incurred.

To conduct a thorough inventory:

  1. Keep originals of crucial financial and family documents secure, including birth certificates, marriage licenses, wills, insurance policies, and financial records.
  2. Make a detailed record of possessions, including descriptions, purchase dates, and costs. Use photographs or videos to supplement written descriptions.
  3. Note model and serial numbers.
  4. Account for items in attics, basements, and garages.
  5. Photograph the exterior of your home and its landscaping.
  6. Make copies of receipts and important documents.
  7. Obtain professional appraisals for high-value items.
  8. Update your inventory annually.

If the task feels daunting, consider using software designed for this purpose, available at local computer stores.

Remember to store a copy of your inventory list in a secure location, such as a safe deposit box, or with relatives or friends.

Secure Appropriate Insurance

Even with ample time to prepare, unavoidable damage can occur. Insurance for homeowners or renters can provide significant assistance during these times. It's crucial to ensure you're adequately covered, as many individuals impacted by recent disasters found themselves underinsured or without coverage.

For Homeowners:

  1. Purchase full replacement or replacement cost coverage at a minimum.
  2. Explore guaranteed replacement cost policies where available.
  3. Regularly appraise your home to adjust coverage for actual replacement costs.
  4. Update policies to encompass home improvements.
  5. Ensure your policy covers the replacement cost of possessions, not just actual cash value.
  6. Understand policy coverage and deductibles.
  7. In case of difficulty obtaining private coverage, explore government-operated insurance pools.
  8. Align your policy coverage with your household inventory.

For Renters:

  1. Consider renting in areas with low disaster risk.
  2. Acquire renter's insurance to protect personal property.
  3. Investigate special coverage like flood insurance.
  4. Clarify policy coverage, including temporary living expenses and sewer backup damage.
  5. Shop around for comprehensive and affordable policies, possibly bundling with existing policies.

For Buyers:

  1. Choose homes in low-risk areas.
  2. Prioritize comprehensive insurance coverage.

Consider Special Coverage:

In addition to standard coverage, inquire about extra coverage for:

  1. Floods and earthquakes.
  2. Home offices and business equipment.
  3. Building code changes after a disaster.
  4. Other potential issues like underground mines or mudslides.
  5. Valuables like jewelry, collectibles, or artwork.

Prepare Your Finances

In the aftermath of a disaster, having access to funds is crucial. Consider these financial steps:

  1. Keep a small amount of cash at home for immediate needs during evacuations.
  2. Establish an emergency fund for financial stability during unforeseen events.
  3. Maintain emergency funds in easily accessible accounts.
  4. Diversify your emergency funds across locations for added security.
  5. Keep credit cards up to date and paid off.

Craft an Evacuation Box

Create a secure and accessible "evacuation box" for emergencies. This box should contain essential items like:

  1. Cash and traveler's checks.
  2. Emergency contacts.
  3. Important prescriptions.
  4. Insurance policies and records.
  5. Other significant financial and family documents.
  6. Backups of computerized records.
  7. Safe deposit box key.

Rent a Safe Deposit Box

Safe deposit boxes are ideal for preserving important documents. Store items like:

  1. Ownership records for property.
  2. Birth certificates and legal papers.
  3. Valuables and investment documents.
  4. Trust agreements and wills (excluding originals).
  5. Insurance policies (copies).

Consider renting a safe deposit box in a distant location to safeguard against localized disasters.

Home Safes and Fire Boxes

While home safes and fire boxes are convenient, they might not withstand extreme disasters. For ultimate protection, keep original documents in a safe deposit box or away from your home.

Plan Ahead if Time Allows

When there's sufficient warning, take the following steps:

  1. Prioritize essential items for evacuation.
  2. Secure irreplaceable heirlooms and photos.
  3. Leave replaceable items behind.
  4. Maintain a battery-powered radio for updates.
  5. Gather critical papers for a home business.

While it might seem overwhelming, even implementing a portion of these suggestions can significantly enhance your financial preparedness for disasters. Your proactive efforts now can go a long way in mitigating the impact of unexpected events.

 

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6 Mistakes To Avoid When Trading Up to a Larger Home


".....you have to sell your present home at exactly the right time in order to avoid either the financial burden of owning two homes or, just as bad, the dilemma of having no place to live during the gap between closings...."


Unlike the experience of buying a first home, when you're looking to move-up, and already own a home, there are certain factors that can complicate the situation. It's very important for you to consider these issues before you list your home for sale.

Not only is there the issue of financing to consider, but you also have to sell your present home at exactly the right time in order to avoid either the financial burden of owning two homes or, just as bad, the dilemma of having no place to live during the gap between closings.

Six Strategies

In this report, we outline the six most common mistakes homeowners make when moving to a larger home. Knowledge of these six mistakes, and the strategies to overcome them, will help you make informed choices before you put your existing home on the market.

1. Rose-colored glasses

Most of us dream of improving our lifestyle and moving to a larger home. The problem is that there's sometimes a discrepancy between our hearts and our bank accounts. You drive by a home that you fall in love with only to find that it's already sold or that it's more than what you are willing to pay. Most homeowners get caught in this hit or miss strategy of house hunting when there's a much easier way of going about the process. For example, find out if your agent offers a Buyer Profile System or House-hunting Service, which takes the guesswork away and helps to put you in the home of your dreams. This type of program will cross match your criteria with ALL available homes on the market and supply you with printed information on an ongoing basis. A program like this helps homeowners take off their rose-colored glasses and, affordably, move into the home of their dreams.

2. Failing to make necessary improvements

If you want to get the best price for the home you're selling, there will certainly be things you can do to enhance it in a prospective buyer's eyes. These fix ups don't necessarily have to be expensive. But even if you do have to make a minor investment, it will often come back to you ten fold in the price you are able to get when you sell. It's very important that these improvements be made before you put your home on the market. If cash is tight, investigate an equity loan that you can repay on closing.

3. Not selling first

You should plan to sell before you buy. This way you will not find yourself at a disadvantage at the negotiating table, feeling pressured to accept an offer that is below market value because you have to meet a purchase deadline. If you've already sold your home, you can buy your next one with no strings attached. If you do get a tempting offer on your home but haven't made significant headway on finding your next home, you might want to put in a contingency clause in the sale contract which gives you a reasonable time to find a home to buy. If the market is slow and you find your home is not selling as quickly as you anticipated, another option could be renting your home and putting it up on the market later - particularly if you are selling a smaller, starter home. You'll have to investigate the tax rules if you choose this latter option. Better still, find a way to eliminate this situation altogether by getting your agent to guarantee the sale of your present home (see point number 5 below).

4. Failing to get a pre-approved mortgage

Pre-approval is a very simple process that many homeowners fail to take advantage of. While it doesn't cost or obligate you to anything, pre-approval gives you a significant advantage when you put an offer on the home you want to purchase because you know exactly how much house you can afford, and you already have the green light from your lending institution. With a pre-approved mortgage, your offer will be viewed far more favorably by a seller - sometimes even if it's a little lower than another offer that's contingent on financing. Don't fail to take this important step.

5. Getting caught in the Real Estate Catch 22

Your biggest dilemma when buying and selling is deciding which to do first. Point number 3 above advises you to sell first. However there are ways to eliminate this dilemma altogether. Some agents offer a Guaranteed Sale Trade-Up Program that actually takes the problem away from you entirely by guaranteeing the sale of your present home before you take possession of your next one. If you find a home you wish to purchase and have not sold your current home yet, they will buy your home from you themselves so you can make your move free of stress and worry.

6. Failing to coordinate closings

With two major transactions to coordinate together with all the people involved such as mortgage experts, appraisers, lawyers, loan officers, title company representatives, home inspectors or pest inspectors the chances of mix ups and miscommunication go up dramatically. To avoid a logistical nightmare ensure you work closely with your agent.

 

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Choosing the Right Contractor for Your Home Improvement Project

When it comes to home improvements, choosing the right contractor can make all the difference in ensuring a successful outcome. To guide you in this crucial decision-making process, we've compiled essential considerations to keep in mind.

Firstly, gather recommendations and references from trusted sources such as friends, family, and individuals who have previously worked with the contractor. These personal insights can provide valuable guidance in assessing the contractor's credibility and expertise.

Next, it's advisable to obtain written estimates from at least three contractors who have visited your home to evaluate the work that needs to be done. Ensuring that the estimates are based on the same scope of work allows for meaningful comparisons and helps you make an informed decision.

Checking for proper licensing and registration is essential. Make sure that the contractor meets the necessary requirements set by your local consumer agency. Some areas have stringent criteria, including competency tests and financial solvency assessments. Research whether the contractor's licensing includes the necessary insurance coverage for liability, property damage, and worker's compensation.

Furthermore, it's crucial to review the contractor's complaint records with organizations like the Better Business Bureau. This step offers insights into the contractor's track record and can help you gauge their reliability.

When reviewing proposals, scrutinize the provided contracts thoroughly. Ensure that the contract outlines all aspects of the project, including work details, materials quality, subcontractor information, project timeline, total cost, and payment schedule.

We've compiled a checklist of considerations for selecting a contractor:

  • Seek Recommendations: Consult friends, family, and acquaintances who have undergone similar projects for contractor suggestions. Hearing about firsthand experiences can be invaluable.
  • Obtain Multiple Estimates: Request written estimates from at least three contractors who have assessed the work on-site. Ensure that the estimates are based on the same scope of work for accurate comparisons.
  • Licensing and Registration: Confirm that the contractor adheres to your local consumer agency's licensing and registration criteria. Some regions require competency testing and financial vetting, with provisions for covering financial losses from contractor issues.
  • Estimate vs. Final Bill: Familiarize yourself with local laws regarding the permissible difference between the estimate and the final bill. Any increase beyond this should require your prior approval.
  • Check Complaint Records: Research the contractor's history of complaints with agencies like the Better Business Bureau or similar organizations.
  • Supplier Relations: Obtain supplier references and inquire about the contractor's payment timeliness.
  • Building Inspection: Contact your local building inspection department to verify permit and inspection prerequisites. Be cautious if the contractor insists on you obtaining the permit, as this could signal a lack of proper licensing.
  • Insurance Coverage: Ensure the contractor possesses essential insurance coverage, including personal liability, property damage, and worker's compensation. Verify your own insurance coverage for potential injuries or damages.
  • Comprehensive Written Contract: Demand a detailed written contract that outlines the work scope, materials quality, warranties, subcontractor details, project timeline, total cost, and payment schedule.
  • Down Payment Limit: Understand the local regulation on down payments and avoid excessive upfront payments.
  • Payment Options: Compare financing options between contractor-provided loans and your own financing. Evaluate the costs associated with each.
  • Final Payment Caution: Do not make the final payment or sign a release affidavit until you are content with the completed work and have confirmed the payment to subcontractors and suppliers.
  • Credit Card Payments: Opt for credit card payments when possible. This can offer you leverage to withhold payment until issues are resolved.

Be Vigilant Regarding Contractors Who:

  • Approach You: Be cautious if contractors approach you unsolicited or through door-to-door visits.
  • Leftover Materials: Watch out for claims of having extra materials from previous jobs.
  • "Demonstration" Jobs: Be wary if the contractor suggests your project as a demonstration.
  • Referral Discounts: Approach with caution if offered discounts for referring other customers.
  • Outlandish Quotes: Be cautious of significantly higher or lower quotes compared to other estimates.
  • Immediate Decision Pressure: Avoid contractors who pressure you for an immediate decision.
  • Exaggerated Guarantees: Be cautious of exceptionally lengthy guarantees.
  • Hard-to-Reach Contractors: Be wary if the contractor can only be reached through an answering service.
  • Unmarked Vehicles: Exercise caution if the contractor drives an unmarked vehicle or uses out-of-area license plates.
  • Full Upfront Payment: Avoid contractors who request full payment upfront.

By taking these steps and staying vigilant, you can enhance your chances of selecting a reliable and competent contractor for your home improvement project.

 

 

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