The Homebuyers Guide Chapter 6 Success As a

The Homebuyer’s Guide Chapter 6 Success As a Homeowner

Home Equity = What You OWN! The advantage of home ownership is, over time, owning your home clear and free. This means making payments every month. The value of your home equity is equal to the current value of your property less the amount still owed by your lender.

Common Reasons for Refinancing Your Home • • To save money by lowering interest rate • If you want to modify the ownership because of marriage or divorce Convert to another type of mortgage with better terms

• What if I have trouble making my loan payments? If you find you cannot make a mortgage payment, contact your lender. Talk with them about the problem • • Prioritize your bills and pay your mortgage first. • Forbearance Talk with a housing counselor to determine options.

When Contacting Your Lender • Provide your loan number • Note the name of the person you spoke with and note it on your calendar • Offer information about your current financial situation and provide your loan officer with a remedy you can live with. • Be ready to discuss options such as partial payment, forbearance or a loan modification. • Follow up the phone call with a letter stating what was discussed and confirmed in the call. Date the letter and keep a copy.

In Case of Difficult Mortgage Problems A borrower is considered seriously delinquent after two missed payments. If 90 days pass without a payment, the foreclosure process can begin. A lender, can, however, begin the foreclosure process after the first missed payment.

In Case of Difficult Mortgage Problems If it becomes apparent that you will not be able to make your mortgage payments, what options do you have? 1. First, consider talking with a housing counselor to determine your options. 2. Consider a short sale offered through a realtor. 3. Consider a Deed-in-Lieu of Foreclosure with your lender. Do Not voluntarily give up the EQUITY of your home! P. 52

Know Your Community • • • Meet your neighbors Read community newspapers Visit city or town hall Join a service or professional club Volunteer for special events Attend neighborhood meetings

• • • First Things First after Move In Change all locks and add bolts to windows Install smoke detectors Buy a fire extinguisher for the kitchen Post emergency numbers Plan fire escape route and include the family Introduce yourself to your neighbors

Safety First! If your family asks about housewarming gifts that you might like, put these on their list! • • Fire safety inspections Safety ladders First aid kit Carbon monoxide detectors

Keep Safe and Secure! • • • Lock doors and windows when you go out Trim shrubs that hide windows and doors Install outside lighting Put up “beware of dog” sign Stop mail when you go away

Get to Know Your Home Find each of these and mark them clearly • • Main cutoff valves for water and gas Main electrical switch Fuses or circuit breakers Hot water heater thermostat

Basic Tools • • Screwdrivers Claw hammer Pliers Crescent wrench Hand saw Assorted nails, screws, etc. Tape measure Flashlight with batteries • • Putty knife Utility knife Caulking gun Plunger Handheld power drill Carpenter’s level Ladders Sandpaper

Improvements that Usually Add Value • • • Adding a second bathroom in a 3 - or 4 -bedroom house Modernizing a kitchen Creating more closet and storage space Building a garage Adding a deck, patio, screened porch or skylights

Questions to Ask Before You Remodel or Repair • • • Do you need to hire a contractor? Will the job add value to your house? How much can you afford to spend?

Planning Your Project • • • Think about the finished product Consider your budget Make sketches Do research on local permits and codes Think about timing and weather

Financing Your Project • • Home improvement loan Refinancing your home to use some equity Home equity loan Do it yourself as you have some extra cash Be thoughtful in your financing…. you do not want to jepordize your home should a financial emergency develop!

Working with Contractors • • • Decide which type of contractor you need Get references Visit at least one completed job Ask how long the contractor has been in business Use the Rule of 3 in comparing and selecting a contractor

More to Know About Contractors • • • Check out the contractor’s reputation Check the contractor’s insurance Ask about guarantees Get firm, line item bids Get contract specifics

Managing Your Contractors • • Control costs by controlling changes Get terms of payment in writing as a bid Don’t make the final payment until the job is completed Specify responsibility for permits

Keep Financial Records Safe • • • Purchase a filing cabinet or fire-safe box Design a system for filing records Store important papers from the home sale Keep a copy of your homeowners insurance policy Keep service contracts and owner’s manuals Keep a file for warranties and receipts Make a list of serial numbers Take photos of the home and its contents Keep separate files for maintenance projects

Eligible Income Tax Deductions • • Mortgage interest Points Moving expenses Property taxes

• • Filing a Homeowners Insurance Claim Report burglaries to police Call your insurance agent immediately Make temporary repairs Provide data to your insurance company Keep receipts for additional living expenses Re-read your insurance policy Get a claim identification number

Living Green Reduce Repair Reuse Recycle

• • • Energy-Saving Tips for Your Home Add attic insulation Service furnace and change filter regularly Caulk around doors and windows Install storm windows and doors Set water heater low and put a blanket on it Install attic fans or vents Buy energy-efficient appliances Install ceiling fans Monitor your heating and cooling systems

Summary • Increase the Equity in your Home through Mortgage Payments. • Consider the Possibility of Refinancing as the Market Changes. • Work with a Housing Counselor and your Lender if you are having trouble managing your Mortgage. • Maintain your home through monthly or yearly changes to take care of your investment!