5 Ways to Make Sure Your Mortgage is on Track

It's time to make sure your mortgage is on the right track. The Consumer Financial Protection Bureau (CFPB) rules require that your mortgage servicer send you more information and fix mistakes quickly. 

And if your interest rate has changed this year, you should have got a heads up to give you more time to shop for a better deal. 

I hope you have taken the steps to make this year one with fewer runarounds and surprises.

By February you should have received a new monthly mortgage statement showing how your mortgage servicer credited your monthly payments along with any extra payment. Your statement also puts the important information you need in one place: Your interest rate, the balance on your loan, and how your payments are applied. If you use a coupon book, your mortgage servicer will have to send you a coupon book that complies with the new rules.

1. Check for delays.

With very few exceptions, your servicer must credit your mortgage payment as of the day they receive it. Check your statement to see if your payments were credited on time.  If not, call or write your servicer and tell them to correct the problem.

2. Fix mistakes.

The new CFPB mortgage rules require servicers to investigate and fix, in a timely manner, any mistakes that you report. If your servicer won't help you when you call, submit a written error notification for more protection.

3. Shop around.

Your monthly mortgage statement will show you your interest rate and principal balance. Compare your rate to current interest rates. You can find local rates online or in the business section of your newspaper. If your interest rate is higher than current rates, you might look into refinancing.

4. Prepare for your rate reset.

If you have an Adjustable Rate Mortgage (ARM), your mortgage servicer is required to send you an estimate of your new payment seven or eight months before your interest rate resets for the first time. If you have an ARM that has already reset once, you will be notified two to three months in advance of the next reset. This advance notice is designed to give you time to budget for your new payment or shop for a different mortgage.

5. Get help and take control.

If you are having trouble paying your mortgage, you will get a warning that you're late on your payment on your new monthly statement. CFPB rules also generally require your mortgage servicer to reach out to you. But you don't have to wait until you fall behind to act. 

Take control. If you submit a complete application for help soon enough—often called a loss mitigation application—CFPB rules require your servicer to evaluate you for options that may be available to you to avoid foreclosure.


Call (773) 614-3201 if you need some help in understanding your mortgage statement or if you are considering refinancing. Click here to calculate your mortgage.

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Quick Guide to Buying the Best Homeowners Policy Part 1

When shopping for home insurance, remember this: Insure your house for the cost to replace it (meaning reconstruction costs), not its real estate "market value", and don't factor in the value of your land. 

Also know that a home insurance policy covers much more than damage to your house. 

There are additional coverages within a home insurance policy with limits often set as a percentage of the dwelling's coverage amount. (Check your own policy for limits.)

• Your belongings. (Often 50 percent of the of the dwelling amount.)    

• Certain structures outside your house, such as your garage or fence. (Often 10 percent of     the dwelling amount.)

• Loss of use, meaning additional living expenses you incur if you can't live at home due to damage.     This could include hotel bills, restaurant meals and laundry costs. (Often 20 percent of the dwelling  amount.)

• Liability, for cases where you are sued for damages or injuries to someone else.

• Medical bills for people injured on your property or by your pet.

  Other items may be covered under your home insurance, with specific limits for each, so check your   policy or ask your agent:

• Downed trees.

• Replacement of lawn, trees and shrubs.

• Debris removal.

• Power outages, including food spoilage.

• Grave markers.

• Unauthorized charges to your credit cards.

    

You may also need special add-ons for valuables such as jewelry, your computer equipment, antiques and other pricey possessions, where their value exceeds the coverage limit of your policy.

Home insurance does not cover earthquakes or floods - you'll need to buy separate policies for those if you want coverage for those disasters. And in some areas of the country you need to buy windstorm coverage  separately. Now go to the Part 2 Guide.

Lending institutions usually require mortgage customers to purchase home insurance. Don't rely on the coverage levels mandated by your bank or mortgage company. Those levels are designed to protect the  house itself, but not necessarily your possessions. That's why it's important to check with your agent or  insurance company to make sure you have adequate coverage.

Have questions about your Homeowners' policy, call (773) 614-3201

  

What You Need to Know Before Making a Home Buying Offer

Your home is likely going to be the greatest asset you have and what you can leave to your posterity. 

Once you decide upon the home that you want, your next step is to negotiate about what to include in the offer or purchase commitment.

 In most states, your Realtor will help you determine what to say or even say it for you. Some states may require an attorney to take part in the transaction.

If possible, ask your Realtor to let you see a blank copy of a purchase agreement when you first begin looking at homes. 

This is the document that you will present to the seller, and where you offer a price and any conditions you have for the purchase. That way, you will have time to think about what you want your agreement to cover. 

Be sure to include in your agreement a stipulation that the purchase depends upon a satisfactory professional inspection. If you have any doubts about the results of the inspection, ask for another one.

Here is What You Need to Know Before Making a Home Buying Offer:

1. Get recent selling prices of similar homes in the area to justify your offer price.

2. Be careful not to let your feelings rule. Remember, if the offer is turned down, there are (usually) other homes to your liking.

3. Do a background check on the property. How long has it been on the market? Why is it being sold? What are its good and bad points? Doing your homework will help you make an offer that meets the needs of both buyer and seller.

4. Check out the neighborhood and speak to neighbors.

5. Consider the home's resale value.

6. Negotiate about the offer price and other items to be covered in the offer before you sign any formal papers.

When your offer is formally accepted, you sign the purchase agreement which is a legal contract. It covers many items, such as the price, total down payment, and closing date. (The closing date is when you sign the closing or settlement agreement that officially makes the home yours. 

This date may change if all the necessary paperwork is not finished. The offer also states which party (buyer or seller) will pay for which settlement costs, the type of loan you are applying for, and the interest rate. 

Keep in mind that earnest money or a good faith deposit is required when the offer is accepted. This is a cash deposit towards the down payment and shows your commitment to buying the home. 

Ask your real estate agent how much money is needed for a deposit and use your pre-qualification certificate to back up your offer.

Again, to protect yourself, be sure that the purchase agreement is conditional. This means that you can cancel it if you do not secure the loan or if the inspection identified major problems that can't be corrected before closing.

Any Comments? Leave them below. Click here if you want to calculate your mortgage.

4 Most Popular Ways to Own a Home - the Pros and Cons

You will probably look at and consider many homes before you make an offer on one. 

But even before you begin house hunting, it helps to have in mind the type of home you want and the features that are most important to you. 

Here are the 4 Popular Ways to Own a Home and the Pros and Cons.:

THE TYPES OF HOME OWNERSHIP

1. Single family Ownership 
This is the most popular type of home ownership. As the owner of a single-family dwelling, you are totally responsible for paying the mortgage, property taxes, and any other carrying expenses, including all maintenance and repair costs.

2. Condominium Ownership
As the owner of a condominium, you own your living quarters (apartment, town home, or other unit) in the same way that a single-family homeowner does. You also own a share of the common space, such as gardens, parking areas, and community facilities (e.g., pool, recreation hall, tennis court). You pay a monthly maintenance fee for the common expenses. The owners' association, which you belong to makes decisions about how the condo is run.

3. Co-operative  Ownership
As the owner of a co-op, you buy a share or a number of shares in the corporation that owns and manages the building your apartment is in and the land it is on. If you took out a mortgage for the apartment, you are responsible for paying it off. You also pay a monthly maintenance fee for your part of co-op expenses, repairs, and taxes. You must, however, be approved by the co-op board before you can purchase.

4. Multi-family Ownership
This type of home has separate living quarters for two or more families to rent. The owner may be able to use rent from the other tenants to cover his or her own housing costs. These homes are often restricted to certain areas by zoning laws.

Condominiums and co-ops 
Depending upon the location, this type of home may be less expensive than single-family homes, although association fees can drive up the cost. They may also be safer and provide a variety of services and extra features that single-family homeowners often can't afford. However, you must obey the by-laws and rules of the association. Also, these dwellings generally do not appreciate in real estate value as quickly as single-family homes do.


Interested in home ownership, call for a free consultation, (773) 614-3201

5 Rules to Follow if You Want Good Credit

There are the financial gurus or advisers on TV, radio, and in print that advise their followers to cut up all their credit cards and go on a cash only basis. 

These advisers often already have a great cash flow either from their book sales, their speaking engagements, their media gigs, their investments, or any combination of the above. Ironically, often they used credit to get to the point where they are and now they are advising all of us to stop using credit.

However, for most of us, carrying a few credit cards is the norm. Nevertheless, if you want to keep your already good credit or want to improve your credit even more, there are some things you should not do: 

1. Don't miss a payment and end up paying 30 days late. This results in an immediate negative impact on your credit score.

2. Don't resume paying a delinquent account if it is over two years old unless you are applying for a mortgage loan and the lender requires it to be paid off. Delinquent account over two years old have minimum impact on your credit score and if you start paying it again, the algorithms at the credit bureaus will treat it as if it was a recent entry. Please avoid doing this. Do not feel guilty that you didn't pay this obligation, it has been charged of as a bad debt by the creditor.

3. Don't accumulate more than five revolving credit cards (for example, Master Cards, VISA cards, and Discover cards) and always ignore the instant credit offers from retail stores giving you 10% off. They almost always have a higher interest rate and besides these stores accept Master and VISA cards anyway. They just want to make extra money off of you.

4. Don't allow your credit to exceed 30% of your credit limit. For example, you have a credit limit of $1000 your balance should not be more than $300. The larger the spread between your balance and your credit limit the better. If you can afford to pay off your balance each month prior to the due date on your statement, that would be even better.

5. And finally, don't close your credit cards that have these low balances and transfer these balances to new credit cards offering lower interest rates. That will result in you having fewer credit cards with higher balances thus impacting your credit score negatively. Instead, negotiate with your current creditors for a lower interest rate. You already have a good record with them and chances are they will not want to lose your business. 

Make these don'ts a habit and you will continue to maintain your good credit, and even see it improve.

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Quick Guide to Buying the Best Homeowners Policy Part 2

You may hear the term "standard home insurance policy." Home insurance policies are often similar because there are two organizations that supply policy forms to insurers: ISO Insurance Services Office) and the American Association of Insurance Services (AAIS). 

Some home insurance companies choose to use their own policies. Whichever type your insurer is using, it has to be approved by your state insurance department.

Know the Perils covered in HO-2, HO-4 and HO-6 policies

1. Fire or lightning

2. Windstorm or hail

3. Explosion

4. Riot or civil commotion

5. Damage caused by aircraft

6. Damage caused by vehicles

7. Smoke

8. Vandalism or malicious mischief

9. Theft

10. Volcanic eruption

11. Falling objects

12. Weight of ice, snow, or sleet

13. Accidental discharge or overflow of water or steam from within a plumbing, heating,               air conditioning, or automatic fire-protective sprinkler system, or from a household                 appliance  
 14. Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot             water heating system, an air conditioning or automatic fire-protective system.

 15. Freezing of a plumbing, heating, air conditioning or automatic, fire-protective                         sprinkler system, or of a household appliance.

 16. Sudden and accidental damage from artificially generated electrical current (does not           include loss to a tube, transistor or similar electronic component).

What will vary will be premiums. You can find a wide range of rates among insurance companies for the exact same level of coverage. That's why it's important to shop around.

Basic Types of Home Insurance Policies
Each homeowners insurance policy provides a combination of property and liability coverage and covers loss of use resulting from damage. There are several basic types of home insurance policies:

HO-1

• Basic homeowners policy.

• Covers your house and possessions against 10 different perils.

• HO-1 policies have been discontinued in most states.

  HO-2

• Broad homeowners policy.

• Covers house and contents against 16 perils, which are named in the policy.

  HO-3

• Special form homeowners policy.

• Covers the structure for all perils except those specifically excluded by the policy.

• Contents are covered against perils named in the policy.

   HO-4

• Renters insurance policy.

• Covers contents for 16 named perils and includes liability coverage. It does not insure the      dwelling itself.

• Also includes liability coverage for the renter.

  HO-5

• Premier homeowners policy, generally offered to newer, high-end homes that are well-         maintained.

• Much like the HO-3 policy but contents are covered against all perils except those                 specifically excluded.

• According to the Insurance Information Institute, in some cases, depending upon the              year of construction, the area where you live, your claims history, and other rating                  factors, you can buy an HO-5 for about the same cost as a traditional HO-3.

  HO-6

 • Insurance for owners of co-ops or condominiums.

 • Provides personal property coverage, liability coverage and specific coverage of                    improvements to the owner's unit. Insurance provided by the owner's association                  normally covers most of the actual structure.

 HO-8

• Policy for older homes.

• Covers the same perils as HO-2 but pays only for repair costs or actual cash value,               since replacement cost could make the policy costly.  

• Well-suited for older homes whose market value is considerably less than the cost to               rebuild them.

Home insurance rates

Many factors go into determining the premiums for a homeowners policy. The age of your home, the materials used to build it, where it's located, the square footage and its distance from a fire hydrant all generally play a role in rates.The insurer should be able to give you an estimate for rebuilding your house in the event of a total loss. That estimate should be your dwelling coverage amount.

Replacing personal property      

The extent of coverage for your belongings depends on the loss settlement clause. This clause identifies property that will be valued at actual cash value, and property that will be valued at replacement cost. 

Before buying home insurance, understand the differences among "actual cash value," and "replacement cost." A cash value policy pays for an item's replacement cost, minus depreciation. Replacement cost policies give you more protection than actual cash value coverage. For example, what happens if a burglar steals your six-year-old television set? With  actual cash value coverage, you get only what you would expect to pay for a six-year-old television set. With replacement cost coverage, the insurance company pays to replace your TV with a new set similar to the stolen one.

Extended replacement cost for your house

In another twist to your policy choices, some companies offer coverage for your dwelling that goes beyond its insured value. In other words, your premium might be determined based on dwelling coverage for $200,000, but if your home is destroyed and it costs $215,000 to rebuild, you're covered.

Guaranteed replacement cost coverage pays for the full cost of replacing or repairing a damaged or destroyed home, even if it is above the policy limit. You may have a tough time finding a policy with guaranteed replacement cost.

Extended replacement cost coverage pays a certain amount above the policy limit to replace a damaged home, generally 120 or 125 percent.

Guaranteed and extended replacement cost policies are designed to protect the policyholder after a major disaster when the high demand for building contractors and materials can push up the normal cost of reconstruction.

Home inventories

Many people learn only after a fire or storm that they didn't have enough personal property coverage. Taking inventory will help you decide how much contents coverage you need. It also will simplify the claims process if you have a large loss; no one wants to reconstruct everything they owned from memory.

Your inventory should list each item, its value and serial number, where applicable. Photograph or videotape each room, including closets, open drawers, storage buildings and your garage. Keep receipts for major items in a fireproof place.

Other insurance you may need

Flood insurance

Homeowners policies do not cover flood damage. The National Flood Insurance Program (NFIP) offers flood insurance    

      

Earthquake insurance

If you are concerned about earthquakes, you can get earthquake insurance with a separate policy.

Windstorm insurance

In much of the country, damage from wind is already included in your homeowners policy. But in hurricane-prone areas like Florida, homeowners who want to insure against wind damage needs to buy special windstorm coverage.

Endorsements & add-ons

Home insurance policies contain exclusions and limitations for some types of personal property that are particularly susceptible to loss. Some policies place a specific dollar limit on certain property such as jewelry or antiques.

   

You might want more coverage for certain items than your policy provides. For an extra premium, you can buy endorsements that expand or increase the coverage on these items. Some of the most common endorsements cover jewelry, fine arts, camera equipment, coin or stamp collections, computer equipment, and radio and television satellite dishes and antennas. To insure that these types of items are properly  covered, look into a "scheduled personal property endorsement."

Personal umbrella liability insurance

If you want more liability coverage than your home and car insurance policies provide, you can buy a separate umbrella insurance policy.

Additional Coverage Available

      • Building code upgrades through home insurance companies        

      • Sewer and drain back-ups nationwide.                              

      • Inflation-guard      

      • Special riders for jewelry, collectibles and expensive items if your home is in a special             flood hazard area, you might be required to purchase flood insurance.

Why you should read your policy  

You may renew your home insurance policy each year and never bother to read the new paperwork your insurer sends. But renewal time is when insurers have the opportunity to make changes to your policy. You  won't know your policy has changes unless you read your declarations page each year. For example, insurers that use forms from AAIS might be sneaking in a new exclusion for roof damage that's  cosmetic. So if hail has pock-marked your roof, repairs may not be covered.

   

Also pervasive in recent years has been the spread of percentage-based deductibles for certain perils, such as windstorms. These policies make you liable for 1 to 5 percent of your home's insured value before the insurance company pays. So, if you have a 2 percent deductible and your home's insured value is $250,000,  you're on the hook for $5,000.

Saving money

The best ways to save money on home insurance are to shop around for rates and to make sure you get all the discounts to which you're entitled. 

If you have any questions about your Homeowners Insurance Policy of if you need Homeowners Insurance, call (773) 614-3201