Thursday, September 27, 2007

Don't make this mistake with homeowners insurance

Why updating policy after paying off mortgage is so crucial

Thursday, September 27, 2007By Ilyce R. GlinkInman News

I received these comments after answering a question in a recent column about any changes that should be made on a homeowners insurance policy:

Comment: I read your recent column in the Hartford Courant. One reader asked if any changes were needed on the home's insurance policy once the mortgage was paid off.

Your answer was "no." You stated that no changes needed to be made on the insurance policy. I disagree. If a mortgage company or bank is listed as a mortgagor or loss payee on the insurance policy, then that entity should be removed from the policy once the loan is paid off.

Ilyce: If a fire or other loss results in a claim, the insurance company will issue the loss payment or settlement check for that claim payable to both the insured (the homeowner) and the mortgagor if the name has not been removed. The proper paperwork needs to be submitted to the insurance company to have the mortgage company or bank deleted from the policy. It would not have any financial interest in the home once the mortgage is paid off.

Comment: I believe your comment that nothing needs to be done is in error. The reader should have his homeowners insurance policy modified to remove the lending institution as an additional insured. Otherwise the reader would have to locate and request the lender sign off on any claim settlement checks should the property be damaged at some future date.

The reader should also request that tax and insurance bills be sent to him for payment rather than to the lending institutions' escrow accounts.

Ilyce: Loretta Worters, a spokesperson for the Insurance Information Institute, agrees it is a good idea to notify your insurance company that your mortgage has been paid off.

"When you have paid off your mortgage, the title is returned to the borrower," who is also the homeowner, she explained. The homeowner "would need to notify the insurance company that the title is now in his name, but the bank may automatically do it."

According to Worters, this is an important thing to do to smooth the claims-paying path in case you have a loss.

"If you have a loss, the check would be made out to you and to the bank because theoretically the bank owns your home," she explained. If you remove the lender's name from the policy once your mortgage is paid off, only your name would be printed on the check, which helps cut down on the paperwork.

If you don't remove the bank's name, it slows down the process of getting you a check because there would be additional paperwork to complete.

"It's more of an inconvenience. The check would have to be reissued. The insurance company would probably look for proof that the loan has been paid off -- such as the title from the bank. It's not awful but it would take time. If you're looking to get a claim paid to rebuild a home after a catastrophe, you want to get it paid as quickly as possible," she said.

When you refinance your mortgage, you'll need to notify your insurance company as well, says Worters, so that new lender is named on the homeowners insurance policy. Typically, the lender takes this step for you.

Worters said there are typically two areas where problems creep up when it comes to homeowners insurance and mortgages.

Ninety-eight percent of homeowners have homeowners insurance because the lender requires it. But once a home loan has been paid off, some homeowners decide they no longer want to pay for homeowners insurance.

"It's extremely dangerous, because if they experience a loss after the policy lapses, they are on their own and they may not be aware of it. Banks automatically include homeowners insurance as part of the package on many mortgages. So you may not even be aware of your premium or your coverage," Worters explained. "But once your home is paid in full, you will no longer get notices about homeowners insurance and it could slip through the cracks."

The best way to contact your insurance company is to call first, and then follow up in writing. Be sure to keep a copy of the letter, which you should send via registered mail, return receipt requested.

Friday, September 21, 2007

How to protect home from winter's fury

By Paul BianchinaInman News

With fall's transition between the seasons comes a transition for your home as well. That roof and those four sturdy walls need to protect you from winter's fury, and there are several things you can do to help get ready.

1. Seal masonry surfaces: Apply a sealer to concrete driveways and walkways, brick patios and other exterior masonry. The sealer, available from paint stores and masonry supply retailers, prevents water from penetrating into cracks and crevices where it can freeze and cause serious damage.

2. Prepare your fireplace: Now is the time to get wood-burning appliances such as fireplaces and woodstoves ready for the season. Remove ash buildup; check screens and glass doors for damage; replace door gaskets as needed; and check doors, door latches, screen brackets, and other metal parts to be sure they are secure and operating properly. Check the condition of the exterior of the chimney or flue pipe, including the cap, and then clean the chimney to remove last season's accumulation of soot and creosote. Consider having a professional chimney sweep service clean and check everything at least every other year.

3. Prepare humidifiers: Winter is a dry time inside your home, and many people choose to use a portable or central humidifier to put much-needed moisture back into the air. Now is the time to check your humidifier to make sure it's operating properly, that all necessary plates and filters are in place, and that the system is clean and the water supply is correct. Check your operating and maintenance instructions for more information.

4. Check the gutters: Check and clean gutters to remove leaf and pine needle debris, and check that the opening between the gutter and the downspout is unobstructed. Look for loose joints or other structural problems with the system, and repair them as needed using pop rivets. Use a gutter sealant to seal any connections where leaks may be occurring.

5. Change your furnace filters: Replace your old furnace filter with a new one. While you're at it, check the furnace for worn belts, lubrication needs or other servicing that might be required; refer to your owner's manual for specific suggestions, and follow any manufacturer safety instructions for shutting the power and fuel to the furnace before servicing.

6. Install a carbon monoxide detector: As we close up our houses for winter, the chances of carbon monoxide poisoning from malfunctioning gas appliances increases substantially. If you have a fireplace, water heater, or other appliance that is fueled by propane or natural gas, fall is an ideal time to install a carbon monoxide detector -- available from many home centers and retailers of heating system supplies. While you're at it, consider also having a professional heating contractor come out and inspect all of the fittings and components on your gas appliances.

7. Check smoke detectors: Fall is a great time to check the operation of your smoke detectors and to change batteries. You should also consider installing additional smoke detectors outside each bedroom.

8. Close off foundation vents: Depending on the winter climate in your area, you'll want to be thinking about closing off your foundation vents to help prevent pipe freezes. You can leave the foundation open for as many months as the weather remains mild, but close them off when the local forecasts begin calling for freezing temperatures. Once closed, you can leave them that way until it warms up again in the spring.

9. Check weatherstripping: Air leaks around doors and windows can rob your home of expensive heated air and create uncomfortable drafts that keep you feeling chilly. Check the weatherstripping around doors and windows, and replace any that are worn -- retailers who specialize in doors and windows can fix you up with the proper replacement type for your situation. Now is also a good time to close up a few more air leaks by checking the condition of caulking around exterior door and window frames.

Tuesday, September 11, 2007

Do We Need A Home Inspector?

We're buying a brand-new retirement condo. Should we get our own inspector or just rely on the builder's inspector? Or, do we really even need an inspection? After all, we will have a year to request repairs if anything goes wrong during the warranty period. --Diana

Dear Diana,

There are two reasons why you need a professional inspector of your own. The inspector you hire will be there to discover every visible and accessible defect, regardless of whether that discovery is profitable for the builder. The builder's inspector has other loyalties, related of course to the source of his paycheck. His allegiance is to the builder, not to you.

Reason number two involves the common assumption that the one-year warranty will cover all inherent defects. All the warranty covers are the defects that you discover during that first year.

For example, if an appliance ceases to function, or if a sink drain begins to leak, you will probably notice the problem and call it to the attention of the builder. But what about less obvious defects? Suppose there is a safety violation at the garage firewall, or an improper gas connection at the water heater, or a chimney installed too close to combustible materials in the attic, or some portion of the roof that was not properly flashed, or some ungrounded electrical outlets. It is unlikely that you would become aware of such problems during the first year, and those conditions would remain after the warranty had expired.

No one should ever buy a new home without hiring a professional home inspector because all new homes have construction defects, regardless of the competence or the integrity of the builder.

Published by Barry Stone - Inman News

Thursday, September 6, 2007

Do Open Houses Work?

From InmanWiki -->

What are the odds that you'll find your dream at a Sunday open house? What is the likelihood that your home will sell at an open house? Open houses are an integral part of the home sale business. But, do they work?

There are two types of open houses. One is for real estate agents. The purpose of the broker's open house is to introduce a new listing to local agents. The chance that a home will sell as a result of a broker's open house is relatively high. Serious buyers usually work closely with agents in order to find a home. By exposing a listing to more agents, you increase the number of showings to bone fide buyers.

Sunday open houses are more of a hit-and-miss proposition. When a home is open to the public, it is open to anyone who wants to take a look. Not everyone who walks through will be a legitimate buyer.

Some open house visitors will be neighbors. This is not all bad. Some neighbors have friends or relatives who may want to relocate into the area.

Most people who visit open houses are directed there by the signs. This means they don't have much information about the house when they walk in the front door. So even when open house visitors are legitimate buyers, they may not be well-qualified for the house in question. They may need a larger house or a smaller house, or something more or less expensive.

The biggest beneficiary of a public open house is often the agent holding the house open. Open houses give agents an opportunity to meet prospective home buyers and sellers face-to-face in a relatively non-threatening environment. An open house can be a source of future business leads for the agent.

From a seller's perspective, there are pros and cons to having a home held open to the public. On the positive side, an open house gives buyers' agents the opportunity to send their clients through the property. Buyers who may be reluctant to make an appointment to see a new listing, will often be willing to stop in at a Sunday open house. Sometimes, they are pleasantly surprised by what they see.

Buyers' agents sometimes make the mistake of screening listings too carefully for buyers. When this happens, one of the only ways buyers will be exposed to a rejected listing is if they find it on their own at a Sunday open house.

Open houses can be abused, however. If a listing is open all the time, there's no reason for a buyer to make an appointment to view it privately. The most productive showings occur when buyers visit a listing with their agent, privately--without the distraction of others.

From a buyer's perspective, visiting Sunday open houses can be both informative and misleading. One way to learn market value, and to educate yourself about the inventory, is to look at a lot of houses. Touring Sunday open houses is one way to see a lot of houses in a short period of time.

However, if you limit your home search to only those homes that are held open to the public, you may miss out on good listings. Some sellers don't want their homes held open to the public. The only way to see these listings is by appointment.

Well-priced listings sometimes sell before they are ever held open to the public. Don't wait until the open house to see a hot new listing if your agent tells you that it might sell quickly.

Copyright Dian Hymer
Distributed by Inman News