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7 Things Homebuyers Hate

Kiplinger — 2012-04-17T13:50:00 00:00

As a home seller, you have way too much competition to let little items sabotage a sale. These seven problems are among the biggest homebuyer turnoffs, and most of them are easy to fix without spending a lot of money.

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See also
Homebuying: 5 Key Steps to Your 1st Real Estate Purchase
Home Affordability: How Much House (or Apartment) Can I Handle?
Home Costs: 4 Crucial Questions Reveal Hidden Expenses

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Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.

Housing Recovery Lags in Judicial Foreclosure States

Kiplinger — 2012-03-29T16:00:00 00:00

Filed under: News

By Karen Mracek

Believe it or not: The housing market is recovering in most states. Home price indexes for 38 states ended 2011 above their early-year lows. And while prices aren't yet up to prerecession levels, 30 states had more than two quarters of growth under their belts by the end of 2011, according to data from the Federal Housing Finance Agency.

POLL: Should the Government Be Helping?

But the national index is still falling, dragged down by pricing drops in the worst-hit states. It'll drop another 2 percent in the next six months before starting to climb in the second half of the year. There are just a handful of states dragging down the national average: Arizona, California, Florida, Michigan and Nevada, all of which saw home prices drop by more than 50 percent from 2006 levels. These five states are home to 46 percent of the inventory working through the foreclosure process.

Furthermore, "almost half of the shadow inventory (homes which could come on the market in the near future because owners are in default on their loans) is not yet in the foreclosure process," says Mark Fleming, chief economist at data analysis firm CoreLogic. "Also, shadow inventory remains concentrated in states impacted by sharp price declines and states with long foreclosure timelines," he says.

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The pace of a state's housing recovery depends largely on how it handles foreclosures. Twenty-four states require a judicial review, calling for a judge to sign off before a house can be transferred to the lender. The foreclosure backlog clogging the pipeline in states with judicial review is 2.6 times larger than in states without judicial review, says Florida mortgage analysis firm Lender Processing Services.

And states without judicial review are selling off foreclosed homes faster -- up to three times faster in January than those with judicial review. "In January, you could have had some seasonal impact," says Herb Blecher, vice president of LPS Applied Analytics. "But if it continues, it really is a resolution of this pipeline issue we've seen for some time." In late 2010, several large banks, including Bank of America, JPMorgan Chase, Wells Fargo and Citigroup, halted foreclosures in some states because of improper documentation. Afterward, states without judicial review saw the resolution of foreclosures pick up relatively quickly, while foreclosures in "states with judicial reviews have been largely flat for well over a year," Blecher says.

In many cases, home prices are already ticking up in states where foreclosures work through the process faster. Texas, for example, has the shortest foreclosure timeline, 90 days, and it saw home prices climb 1.2 percent in the fourth quarter of 2011, according to the FHFA. In Delaware, the time between missing a mortgage payment and foreclosure averages 106 days, and prices grew 0.6 percent in the fourth quarter. In New York, however, where judicial reviews and mortgage mediation requirements stretch the foreclosure time to a whopping 1,019 days, prices fell 1 percent.

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Even where there is a huge overhang of housing inventory, there is a big difference. Take Florida and Arizona, two states bearing the brunt of the housing bubble burst. It takes an average of 806 days to complete foreclosure in the Sunshine State, which requires judicial review. In the Grand Canyon State, which doesn't, it takes less than 200 days. As a result, Arizona's market is already turning the corner. Phoenix home prices, for example, gained 2.7 percent in the fourth quarter of 2011, after plunging a staggering 55 percent from the 2006 peak. In Florida, prices are still falling.

That's not to say some delays aren't justified. The robo-signing fiasco and other cases validate the need to be diligent in the foreclosure process. Mediation is justified if there is an actual chance the homeowner can afford to make future payments on a house. But if not, the faster inevitable foreclosures can be concluded, the faster prices can rebound, because foreclosed-upon homes are often listed at a 40 to 50 percent discount to comparable houses and vacant, blighted homes depress the prices of those nearby.

Florida is trying to cut damaging foreclosure delays with legislation to let lien holders request an expedited process. But it appears the move will be put off until next year. Although a bill passed in the state House of Representatives this year, it did not clear the state Senate. Odds are it will come up again in the next legislative session. Other states, though, are headed in the opposite direction, imposing new requirements for mediation between homeowners and lenders, which will add more months of delay. New York's required mediation, for example, adds about one year to the process, according to one estimate.

Nationally, there is some movement to help clear excess inventory. Lenders' recent agreement with state attorneys general will provide relief for about 500,000 homeowners, keeping many of them from going into foreclosure. And a pilot program at Fannie Mae to sell off foreclosed-upon homes in bulk, with the requirement that they be rented out for five years, is getting a warm reception from the market. Fannie Mae is selling 2,500 homes in the hardest-hit areas, such as Atlanta, South Florida, Phoenix and Las Vegas. Look for the government-sponsored entity to expand the program later this year and for other mortgage holders, including Freddie Mac, to follow suit.

Read more on Kiplinger:
12 Cities Where Home Values Have Risen Most
SPECIAL REPORT: Guide to Buying and Selling a Home in 2012
What $300K Buys You In Today's Market
QUIZ: How Smart a Homeowner Are You?

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Spring Cleaning: Essential Tips for Homeowners

Kiplinger — 2012-03-08T15:30:00 00:00

Filed under: News,Advice,Lifestyle,Other

By Pat Mertz Esswein, Kiplinger's Personal Finance

As you go about your annual spring-cleaning ritual, take a few additional steps to save money on energy bills this summer, improve your home's appearance and ward off big-ticket repairs later.

Here are 18 things for you (or the handyman) to tackle now to help prepare your home for the warmer months and keep it in top shape.

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More from Kiplinger:
Quiz: How Smart a Homeowner Are You?
What $300K Buys You Now
Quiz: How Long Should it Last?
10 Tiny Homes You'll Love Big Time

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10 Worst Cities for Singles

Kiplinger — 2012-02-10T16:20:00 00:00

Filed under: News

By Caitlin Dewey

Landing on our list of worst cities for singles doesn't necessarily make a city a bad place to live. Far from it. Many of these cities are great for couples, families or retirees, and many offer enviable amenities, from warm weather to low living costs.

What these cities don't offer are deep pools of financially attractive singles. Like it or not, when it comes to dating, money matters -- at least to a degree. So while love might ultimately conquer all, a steady paycheck conquers the here and now -- the tab for dinner and the like.

To assemble our list of worst cities for singles, we started by screening for places where the percentage of unmarried households falls well below the national average of 49.4 percent. That indicates a lower share of single people in the overall population.

Then, we factored in income and cost of living based on data from the Census Bureau and the Council for Community and Economic Research. Although the bottom-10 cities have cost-of-living scores near or below average -- a good thing in and of itself -- household incomes run disproportionately below the average of $49,536.

We also added a date-night tab that shows the typical cost of a couple of movie tickets and a bottle of wine. The amount can be used to budget for your next night on the town. Check out the 10 worst cities for singles.

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Why Not to Cosign Your Child's Credit Card
The 10 Best Cities for Singles
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12 Best Cities for High Paying Jobs (SLIDESHOW)

Kiplinger — 2012-01-05T10:55:00 00:00

Filed under: News

By Caitlin Dewey

Getting hired in today's tough job market is hard. Landing a position that pays well is even harder. The secret to a successful search for employment that comes with a fat paycheck lies in looking for work in the right places. That's why we crunched the numbers to identify 12 of the best cities for high-paying jobs.

We started with Kiplinger's Personal Finance magazine's list of the 100 best value cities in the U.S., which favors metro areas with healthy local economies, affordable living costs and appealing amenities. Then we used data from the U.S. Bureau of Labor Statistics and Indeed.com, a job-search website, to pinpoint cities with below-average unemployment and above-average income growth. (Click the gallery below.)

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Because we're concentrating on locating the best cities for high paying jobs, we looked for places with a high total number of postings for jobs that pay at least $50,000 per year. We also made sure that the number of $50,000-plus job postings per 100 unemployed workers was greater than or equal to the average of 11.

More from Kiplinger:
10 Cities With the Lowest Cost of Living
10 of Today's Hottest Jobs
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7 Tips for Snowbirds Before Flying the Coop

Kiplinger — 2011-12-22T08:00:00 00:00

Filed under: News

By Kimberly Lankford

Q. We're retired, and this is the first year that we plan to spend the winter in Florida, leaving our home in New Jersey unoccupied. Are there any special steps we should take before we leave?

Here are several special banking and insurance moves that can help snowbirds protect their finances and homes while they're away from home for several months.

1. Prepare your home for winter.

Everyone should take some key steps to prepare their home for cold weather and snowstorms, to help avoid expensive damage or homeowners insurance claims. But it's even more important to prepare your house if it will be vacant during the coldest months of the year and you won't be there to notice problems -- such as a small leak that can cause a lot of water damage by the time you return in the spring. Before you leave for Florida, inspect your roof for any damage or worn shingles that can lead to leaks, says Elaine Montgomery-Baisden, vice-president of Travelers Personal Insurance. She also recommends cleaning gutters and downspouts and checking for clogs that can cause water damage to interior walls. Insulate any water lines that run along exterior walls and open cabinet doors to allow heat from the room to get into concealed spaces, which can make pipes less likely to freeze. Also drain and shut off outdoor water faucets. (For more seasonal home maintenance advice, see 15 Fall and Winter Maintenance Tips for Your Home.)

Read more at Kiplinger

2. Trim trees.

Winter's high winds and snowstorms can cause a lot of damage from fallen tree limbs -- which can be very expensive and may not be covered by your homeowners insurance policy. (See When Your Tree Falls in Your Neighbor's Yard for more information.) Remove dead trees or large overhanging tree limbs before you leave town.

3. Ask someone to shovel snow.

Arrange to have a neighbor clean snow from your driveway, sidewalk, hatch cover and dryer vent opening when you're gone, says Montgomery-Baisden. That can prevent melting snow from leaking into the home and causing damage. It can also reduce slip-and-fall liability losses, and prevent your home from looking vacant and becoming a target of thieves.

4. Secure your home.

Home security is a big issue if you're away from your house for months. Stop your newspaper delivery and forward your mail to your winter address or have it picked up on a regular basis. Also have someone check the house at least weekly to make sure any flyers or packages that are delivered while you're gone don't build up and make the house look unoccupied. Secure doors and windows with deadbolt locks, and install slide locks or other security locks on sliding glass doors or French doors. You can also install variable light timers, which turn lights on and off at different times to make it look like someone is home.

5. Monitor your house from a distance.

Install smoke detectors on at least every floor, preferably tied to a centrally monitored fire alarm system so the fire department will be notified automatically if the alarm goes off, recommends Montgomery-Baisden. Otherwise, nobody will be home to hear the alarm if it goes off only inside your house. You can get a discount on your homeowners insurance premiums if you have a centrally monitored home-security system. You may even be able to hook up a water-flow sensor or low-temperature sensor to that system, which can alert your security provider of problems that could lead to freezing pipes. But nothing replaces the human touch. Share your winter contact information with a neighbor who can be your eyes and ears while you're gone, forward important mail to you in Florida, check for any problems and take action in an emergency.

6. Notify your bank.

Give your bank your temporary address and contact information before you leave, which is important so you can continue to receive your statements and to alert bank representatives about out-of-state debit and credit card charges, says Joe Bednarik, PNC Bank's regional manager of retail banking for Southern New Jersey. Bank fraud departments have become proactive about preventing theft by spotting and denying unusual charges. It's better to let them know of your travels ahead of time rather than run the risk that your account could be frozen temporarily if your financial institution is unable to reach you with questions about charges from an unexpected location.

7. Sign up for online banking.

This can be a good time to sign up to receive your bills online, so you don't miss any payment deadlines while your mail catches up with you during your transition from north to south. Check your credit card due dates before you leave to avoid any missed payments, recommends Bednarik.

Kimberly Lankford is a contributing editor at Kiplinger's Personal Finance.

More from Kiplinger:
10 Great Retirement Cities in the U.S.
8 Great Places to Retire Abroad
10 Tax-Friendly States for Retirees

Also see:
Where Are the Real Home Bargains? Not Where You Think!
Happy End of the Road for RVers: Assisted Living on Wheels

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Is the Housing Bottom Finally in Sight?

Kiplinger — 2011-12-08T11:00:00 00:00

Filed under: News

By Jerome Idaszak

Housing prices will stop sinking next spring. But recovery will be a gradual process -- too slow to help the economy much next year. Look for prices, which have fallen an average of 31 percent since 2006, to drop an additional 2 percent or so in the early months of 2012 and then recover that lost ground by the end of the year.

The growth in 2013 won't be dramatic come 2013, expect home prices to rise only 3 percent to 4 percent -- not too far from the pre-boom average of 4.8 percent a year, but well short of the bounce that usually follows a housing slump. After the milder housing downturn in the early 1980s, home prices grew an average of 6.5 percent for six years.

A key signal that the bottom is near: A change in the ratio of average homes prices to personal income -- houses are affordable again. After soaring to 4-to-1 during the housing boom, the ratio is now well below the long-term average of 3-to-1.

Another reason for optimism: Foreclosure numbers are set to level off after a recent surge to clear up the backlog that developed when banks were found to be rushing though the paperwork for seizing homes. Although the 3.5 million foreclosures still in the pipeline are weighing heavily on the housing market, that effect will diminish when it is clear that the worst has passed.

Look for home sales to tick up next year as well, hitting 5.5 million for new and existing homes. That's up 4 percent from 2011, the low point since the housing bubble burst.

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Demand from abroad will help. Canadians are buying homes in Phoenix; Brazilians are investing in Miami; and Chinese are buying in California, Las Vegas and New York City. To these investors with bulging pockets, good values can be found where the price declines have been greatest.

U.S. investors remain more conservative, largely avoiding single-family homes and diving into the multifamily rental market. It has heated up in recent years, thanks in part to the crowds of former homeowners who need a place to live, as well as to would-be home buyers who are waiting to see if prices have further to fall.

Home starts will jump 15 percent next year, driven largely by construction of new apartment buildings. Among the strongest areas are Texas, Louisiana, Oklahoma and the Dakotas, where the robust energy industry is lifting local economies and earlier overbuilding was avoided. Other states that have benefited from past restraint are Montana, Washington, Iowa and Nebraska.

Even so, new construction will be only around 750,000 in 2012, down from 2 million in 2005 and far below the pre-crash average of 1.5 million from 1959 through 2006.

Farther down the road, there is plenty of pent-up demand. The lousy housing market has muffled the typical rate of household formation, deterring many young folks from getting their own homes. As a result, there are 2 million new households waiting for an improvement in economic conditions: recent graduates eager to leave their parents' nests and 30-something couples who have delayed marriage or having children. As the economy picks up steam, they will emerge, helping to soak up the glut of foreclosed homes and putting construction on a faster track.

By 2014, the housing market will start to look more like its old self, with housing starts near the long-term average of 1.5 million a year, sales of about 6 million and price gains of over 4 percent a year.

Shorter term, even the modest reversal likely in 2012-2013 is crucial, easing the crushing weight the housing market has imposed on the economy. Homeowners, who lost a large share of their net worth in the housing crash, have been trying to rebuild their wealth by saving more in recent years. Since the market crash, consumers have held on to more than 5 percent of income, up from less than 2 percent during the housing boom. Since consumer spending accounts for two-thirds of economic activity, this uptick in saving and correlating downtick in spending has spelled the difference between a solid recovery and the shaky one the U.S. is experiencing.

Since a good deal of this saving is due to uncertainty -- not knowing just how much more home prices will drop -- reaching a clear turning point is important. Once homeowners know the worst is over, they'll take a breath, start planning their saving for the long term and spend more in the short term.

Of course, the market shift won't make much immediate difference for the millions of homeowners who owe more than their homes are worth. But for the majority with equity in their homes, even a modest gain in prices can change their spending behavior.

Jerome Idaszak is the associate editor of The Kiplinger Letter.

More from Kiplinger:
What's Ahead for Home Prices in 2012
10 Tiny Homes Under $100,000
10 U.S. Cities with the Lowest Cost of Living

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10 Great Cities for Young People

Kiplinger — 2011-09-30T12:45:00 00:00

Filed under: News

For twenty-somethings, finding the right place to live can be a challenge. The best cities need to offer a combination of employment opportunities and social activities, of course, but they also need to be affordable. After all, the typical college graduate with up to three years of work experience makes $41,900, and that money must go a long way.

With these parameters in mind, we found ten great cities for young adults. These aren't the cheapest places to live but rather cities that offer solid value: low cost of living and reasonable rents relative to paycheck size. There are also plenty of things to do that appeal to the twenty-something crowd and a healthy concentration of twenty-somethings to do them with.

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To assemble our list, we screened for cities with high starting salaries for college grads, using data from Payscale.com. We also looked for a cost-of-living score near or below 100, the national average, as well as affordable monthly rents. (The median U.S. rent, including utilities, is $817.) Finally, we searched for cities where the percentage of residents ages 20 to 29 is near or above the average of 13.8%.

Also on Kiplinger:
4 Estate-Planning Lessons From Michael Jackson
6 Good Reasons to Buy a Home Now

Also see:
Mega-Mansions at Huge Discounts
How Paying Rent Can Boost Your Credit

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5 Mistakes to Avoid When Refinancing

Kiplinger — 2011-09-20T15:17:00 00:00

Filed under: News,Financing,Refinancing

Mortgage rates are at record lows and should stay that way as long as economic reports continue to be disappointing, according to Bankrate.com, which tracks mortgage rates weekly. However, if you've been thinking about refinancing, you should act quickly. If mortgage rates rebound, they could do so fast, according to Bankrate.com.

But don't make mistakes in your rush to refinance. Here are five of the biggest ones, according to a survey of LendingTree network lenders. LendingTree is an online marketplace of mortgage lenders.1. Overestimating the value of the home. Despite the fact that home values continue to drop, homeowners still tend to over-value their home. As a result, they receive higher-than-expected loan offers. Use our tool to track home prices in your area so you'll have a better idea how much your house is worth.

2. Hesitating to lock in low rates. Lenders are seeing borrowers waiting for rates to drop further, missing out on the opportunity to lock-in with the current low rates.

3. Focusing only on interest rates. Borrowers often forget to factor in lender fees, loan terms and lender reputations into their decision to refinance. Compare several offers and run all the numbers (including fees) using calculators at Mortgage Professor to see which offer is the best and to determine whether refinancing even makes sense for you.

4. Overlooking shorter-term loans. Remember, the 30-year mortgage isn't your only option. A 20-year or 15-year mortgage can shorten the life of the loan and significantly reduce the amount of interest paid.

5. Not knowing what documents are required to refinance. If you haven't taken out a mortgage or refinanced recently, you might not be aware that you need a lot more documentation these days to get a loan. Be ready to provide pay stubs from a recent month, two months of bank and other financial statements, two years of W-2s and, if you're self-employed, two years of tax returns showing self-sustaining income.

More from Kiplinger:
10 Cities With the Lowest Cost of Living
Should I Refinance?
10 Best Value Cities for 2011

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6 Good Reasons to Buy a Home Now

Kiplinger — 2011-09-08T13:10:00 00:00

Filed under: News

1. Prices have nearly hit bottom.

In most areas, most of the excess has finally been wrung out of the market. But if you're buying a first home or looking to trade up, there's no need to rush. Although prices may fall some more -- blame foreclosures still working their way through the system and tighter credit -- they won't fall by much. Fiserv Case-Shiller, which tracks home prices, forecasts that the median price nationwide will ratchet down for about six more months, then stay flat for three or four years.

In most of the cities where home values experienced a double dip after the expiration of the homebuyer's tax credit in mid-2010, median prices won't fall below their 2009 or 2010 lows, says David Stiff, Fiserv's chief economist. These metropolitan areas include San Francisco, San Jose, San Diego and Washington, D.C. But in areas with a lingering oversupply of homes for sale, Fiserv forecasts a decline of 10 percent or more in the median home price (for the year ending March 31, 2012). These metropolitan areas include Riverside-San Bernardino, Calif.; Las Vegas; and Miami.
2. Houses are affordable again.

Homes haven't been this affordable since 1991. Economists often define affordability as the ratio of median home price to median family income. According to Fiserv Case-Shiller, the U.S. ratio now stands at 2.6 -- down from a peak of 4.1 in mid-2005 and just under the long-term average of 2.8. Of course, some areas continue to defy affordability. In California's coastal cities and the New York metro area, the ratio is 5 or more. Average mortgage payments are another way to look at affordability. Since the housing market's peak in 2006, the average principal-and-interest payment in the U.S. has fallen from $1,063 to $645.

Renters considering the jump to homeownership may be encouraged by the price-rent ratio, or the median home price divided by the median annual rent. In 2005, the national median home price had inflated to nearly 21 times the median annual rent, according to Marcus & Millichap, a commercial real estate brokerage company in Encino, Calif. Since the bust, the ratio has deflated to 14, less than the historical average of 15. During the same period, the difference between the median monthly mortgage payment and median monthly rent fell from $745 nationally to $102. Marcus & Millichap expects rental vacancy rates to hit pre-recession levels this year, allowing landlords to raise rents by an average of 3.5 percent.

3. Mortgage rates won't go any lower.

For the past couple of years, interest rates have hovered at levels last seen when the veterans came home from the Korean War. According to HSH.com, which tracks mortgage rates, at the beginning of August the national average 30-year fixed rate was 4.5 percent. FHA loans, which require only a 3.5 percent down payment, had a 4.3 percent rate. Adjustable-rate mortgages are even cheaper, and even rates for jumbo mortgages have hit lows not seen since the 1980s.

Freddie Mac forecasts a 30-year fixed rate of 5 percent by year's end and 6 percent by late 2012. Standard & Poor's downgrade of the U.S. credit rating won't have an immediate effect on rates because of the weak economy (see Ripple Effects of the U.S. Debt Downgrade). But credit is tighter, and you'll need a credit score of 740 or more and a down payment of at least 25 percent to nab the lowest rates. If you fall short of that, you'll pay interest-rate risk premiums if the bank plans to sell your loan to Fannie Mae or Freddie Mac. For example, lenders must charge an extra 0.25 point if a borrower has a 740 credit score but puts down less than 25 percent (but at least 20 percent).

4. It's a buyer's market.

Demand is low; supply is high. In early summer, the National Association of Realtors reported that sales of existing homes (single-family houses and condos) fell by 9 percent from the year before. NAR also reported 9.5 months' supply of homes. That's how long it would take to sell all the homes on the market at the current pace of sales, and it strongly favors buyers. (Four to six months' supply is considered balanced between buyer and seller.)

With so much selection, you'll find more properties in good school districts or near your job, or homes that offer added value, such as a mother-in-law suite, says Thomas Popik, research director with the Campbell surveys of real estate professionals. You'll spend less time shopping and competing against other bidders. And you don't have to waste time with sellers who set unrealistic prices (although they're still out there).

One caveat: If you're searching among entry-level homes, which had more extreme price declines than upper-end houses did over the past year, you may face stiff competition from investors. They typically pay cash, which makes them attractive to sellers who want to close the deal fast. However, says Popik, you may find opportunities in homes that were bought and fixed up by investors, who intended to flip them but have had difficulty making a sale.

5. You may find a distressed property.

Bank-owned foreclosures (or REOs, for "real estate owned" properties) sell for an average discount of 35 percent off the per-square-foot price of conventional homes for sale, according to RealtyTrac. In the first half of 2011, lenders owned about 870,000 REOs but listed only about one-fifth of them for sale, concentrated in such high-foreclosure states as Arizona, California, Florida, Michigan, Nevada and Ohio; even with the slowdown in the foreclosure pipeline due to legal-processing issues and new supply exceeds sales. Find more on buying foreclosures.

Short sales, or homes sold with lenders' permission for less than their owners owe on their mortgages, have also grown in number. Lenders have become more amenable to them as they seek to avoid the often huge losses associated with foreclosures, says Rick Sharga, of RealtyTrac. Short sales offer buyers less of a bargain than REOs, but the homes tend to be in better condition. Banks may still take two to six months to sign off on a short sale, so patience is imperative.

6. Homeownership is still attractive.

A home is the biggest purchase most people ever make. But deciding whether and what to buy isn't purely a financial decision, says Chris Herbert, research director at Harvard's Joint Center for Housing Studies. When you own a home, you can control your living environment and security, upgrade and change your home as you see fit, and create a sense of rootedness in your community.

You can offset some of the cost of homeownership by deducting mortgage interest. But don't mistake a home for an investment, at least not in the short run. "If your goal is to jump in and get a return of 6 percent annually, that's a bad idea," says Fiserv's Stiff, given the forecast for weak price appreciation. Instead, you need to commit to owning the home for at least five to seven years to ride out any further price declines and recoup your down payment and transaction costs. If you think that you might need a bigger home before that time to accommodate a growing family or that you might have to move to another area for your job, don't buy unless you're willing to become a long-distance landlord.

Shop carefully, and be patient. Exclusive buyer's agent Michael Crowley of Spokane, Wash., tells buyers it may take three to four months to find the right house. "We can be in a hurry, or we can be particular, but we can't be both," he says.

Related stories:
10 Best Value Cities in 2011
QUIZ: How Smart a Home Buyer Are You?
10 Cities With Rising Home Prices

Also see:
First-Time Homebuyer's Guide
11 Things Today's Home Sellers Must Do

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Does Your Insurance Cover Hurricanes and Earthquakes?

Kiplinger — 2011-08-26T18:00:00 00:00

Filed under: News

People up and down the East Coast are thinking about earthquake coverage, after a 5.8 earthquake rattled the Mid Atlantic states on August 23. Bill Howard, an independent insurance agent in Alexandria, Va., just across the Potomac River from Washington, D.C., has been getting calls for the past two days from clients who don't have much damage this time around but want to find out whether they're covered for any future quakes.

Homeowners insurance policies don't cover earthquakes, but you can generally buy a rider to add the coverage to your policy. And in areas that rarely experience major earthquakes, like most of the East Coast, the coverage is relatively inexpensive. Howard says that it would cost about $250 per year to add earthquake coverage in his area to a Chubb policy that has a maximum coverage limit of $500,000.Earthquake coverage generally has higher deductibles than standard homeowners coverage does -- you may have a regular deductible of $500 or $1,000 for other types of damage, for example, but have a deductible of 2% to 10% of your coverage limits for earthquake damage. If the deductible is 2% of $500,000, for instance, the earthquake coverage kicks in for amounts above $10,000 in damage.

Some policies have even higher deductibles in return for lower premiums. Safeco, for example, offers earthquake deductibles of 10% to 25%. A $500,000 policy on a wood-frame home would cost $115 per year with a 10% deductible, says Howard. And the annual premium shrinks to just $30 per year if you take a 25% deductible -- but the insurance coverage would kick in after you have $125,000 in earthquake damages. With events that are rare in your area, such as earthquakes, you may want a higher deductible in return for lower premiums. But you'll need to balance the premium savings with how much you could pay out of pocket for repairs.

Read the full story at Kiplinger.

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Home Insurance Rates Rise Even as Property Values Sink

Kiplinger — 2011-08-10T15:10:00 00:00

Filed under: News

In a year that's been rife with tornadoes and severe thunderstorms, premiums for homeowners insurance are on the rise. And forecasts are calling for a hurricane season that will be more active than usual. Insurers may try to boost rates by as much as 20 percent in areas where storms hit hardest.

Don't look for a break because the value of your home has fallen. Premiums are tied to the cost of rebuilding a home -- not its current market value -- so skimping on coverage because your home's value has shrunk could leave you underinsured. It doesn't help that rebuilding costs have been increasing: As of late spring, the overall producer price index for construction materials was up 7.5 percent for the previous 12 months.
Some key moves could help you save on home insurance, says Michael Barry, spokesman for the Insurance Information Institute. One is to raise your deductible, provided that you can pay more out of pocket if disaster strikes. You can save up to 25 percent by hiking a deductible from $500 to $1,000.

If your auto insurance and homeowners policies are with different companies, see how much you could save by having a single insurer. Get several quotes, but don't buy based on price alone -- look for a solid reputation and a below-average complaint ratio (find complaint info at eapps.naic.org/cis).

Don't be shy about asking for discounts. You may be able to save at least 5 percent if you have installed smoke detectors and security devices in your home, or you have recently updated your plumbing or electrical systems. Retirees may also be eligible for discounts.

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Homeowners Insurance 101: What You Need to Know

Kiplinger — 2011-07-08T10:52:00 00:00

Filed under: News

Q: We are about to settle on our first home, and we don't know the first thing about buying homeowners insurance. How do we get started, and what do we need to know?

Kimberly Lankford:
Congratulations on buying your first home! Start by getting a price quote from the company that handles your auto insurance -- you generally get a discount on your auto and home insurance if you have both policies with the same company. If you have an auto insurance agent, find out whether he or she works for one company or is an independent agent who works with several companies. An independent agent can give you price quotes from several insurers. You may also want to contact a few big insurers separately, such as State Farm, which doesn't sell through independent agents. And if you have any military connection in your family, it's worthwhile to contact USAA, too (see USAA's page for a list of who is eligible). If you don't have an independent agent, you can find one in your area through the Independent Agents and Brokers of America agent search.

But before you start comparing quotes, you'll need to decide how much coverage to get. A home's insurance value is based on the cost to rebuild the house, not the market value. And even though market values are still down in many areas, rebuilding costs are on the rise. You can get an estimate of the home's rebuilding cost at AccuCoverage.com, which asks a lot of questions about the size of the house and the building materials and details, then uses the same building-cost database that insurers use. Or you can work with the agent or the insurer to come up with an estimate.
Homeowners insurance automatically provides coverage for your possessions based on a certain percentage of your home's insurance value -- 75% is typical. So if your home is insured for $200,000, you'll also have up to $150,000 of coverage for your possessions. But homeowners insurance policies usually have lower limits for certain kinds of items -- such as $2,000 or $3,000 for all of your jewelry, for example. If you have any particularly valuable possessions -- such as jewelry, artwork or special collections -- you may want to get extra coverage for those items. See What Does Homeowners Insurance Really Cover? for more information about special coverage for valuables.

You'll also need to choose the deductible amount. One good way to lower premium costs is to choose a deductible of at least $1,000. That will reduce your premium and discourage you from filing small claims that could get you dropped by the insurer or cost you a claims-free discount. Then be sure to keep enough money in your emergency fund to cover the deductible, in case you need to file a claim.

Before you settle on an insurance company, check out the insurer's complaint record through the National Association of Insurance Commissioners Consumer Information Source. Saving a few dollars in premiums can backfire if your insurer ends up hassling you about claims.

If you're concerned about flooding, which isn't covered by homeowners insurance, go to www.floodsmart.gov to see the home's risk of flooding and get prices for flood coverage through the National Flood Insurance Program. You can buy flood insurance through most homeowners insurance agents. Your mortgage company may require flood coverage if you live in a high-risk area, but it can be worthwhile to get the coverage even if it's not required. See Protect Your Home and Finances Against Floods for more information.

When you move into your new home, it's the perfect time to conduct an inventory, which will streamline the claims process if you have to file a claim in the future. Take photos or a video of every room, keep receipts for valuable items, and keep a copy of the file somewhere away from home so it's easy to access if needed. See How to Prepare for an Emergency for details.

Got a question? E-mail me directly at askkim@kiplinger.com.

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