Preparing Your Home For A Disaster

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Books to Help You Buy, Sell, Understand Real Estate BY

BARBARA BALLINGER

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How to Buy Your First Home by Diana Brodman Summers (Sphinx Publishing, 2nd edition, 2005) $14.95 Buying a first house is an enormous, frightening and exhilarating step.Why else was the phrase “buyer’s remorse” coined? First-time homebuyers are likely to experience a twinge – or even

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a lot – of worry before they plunk down a downpayment, although most end up happy they took the plunge. Summers’ tips will help get any neophyte through the homebuying process. She carefully presents the pros and cons of buying, explains what it takes to qualify

WITH PETER G. MILLER

I’d Like to Pay Off My Mortgage More Quickly. Do I Need an Outside Assist?

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Catalogs may not yet be crowding your mailbox and holiday decorations may still be stored away. But it’s never too soon to start your holiday gift list.A good book that becomes a handy reference is always a wel-

come treasure. If you know someone who plans to buy or sell a house, condominium, townhouse, or cooperative apartment, why not consider one of the following books? If you’re shopping for real estate, buy one for yourself. You can never have too much knowledge or peace of mind.

‘Disaster just won’t happen to me’: emergencies such as floods, hurricanes, mudslides, earthquakes and fires may seem remote to first-time renters or homeowners who are caught up in the excitement of their new homes.Yet experts urge those starting out to take time to plan carefully for an unexpected crisis.

Emergency Planning for First-Time Homeowners, Renters:

Cross T’s, Dot I’s to Prepare for the Unthinkable BY

CHARLES SCUTT

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f hurricanes Katrina and Rita taught us anything, it’s that you can never be too prepared for disaster to strike. Whether it’s gale-force winds, mudslides, fires, earthquakes or terrorist attacks, in a post-9/11 world, it pays to be cognizant of potential threats to our homes, family and way of life and to safeguard accordingly.This is especially true for first-time homebuyers or renters, who may not have given much thought to planning properly for worst-case scenarios. “Many of us have the mentality that disas-

ters just won’t happen to us,” says Neal Weichel, agent, RE/MAX of Valencia, Santa Clarita Valley, Calif.“But between the California fires two years ago and the earthquakes in 1994, my personal experience has taught me otherwise.” “First-time renters or buyers should prepare for these incidents because it can save them a ton of heartache and aggravation, not to mention severe long-term economic, personal and property loss, especially to their homes and future livelihoods,” says Edo Raday, real estate advisor for Halstead Property, New York City.“These crises can set you back severely.”

INSURANCE AND PAPERWORK Raday says one of the biggest mistakes first-timers make is not to read their entire insurance policy coverage.“Many people are not fully covered. Not having adequate flood insurance is a common mistake,” particularly in flood-prone regions of the country, she says. Review your homeowners, renters and automobile insurance policies carefully and upgrade to adequate coverage levels based on your needs and territorial risks, says Raday. It’s important to contact your insurance

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Q: Have you heard about plans that pay off your 30-year mortgage in roughly 10 years? You deposit your paycheck into a bank account that pays the mortgage. In addition to paying the mortgage loan, all your other bills are paid from this account. Do you recommend such accounts? A: This is a question I hear frequently. Let’s take a look at what’s good, what’s tricky and what you should avoid about these programs. With a right to pre-pay a mortgage in whole or in part and without penalty, any homeowner with the cash can repay a 30-year mortgage in 10 years. Let’s say you have a $100,000 loan at 6 percent.The monthly payments over 30 years are $599.55 for principal and interest. If you increase your monthly payment to $1,110.21 you will repay the entire debt in ten years. If held to term, interest on the 30-year loan amounts to $115,838.19.Total interest paid in a 10-year timeframe is just $33,224.60. Bi-weekly mortgages (paid every other week) work much the same way. If you have a $1,000 monthly mortgage payment and instead pay bi-weekly, you will make 26 payments of $500. In effect, instead of paying $12,000 a year ($1,000 x 12) you pay $13,000 (26 x $500).The trick is not the extra payments; it’s the larger number of dollars you shell out each year.You could do just as well paying $1,083.33 once a month, 12 times a year. Check the numbers for yourself with a financial calculator or by using the amortization calculator at www.ourbroker.com. Here is the core question you must explore, though, and it has nothing to do with numbers:Why would you rely on a third party to handle your payments rather than simply paying your lender directly? Most lenders allow you to make prepayments each month without penalty.There is no reason to give money to a third party, establish a separate bank account, pay to set up such a program or pay a fee with each monthly payment. Such fees and charges could just as well be spent reducing your debt. Moreover, what if you give money to a third party and they do not make the monthly payment? Guess who will owe the late fees? Guess whose credit will be tarnished? In the worst case, guess who will be foreclosed? If you want to make pre-payments that’s fine, but See ASK OUR BROKER, Page 2

UNTHINKABLE CONTINUED FROM PAGE 1 agent and ask all the necessary questions, says Dr. Sherrie Raz, a Boca Raton, Fla., clinical psychologist who founded The Institute of Emergency Mental Health Services in conjunction with Florida Atlantic University. “Find out how things will be handled should you suffer damage during a storm.What is your deductible and how is it determined? And do you have actual value or replacement value coverage?” says Raz. Also,“talk with your lawyer to ensure that all your important papers are up to date: your will, living will, durable power of attorney and more,” Dr. Raz says. Make copies of all your important records, including your insurance policies, will, living will, life insurance, mortgage or lease, birth certificates, social security cards, visas, passports, voter’s registration cards and financial account information, and store multiple copies – one in a fireproof box on the premises and another with a close family member or friend, says Raday. What’s more, videotape or photograph all your possessions and valuables that you can keep in a safe place for insurance purposes,Weichel says. Raday also recommends setting up emergency financial accounts that you can access in the event of a severe economic setback, which can come in handy while waiting for an insurance reimbursement.

which should provide supplies for up to two weeks,” says Robert Gerace, professor of emergency management and safety at Rochester Institute of Technology, Rochester, N.Y. “These kits should include firstaid supplies, toilet paper, basic tools, warm clothing, bedding and any emergency pharmaceuticals you require.” Other items that should be stored in your disaster kit, according to the Home Safety Council, a Washington, D.C. nonprofit organization dedicated to preventing home related injuries, include dry and canned goods, a can opener, flashlights and batteries, soap, toiletries and other sanitary products and a cell phone charger, “In the event of water contamination, consumers should also have in storage a minimum of three gallons of water per person for drinking and sanitation purposes,” says Dr.Anne VanBeber of Texas Christian University, Fort Worth,Tex.“Store the water in a cool, dry place.” Additionally, Gerace suggests purchasing a portable AM/FM/short wave radio with a crank-up, self-contained power generator,“space blankets” (super-thin mylar plastic sheets that efficiently reflect body heat), and insect repellent. Dr. Ramirez estimates that you should expect to spend upwards of $200 on supplies for your emergency kit, which can be stored in a large trashcan, duffel bag or easy-to-carry plastic container with a lid.

pending disaster is to be prepared and establish a plan that you’ve practiced with your loved ones, says Dr. Maurice Ramirez, a National Disaster Life Support (NDLS) instructor in Houston, Tex. Several national health organizations including the American Medical Association established the NDLS program to help prepare healthcare professionals to respond to mass casualty events. Your emergency plan should be based on the “72-hour rule,” says Dr. Ramirez.“History has shown that it takes 48 to 72 hours for enough resources to arrive to a community to meet the needs at hand. If you prepare to be totally independent for 72 hours, you are planning for success.” Practice escape routes from every room in your home with every member of your family, says Dr. Ramirez.All rooms must have two separate escape points, and all family members must know how to escape all rooms by both routes and where to meet after the evacuation. Additionally, plan how your family will stay in contact if separated by a disaster. Pick two meeting places: a location that’s a safe distance from your home in case of fire, and a place outside your neighborhood in case you can’t return home. “And reassess your emergency plan with your partner and any children two to three times per year,” says Dr. Ramirez. © Content That Works

PLAN WITH YOUR FAMILY MAKE AN EMERGENCY KIT “Everyone should create a ‘grab-and-go’ disaster supply kit,

Having the right supplies is important, but the key to feeling safe and not worrying about a

Ask Our Broker CONTINUED FROM PAGE 1

work only with your lender. Use monthly payment options to create your own pre-payment plan. Keep records of the additional money you send in – the amount, check number, date, etc. – and review monthly statements to assure that all extra payments have been properly recorded.The stub approach means that you can make extra payments as you have the money, and not make extra payments when you don’t. Required monthly payments, of course, are always due. For details, speak with your lender.

Q: We listed a property, listed it again after the first listing ran out and a week into the second listing decided we wanted to end the agreement with the broker. The first broker said fine and asked if we would ask the broker agent to give her a referral fee to make up for some of the money she put out for ads and such. So, I asked the new agent if she would consider the fee and she said it wasn’t really customary but that she would discuss it with my former agent. Do you think the first broker should be paid? A: If you discontinued the relationship when the first listing ended then the original broker would be owed nothing. By re-listing and then seeking an early termination you have asked the broker to modify an agreement.The broker could say no but instead has said yes and is effectively asking for money because of the investment in ads and such. The first broker could simply have asked for compensation from you in exchange for an early termination. Instead, she is trying to get paid in a way that will not require you to write a check on the spot.There is some logic to this, but why involve the second broker and reduce his or her fee? This is a question the second broker will surely raise. Q: Can you back out of an offer to sell once you have signed and accepted the offer? A: In general, a signed offer is considered contract. You cannot typically withdraw from a contract unless the other party agrees or the agreement is conditional and a condition has not been met. Please talk to an attorney for specifics. © Content That Works

Do you have a question or a quandary about buying, selling or renting? Peter G. Miller, author of The Common-Sense Mortgage, specializes in providing real solutions to real estate dilemmas. E-mail your questions to [email protected].

BOOKS CONTINUED FROM PAGE 1 for a mortgage, helps calculate how much downpayment a buyer should expect to make and advises how to negotiate with confidence. 100 Questions Every First-Time Home Buyer Should Ask by Ilyce R. Glink (Three River Press, 3rd edition, 2005) $18.00 Real estate writer Glink arranges her helpful information in an easy-to-follow format, starting with question #1:Are you ready to buy, both psychologically and financially? She moves on to provide worksheets that help a buyer develop a wish list for their future home and compare it to a “reality checklist.” She relays stories of first-time buyers, including her own first purchase. When she and her husband were house-hunting, they put a woodburning fireplace high on their wish list, at No. 5, but ranked a parking spot low, at No. 20, since they didn’t own a car. They regretted their choice, a vintage coop with a fireplace and no parking space, a few years later, when they got a car. Glink also helps readers understand how to weigh whether they should favor purchasing a new home or an old one, what type of home to buy – co-op, condo, single-family, mobile – and how the structure’s condition should influence the decision. Residences purchased in move-in condition make resettling smoother, but typically bear

a heftier price tag. Glink also covers how to select a good realestate practitioner, negotiate the deal, get a mortgage and plan a move. The Essential Dictionary of Real Estate by Lisa Holton (Barnes & Noble Books, 2003) Any business has its own lingo, and real estate is no different.There are 3,000 terms author Lisa Holton thinks you must be comfortable using when you set out to buy, sell or rent a home. Did you know, for example:ADA stands for the Americans with Disabilities Act; a trust account is an account to safeguard the funds of buyer or seller; a trophy building is a landmark that’s well known and highly regarded because of its materials, finish and trim; a zero lot line is a lot where the home is sited right at the lot boundary, leaving little space between it and the house. Holton’s book also includes useful appendices, including diagrams of different types of houses – bungalow, Cape Cod, Georgian, and the like – and the most important parts of a house, such as its soffit and fascia. Tips & Traps When Buying a Condo, Co-op or Townhouse by Robert Irwin (McGraw-Hill, 1999) Buying one of these forms of homes isn’t the same as buying a single-family residence, says author Robert Irwin, and he sets out to help readers grasp the financial, legal and social pros and cons of each. Example: with a townhouse you won’t have neighbors above your unit.

Whichever form you select, know that you are become a part of a community, the equivalent, Irwin says, of “marrying into a family.” Hopefully, yours won’t be dysfunctional. There are important factors to consider when you live as part of a group, Irwin points out.You can’t necessarily make structural changes within your unit or hallway without permission. In many cases, you’ll need approval of the building’s architectural review committee or a board. Hours and days that workmen may work on your unit may be restricted. Before you become too infatuated with a certain unit, study bylaws to learn about possible rules regarding pets and how the building vets and approves new owners. Many of us have read stories about swank New York co-ops that reject politicians, rock stars and anyone whose name appears too often in boldface type.You’ll also want to know a building’s history of special assessments. Irwin provides a very useful list of red-flag questions:What’s the tenant-to-owner ratio? Are there any lawsuits pending? How much insurance does the building carry? Are its reserves adequate? Have there been big hikes in assessments? Are you responsible for any areas outside your unit? Are there any rules you can’t live with? The bottom line: Do your homework as you would to purchase any type of home. The bottom line, Irwin argues, is that a buyer can never be too prepared. © Content That Works