A couple of things you can do to immediately save money on Texas homeowners insurance

Almost every single mortgage company out there will refuse to finance the purchase of a residential property without the homeowners carrying Texas homeowners insurance.

It just isn’t going to happen.

Worse than that though, is the fact that Texas homeowners insurance can be so almost prohibitively expensive. It isn’t at all uncommon for individuals to pay excessive premiums each and every year in excess of $1000 on even the most basic of policies, adding a significant amount of financial stress to an already often times stressful situation.

Thankfully, InsuranceQuote.deals provides us a couple of different ways that we will be able to do to cut down on our Texas homeowners insurance cost – sometimes dramatically.

Improve security and smoke alarm systems

If you want to immediately reduce the amount of money that you are spending on Texas homeowners insurance, simply upgrade your security and smoke alarm systems.

Often times this decision is only going to cost you a few hundred dollars, but it is going to pay off significantly when you report the upgrades to your homeowners insurance company. They’ll appreciate your foresight and your seriousness about protecting your property (and both of your investment), and will usually reward you with significantly reduced Texas homeowners insurance premiums.

Increase your deductible to save money on insurance

Another way that you’ll be able to reduce the amount of money that you spend on Texas homeowners insurance is the same thing that you’ll do to produce your insurance payments of any other type – increase your deductible to save money on your “out-of-pocket” costs as far as premiums are concerned.

Obviously, you’ll need to make sure that you are only increasing your deductible to a figure that you would actually be comfortable pay out-of-pocket if absolutely necessary, but you are definitely going to be surprised to learn just how much money you’re able to save each and every month when you make this decision.

Now, it’s critical that you make sure you do not increase your deductible too significantly, especially not to the point where you wouldn’t be able to cover the deductible to take advantage of the insurance services that you’re paying for in the first place.

It is a bit of a delicate balancing act, but it’s one of the best ways to save money on Texas homeowners insurance right out of the box.

Free Publications

Consumer Protection/Action

Consumer Action Handbook. Provides assistance with consumer problems and complaints and includes directory of consumer contacts at hundreds of companies and trade associations, state and federal government agencies, local and national consumer organizations, and more. 148 pp. (2001.FCIC) 595H. Free
Taking Legal Action. Discusses when legal action may be appropriate, how to file in small claims court, and when to consider hiring a lawyer. 10 pp. (2001.LSC) 603H. Free
Internet Fraud: How to Avoid Internet Investment Scams. Questions to ask about online investment opportunities, warning signs of fraud, and what to do if you have problems. 19 pp. (2000.SEC) 368H. 50 cents.

Financial Planning

Keeping Family/Household Records. Organize your bills, tax information, legal papers and other important documents. Learn what to keep and how to safeguard hard-to-replace items. (USDA) view online only.
The Student Guide To Financial Aid. This valuable resource explains federal grants, loans, work-study programs, and how to apply for them. (ED) view online only.
Social Security: Understanding the Benefits. Explains retirement, disability, survivor’s benefits, Medicare coverage, Supplemental Security Income, and more. 41 pp (2000. SSA) 530H. Free.
66 Ways To Save Money. Practical ways to cut everyday costs on transportation, insurance, banking, credit, housing, utilities, and more. 4 pp. (1998. FCIC) 347H. 50 cents.
What You Should Know About Financial Planning. Discusses the benefits of financial planning for life-changing events, such as buying a home or retirement. 13 pp. (1998.SEC) 581H. Free.

Health and the Environment

Help Yourself to a Healthy Home: Protect Your Children’s Health. Find out about potentially harmful products and how to make your home a healthier place. 24 pp. (2000. HUD) 506H. Free.
Indoor Air Hazards Every Homeowner Should Know About. Get rid of molds, carbon monoxide, radon, asbestos, lead, tobacco smoke, and other pollutants. 16 pp. (2001. USDA/EPA) 631H. Free.
2001 Fuel Economy Guide. Information on fuel economy, purchasing a new or used car, insurance cost comparisons, automobile manufacturers, and more. (DOE) view online only.

Top 10 Financing Tips

Tip 1. Don’t Stretch Your Loan Qualification Limits To Buy A Home Beyond Your Budget.   A home should be a source of satisfaction and an investment not a financial albatross, especially for first-time buyers. Borrowing heavily from family members, selling assets, and living poor just to own a bigger or better home, makes for larger mortgage payments and risks difficulties in the future.

Tip 2. Always Shop For Competitive Rates, Points, And Fees. Get at least three bids. The most competitive lender one week may not be next week so get (or reconfirm) quotes the same week you are ready to make the commitment.

Tip 3. Get An Immediate Written Confirmation Of Your Locked In Interest Rate And Interest Rate Terms (i.e. if you are locking the rate, can you relock if rates drop, etc.), points, and fees, you might find some discrepancies with the figures used on the final loan documents.

Tip 4. Don’t Agree To Prepayment Penalties. You may want to refinance or partially prepay part of the mortgage. If there is no mention of prepayment penalties, make sure you have an addendum attached to the mortgage specifying that no fees will be imposed.

Tip 5. Understanding All The Conditions Of Your Loan: You or a professional that you trust should thoroughly scrutinize each document. Ask questions if you aren’t sure what something means.

Tip 6. Pick The Right Kind Of Loan. Rates are higher on 30 year loans than on comparable 15 year loans. That’s because there is a greater risk that rates will go up the longer the lender commits to a fixed rate. Lenders hate holding loans at below market rates. While there is an advantage to the predictability of fixed rates, if you expect to be transferred in 5 years, you’ll be paying more than you need for a 30 year fixed rate loan. If you want both the security of predictable payments and the lowest monthly payment consider “hybrid” loans – those with a fixed rate for the first five or seven years of their 30 year duration. If you are going to be there for a shorter period, or have confidence that rates will be dropping further, consider an adjustable rate mortgage.

Tip 7. If You Are Buying Rather Than Refinancing, Consider Getting A Pre-approved Mortgage Or Contingent Loan Approval Letter. The former is a binding commitment for a loan up to a certain amount. It can substantially strengthen your negotiating position with the seller, but it puts pressure on you to close a deal before the loan commitment expires. A contingent approval is a letter from a lender that states the largest loan you would qualify for, subject to confirmation of the financial information you’ve provided and formal approval. It will also give you additional negotiating leverage without binding you to the lender (or vice versa). Sometimes owner financing can work to both parties advantage. Ask the seller if it’s a possibility. If so explore further to see if there might be mutually agreeable terms before making an offer.

Tip 8. Save Everything. Lenders require and provide numerous documents. Some get misplaced, usually at the most critical time. Keep copies of everything you send the lender and everything the lender sends you.

Tip 9. Take Advantage Of The Deduction. The mortgage interest deduction is one of the few remaining tax deductible interest payments, and it’s also the cheapest form of long term financing. Consider financing/refinancing as an alternative source of funds for home improvements or other constructive long term investments like education. Don’t get in over your head, and never use it to finance your summer vacation or other short term pleasures.

Tip 10. Study! A lot of money is at stake You can’t learn too much, and you won’t have time to learn what you need, interview and select a lender in the five days allowed most buyers to apply for a loan. Read the real estate section of your local paper and books on the subject.

Top 10 Remodeling Tips

Tip 1. Compare The Cost Of Moving To Remodeling.  Moving is expensive, typically involving a 6% commission on the sale of your current home, plus another 2-4% for closing, moving, and other costs.  If you like the present neighborhood then look into what improvements you could make with 8-10% of your home’s current value before you decide to move.

Tip  2. Design Ahead.  You don’t want to come up with an additional brilliant idea right after the job is complete.  You can reduce the risk by doing some advance research.  Read up on design, talk to friends with knowledge and experience with the type of remodeling you’re considering, and get suggestions (and references from architects and remodelers while you’re in the early stages of planning.   If you’re changing current floor plans get some graph paper or a floor planning kit and play around.  Start a file for literature about components and finishes.

Tip 3. Don’t Over Improve.   This may be of less concern if you plan to remain in the home for a long time, but it’s very important if you’re remodeling to sell your home.   Some remodeling jobs, such as a prudent overhaul of a very dated bath or kitchen, or the addition of a second bath to a one bath home, can return more than 100% of the cost at the sale of the home, and help you sell it faster.  However, if you want a different look, you’ll probably not recover the investment in a home that is already significantly more valuable than most of the others in the neighborhood.

Tip 4.  Allow Plenty Of Time For The Job.   Murphy’s law applies to remodeling.  If you expert a contractor to compress a six week job into four weeks, you’re asking for trouble.  Also, you can save money and probably get the job done faster if you have the ability to schedule it in the off season when contractors have fewer jobs to bid on.

Tip 5. Check The Remodeler’s Credentials- Carefully.   Are they licensed and insured for workers compensation, property and personal liability?  If in doubt, ask to see their insurance certificate.  Do they belong to the National Association of the Remodeling Industry, the National Association of Home Builders Remodelers Council, and/or any of the more specific trade associations in the remodeling sector?  That’s a sign of commitment to the trade and to professionalism.   Most also offer certification and/or management training and keep their members up to date on the latest products and techniques.  Ask for recent references on similar jobs (employee and subcontractor turnover is often fairly high, so recent jobs are a reliable indicator of their current capability).  Check their record with the Better Business Bureau while you’re at it.

Tip 6. Request A Comprehensive Bid.  It should detail as many of the specifications as possible.  Get bids from three remodelers.  If one of the bids is unusually low, make sure that they have included everything.  If they have, make sure you’ve thoroughly covered tip #5.

Tip 7. Consider Doing Some Of The Work Yourself.  If the bids are higher than expected and too much for you to afford, you might be surprised how much money you can save.  But make sure you’re not getting into something you don’t have time to do.  Things that come up near the end of the job, such as painting, finish carpentry, etc. are good bets since the other parts aren’t dependent on their completion.   Some can even be done after the issuance of the final occupancy permit.

Tip 8. Get A Comprehensive Written Contract.  It will greatly reduce the likelihood of disputes with your remodeler.  Most disputes arise over issues that were not resolved in advance.  Make sure it covers the description of the project, timetable, payment schedule, etc., with general provisions defining the responsibility of the contractor and the subcontractors, defects and correction, change order procedures, warranties, right to termination, and alternative dispute settlement mechanisms (since more than half of the costs of lawsuits represent legal fees, homeowners and contractors will almost always be better off with mediation, conciliation, and/or binding arbitration clauses should a disagreement arise).

Tip 9. Consider Buying Certain Building Materials In Advance.   Styles for appliances and other building materials and suppliers are subject to change and are often heavily discounted when they go out of production.   If there’s a style you like very much, it may not be available next year, so consider buying and storing them when you see a really good deal.  With the advent of the larger super discount home improvement stores, prices are down to the point that remodelers often can’t get much better prices from other sources, even with their business discounts.

Tip 10. Be Careful About Financing.  If you’re financing the project, you want the lowest rate possible and you want the interest to be tax deductible.   Only certain types of loans will give you an interest deduction so check with an expert.  In some cases, refinancing your mortgage can be the best bet.

Top 10 Seller’s Tips

Tip 1: In strong markets, where demand outstrips supply, home sellers can old out for top dollar. In weak markets the reverse is true – there are many homes on the market and unless you price your home very competitively you’ll be very unlikely to attract any buyers. Whatever the current market conditions you will be most likely to get the highest possible price if you are willing to take the time to understand each of the components of a successful home sales campaign so you can assure that you, or a real estate service provider who may be assisting you, are doing everything possible to maximize the effectiveness of the home marketing effort.

Tip 2: A good time to sell is during a period of low mortgage interest rates, because with lower interest rates more buyers will be qualified to buy your home. Low rates benefit buyers and sellers alike, and if you plan to purchase another home after selling yours, you will be both a seller and a buyer. A “sellers market”, where there are more buyers than homes available for sale, is also helpful. However, if you plan to purchase another home in the same area after selling yours, this competitive advantage will work against you when you become a buyer. The same principle applies in reverse to buyers markets, so if you plan to purchase another home in the same area after selling yours, it really makes little difference in the end whether it’s a buyers or a sellers market.

Tip 3: Shine Your Apple. Make your home look as nice as it can look. Have a presale yard sale and get rid of as much clutter as possible. Keep only a minimal amount of furniture in each room – it will make the room look bigger. Store any extra furniture. Clean up and repaint with neutral colors if necessary. Open blinds and replace light bulbs with brighter substitutes. If important parts of your home are outdated consider cost effective updates. If your kitchen or bath is old or in bad shape a prudent remodel can often return over 100% of the investment and help you sell the home faster. But don’t over improve. There’s not much point in adding a fourth bathroom to a home that is already worth more than most of the others in the neighborhood.

Tip 4: Study. More money hangs in the balance in the selling of your home than in most financial transactions in your life. It therefore makes sense to learn as much as you can about selling your home. No matter whether you’re a self seller, or have an agent, you need to learn enough to be in command of the process. There are many excellent books on the subject in libraries and bookstores. The real estate sections of local newspapers are great sources of information about your local marketplace. The difference between understanding the process as well as your local market, versus not understanding it, can be many thousands of dollars in the eventual selling price.

Tip 5: Decide whether to use a full service real estate broker/agent or sell it yourself. Although average full service real estate commission rates have dropped to a little more than 5%, that’s still a lot of money (a 5% commission on a $200,000 home is $10,000, for example). If you have the skills, time, and resources you may be able net more money by selling your home without a full service broker/agent. In many states some discount brokers will put your home in the local multiple listing service (MLS) for a few hundred dollars, and they may also have  menu of individually priced additional services. A full service broker/agent may be a smarter choice when you are in a buyers market if you don’t have the experience or the time to learn about the process and your local market. The same applies if you don’t have the time to do all the things necessary to market a home effectively, if you are on a deadline to sell, or if you don’t have an instinctive bent towards advertising, marketing, and negotiating.

Tip 6: If you decide to use a full service broker/agent, first identify three experienced agents who are familiar with your neighborhood. Look for agents who have “for sale” signs placed in your neighborhood. Don’t use an inexperienced agent – entry standards are very low in the real estate field, and years of experience and contacts, as well as advanced professional designations, are valuable. Ask each to prepare a market analysis (how much is it worth?) and a marketing plan (how do you plan to market my home?). Ask lots of questions about both. Include the main points of your marketing plan in your listing agreement so that all parties will know what is to be expected (i.e. frequency of ads and the publications/websites where they’ll appear, frequency of open houses, etc.). Limit the length of the listing – two months or less is good, but no more than three months. If the agent is doing his/her job as set out in the listing agreement you can always renew the listing when it expires. If they’re not producing results you’ll be able to document the reasons if you decide to cancel the listing early or be able to show them why you aren’t renewing the listing with them.

Tip 7: If you decide to market the home yourself it is still a good idea to talk to three full service broker/agents before making a final decision. It will provide an additional reality check to make sure you really are prepared to market the home yourself, and the market analysis and marketing plan information will be helpful in any event.  Even if you still feel good about selling the home yourself supplement your marketing efforts by using a limited service or flat fee broker who will list your home in the local multiple listing service (MLS) for as little as $200. This is extremely helpful to your mrketing efforts because the MLSs feed the listings to the consumer-facing websites of most of the other local real estate brokers and to realestate.com, the world’s largest real estate website. With 80% of home buyers now using the Internet, it’s important that your home gets broad Internet exposure. Both do-it-yourself sellers and real estate agents are also increasingly using free Internet-based real estate marketing alternatives like Craigslist.com, Zillow.com, and several others. There are also other modestly priced Internet alternatives like EBay and Yahoo that have real estate listings, which you should consider as well.

Tip 8: Price your property realistically, especially in slow markets. When markets are slow buyers are psychologically unprepared to overpay – and they apply stringent standards of value. They will heavily discount many expensive and unusual improvements unless they appeal very strongly to their own personal tastes.

Tip 9: Consider providing owner financing if you can, but be cautious. If you can provide some financing, even if it’s a small second trust, you may be offering ‘the’ deal maker. At the same time you can often earn a considerably higher interest rate than you would have earned with the same money otherwise. Caution: Fluctuating real estate markets can wipe out your security in the event of foreclosure. Foreclosures cost money and a second trust only gets paid after the first mortgage is satisfied, and then only if there’s money remaining from the sale. Make sure to run a credit check on the buyer and make sure that they put up a substantial down payment if you’re providing owner financing.

Tip 10: Make sure you don’t prematurely give away any bargaining leverage. All home purchase agreements must be in writing to be binding. If someone asks if you would take a specific lower figure and you agree, that’s not an enforceable contract. All you have done is to lower your asking price. The correct response should be “I’ll consider all written offers”.

OTHER FOUNDATION RESOURCES: The Foundation publishes How To Sell Your Home Fast!, a comprehensive 142 page book covering the complete home selling process. If you plan to buy another home after selling yours, you also might want to consider our companion book, The Complete Home Buyers Guide, as well as our handy reference guide “Mortgage Tips and Payment Tables”, a 62 page booklet coving how to get a mortgage and including monthly payment tables. The books are $13.95 each. Mortgage Tips and Payment Tables is $8.95. Shipping and handling for these publications is $3.95. You can order any of these products with paypal or your credit card on our website, www.AmericanHomeowners.org or call 1/800/489-7776 to place credit card order or send check, money order or credit card info to AHF, 6776 Little Falls Rd., Arlington, VA 22213-1213.

Top 10 Home Buyers Tips

TIP 1- Buying A home Is One Of The Best Investments You Can Make! Home equity remains the largest single savings vehicle for most Americans. In addition to the tax incentives of home ownership, and the ability to tap into your home equity if the need arises, buying a home is a wise and prudent investment for most people.

TIP 2- It Is Very Important To Buy A Home That Will Go Up In Value.  Slow, steady home appreciation has been the rule over most of the nation’s history, and many real estate investors became quite wealthy in that environment. They did so by very carefully analyzing the appreciation potential of their investment, and they invested for the long term. You should too. Even if you plan on living in your home just a few years, you will want it to have gone up in value when you put it back on the market.

TIP 3- Use A Buyers Agent. If you’re going to work with a real estate agent, contract with a buyers agent rather than with a subagent. A buyers agent is paid by you and has a duty to represent your interests, while the subagent is paid by the seller and represents the seller’s interests. The subagent, which has been the traditional relationship between a buyer and an agent, is ethically required to disclose all relevant information (such as the fact that you’ll be willing to raise your offer if necessary) to the seller. Try as you might, it’s difficult to avoid saying things you shouldn’t to a subagent. While you are responsible for paying the buyers agent, the net cost can be zero if you put in your offer that the seller is to pay buyer agent’s commission (which the seller would have had to pay anyway if the offer had come from a subagent). An exception is if you’re buying from a self-seller. They often did not plan on allowing for a real estate commission. In those circumstances you face a subjective decision as to whether a buyers agent’s negotiating skills are sufficiently better than yours to justify the commission you will owe them.

TIP 4- Choose Your Agent Wisely. If you are using a real estate agent look for one with experience in working with buyers, with knowledge of the neighborhood(s) you are considering, and who does not have a reputation for being ‘pushy’. The purchase of a home is a serious long term commitment on your part and a good agent will recognize that buyers need time and patience so they can satisfactorily sort out the myriad’s of factors involved in a purchase decision.

TIP 5 Current Home Prices Are A Less Important Consideration Than Interest Rates. Try to buy and/or sell when interest rates are low. The amount of mortgage you can afford (and thus the price of the home you will consider) will change as the interest rates rise or fall. A certain asking price may sound expensive to you, but at a lower interest rate you might be able to afford it. You may own several homes over your lifetime, and the factors that will limit or increase the value of the home you will be selling will similarly affect the price of its replacement. Since those factors largely wash each other out, interest rates remain the most important factor.

TIP 6- Always Have A Home Inspection Contingency In Your Offer and always hire a professional home inspector to provide you a written report, along with “ball park” estimates or ranges of repair costs. If the inspection turns up problems that weren’t readily noticeable, you can use it and the ball park estimates for negotiating leverage to get the seller to make the repairs or provide you a commensurate price reduction.

TIP 7- Learn As Much As Possible About The Seller’s Circumstances. There may be mutually beneficial opportunities. For example if you might face difficulty qualifying for a big enough mortgage, and the seller is worried about college costs for his or her sixth grader, then maybe the seller might be interested in accepting a second trust for part of the purchase price if the interest rate is above what they could otherwise earn and the loan is paid off the summer before the child’s freshman college year. From your perspective the rate will likely be less than you could get from a traditional lender.

TIP 8- Research Your Mortgage Options Well Before You Make An Offer. You won’t have enough time in the five days sellers normally allow to get all of your paperwork together, determine the best kind of mortgage, who is offering the best rates etc. Consider getting a contingent letter of approval for a loan, or an actual loan commitment prior to making an offer. The former is not actually a loan commitment, but rather a contingent approval for a loan up to a certain amount. While it has relatively little enforceable value, it nevertheless can impress a seller, who might be more willing to accept a lower offer because of the perceived financial capabilities of the seller. Its also possible to get approved by a lender with a longer term “lock” on the interest rate in order to protect you from subsequent rate increases. While this should substantially increase your negotiating leverage, keep in mind that you pay more directly or indirectly for the longer commitment, either in terms of the rate and/or points.

TIP 9- Learn How To Negotiate Like A Pro. There’s more money involved in this negotiation than just about any other area you’ll encounter. Even if you’re using a buyer’s agent, you’re part of the team, and you’ll have to make the ultimate decisions about how much to offer and how much to compromise on a counter offer.

TIP 10- STUDY! The tips in this brochure are only the beginning. You’ll need to learn a lot more if you want to get the best possible deal. Read as much as you can on home buying, on negotiating, on neighborhoods in your area that might fit your needs, and on factors that impact long term appreciation like schools, infrastructure, major new business expansions or closing etc. Keep copies of everything you send the lender and everything the lender sends you.

Top 10 Steps to Avoid Foreclosure

Here are ten suggestions to avoid foreclosure, both now and in the future.

1. Don’t ignore the problem. The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your home. If you are behind on your mortgage payments or have received notice that you are behind in payments, you need to contact your lender quickly and ask to speak with a loss mitigator. Typically, your lender will mail you a “loan workout” package. This package contains information, forms and instructions. If you want to be considered for assistance you must complete the forms fully and truthfully and return them to your lender quickly. Your lender will review the complete package before talking about a solution with you.

2. A smart simultaneous step is to contact a HUD approved local nonprofit counseling agency that may be aware of programs that could help you, may have personal knowledge of your lender’s flexibility in terms of available options, and may know the best person to contact with your lender. To find one click HUD-approved housing counseling agencies or call HUD at (800) 569-4287 on weekdays. Time is of the essence, so don’t let this step slow the process more than a few days.

3. At the same time, find out what your home is worth so you will know how much equity you have (or if its worth less than the mortgage balance). There are online home valuation tools on Zillow.com, Trulia, and several other websites, but an experienced and knowledgeable local real estate agent’s written market valuation is likely to be more accurate and will be helpful in discussing options with lenders. Modifications, forbearance and recasting are all possible if you have sufficient equity in your home, and if you have sufficient equity, selling the home if necessary may not be the worst idea if home values are dropping.

4. Avoid fee based for-profit mortgage prevention companies or counseling agencies – many are rip-offs that provide few if any meaningful services for distressed homeowners, and you can get quality counseling for free. Also be wary of investors who advertise offers of immediate cash for your home. Many of them are also unethical or outright crooks, seeking to strip home equity through a variety of techniques. If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property. Never sign any legal document without reading and understanding all the terms and getting professional advice from an attorney or a trusted real estate professional, or a HUD approved housing counselor.

5. Know your mortgage rights. Find your loan documents and read them so you know what your lender may do if you can’t make your payments.  Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.

6. Foreclosures are expensive for lenders, so they are usually willing to listen to reasonable ideas that can reduce their potential losses, such as restructuring the loan at lower rates or accepting a “short sale” which occurs when the lender agrees to let the owner sell the home for less than the mortgage balance, and agrees to forgive the shortfall and not downgrade the homeowners credit. Your willingness to cooperate is a negotiating tool if your suggestions are likely to be less expensive than a foreclosure action.

7. Bankruptcy is an option, particularly if your lender is inflexible or your mortgage is on a second home or a rental property. Bankruptcy judges can reduce debts and modify interest rates on commercial loans, second home mortgages, and investment property mortgages when it is in the best interest of both parties. Unfortunately, they have no such latitude with the mortgage on your primary residence, but if your mortgage lender is inflexible, bankruptcy proceedings may be the wisest choice.

8. Even if you are current on your mortgage payments but have an adjustable loan, thoroughly review your mortgage documents, even if your reset date is many months in the future. Check the reset interest rate or formula for determining the reset rate and any future rate resets, and see if there are mortgage prepayment penalties.

9. If you think you could have trouble keeping up with the new payments on an adjustable mortgage, consider refinancing into a fixed rate mortgage if possible. Some lenders may be willing to forgive all or part of a prepayment penalty if that payment presents a problem and you qualify for their fixed rate product.

10. Don’t assume that you are immune to a foreclosure in the future. Don’t assume that a mortgage lender’s underwriting process will assure that you’ll not be approved for an unaffordable mortgage in the future. When lenders discovered that they could package and very profitably sell risky loans to investors, they became was less focused on responsible underwriting because they weren’t at risk if they sold the loans. Sound underwriting practices began to deteriorate, eventually causing the current mortgage meltdown. This could happen again. In the future you need to consider the total amount of likely monthly payments, including taxes and insurance, and be comfortable in your own mind that you can handle those payments. Adjustable rate loans are risky because you can’t control the future interest rate at the time they will be adjusted, so you need to assume the worst (in other words, a substantially higher index interest rate when they adjust) in deciding whether they will still be affordable.

Free 10 Minute Home Energy Audit

The American Homeowners Foundation (AHF) is providing this free Home Energy Audit to help homeowners reduce energy consumption costs. The National Energy Assistance Directors Association predicts that home heating oil bills will cost $2,200 in New England this winter, up from an average of $900 per heating season from 2000 through 2005. The costs of home heating oil in other parts of the country as well as other energy sources used for home heating and cooling are expected to rise substantially in 2007 and 2008 as well.

There are many things homeowners can do to reduce home energy costs. Many of them are lifestyle related. While inside your home wear warmer layered clothing in the winter and light and loose fitting garments in the summer and you’ll use less energy for heating and cooling. Try to spend more of your time in warmer parts of your home in the winter and the coolest part of your home in the summer and you’ll also use less energy for heating and cooling. The top floor of the south side of a home is usually the warmest and the lowest level of the north side is usually coolest.

Don’t ignore other ways to save energy outside of the home as well. Today you can buy many of the products you need on the Internet and have them delivered to your home for less than their price at the mall or shopping center, and still save money after adding shipping costs and subtracting the cost of the gasoline you would have used driving to the store. By not driving you’ll be helping to reduce global warming and will probably save time as well. Also employers are becoming more open to letting employees work from home at least occasionally, so it wouldn’t hurt to ask if your boss would let you telecommute. Tax credits for the purchase of hybrid vehicles can also significantly reduce their added cost and the time required to make up the difference through savings on gasoline.

Homeowners can significantly reduce energy costs through several simple and inexpensive do-it-yourself steps that will recover their costs through energy saving very quickly. The costs of more comprehensive energy reduction solutions can be reduced by federal tax credits of up to $500 for expenses to upgrade heating and air conditioning systems, insulation, windows, doors and thermostats, caulk leaks, install pigmented metal roofs and otherwise reduce energy costs (the tax credits will expire on December 31, 2007, but there is a good chance that Congress will extend them). A number of states also offer tax credits for things like solar energy systems and/or rebates or other incentives for things that can reduce energy use. The Environmental Protection Agency has created a free calculator that you can use to customize you own personal energy reduction plan: www.epa.gov/climatechange/wycd/calculator/ind_calculator.html

The Audit

AHF’s Ten Minute Home Energy Audit will help you identify steps you can take to significantly reduce your home’s energy consumption. This a quick guide and scorecard will help you focus on the most obvious and cost-effective steps you can take to reduce energy consumption and increase comfort levels in your home. The greater the range in points, the more energy that can be saved. The Audit will require you to explore your house using a flashlight, ruler and screwdrivers.  We will start in the room containing your furnace if you have one, then work your way through each room to the attic.

Please give yourself the appropriate points for each category listed below, and then add them up when you’re finished. How energy efficient is your home? Here’s the scale:

100+ points    Triple A+ Model of Energy Efficiency, well done!!
80 to 100         A, your house is in excellent energy shape
70 to 80           Great shape, some minor improvements encouraged
60 to 70           Passes, yet obvious room for energy improvements
50 to 60           Not good – you have high utility bills and comfort problems
50 & below     Your house needs major help!  Seek professional advice to reduce energy costs

1. HVAC system’s efficiency/age 
If you have a brand new, super high efficiency/energy star system, add 10 points. If your system is less than 3 years old and high efficiency, add 7 points.
If your system is 3 to 5 years old and high efficiency, add 5 points.
If your system is 5 to 10 years old and in good shape, add 3 points.
If your system is an oldie but a goodie, 10+ years old, add 1 point.
If your system is over 20 years old and in poor shape, subtract 3 points.

2. HVAC system check-up
Has your HVAC system had a check-up by a qualified HVAC pro within the past year?
If you have had a check-up in the last year, give yourself 2 points.
If you have any solar heating in your house, add 5 points.

3. Changing air filter
If you have changed your air filter 6 times this past year, give yourself 2 points.
If you have changed your air filter 2-4 times this past year, give yourself 1 point.
If you have not changed your air filter this past year, subtract 5 points.

4.  Hot water heater temperature
What is the temperature setting of your hot water heater?  Note: If electric please turn off power at the circuit breaker if you need to open access panels to read.
If the temperature is set to 110F or vacation warm, give yourself 5 points.
If the temperature is set to 120F or warm, give yourself 4 points.
If the temperature is set to 130F or warm plus, give yourself 3 points.
If the temperature is set to 140F middle of the dial (factory setting), give yourself 2 points.
If the temperature is set to 150F or hot, give yourself 1 point.
If the temperature is set to 160F or very hot give yourself 0 points.

5.  Water heater insulation
If you have additional insulation around your water heater, give yourself 2 points.

6.  Water heater age
If your water heater is less than 5 years old and is labeled as a high efficiency or “energy star” unit, give yourself 2 points.
If you have a solar water heater, give yourself 5 points.

7.  Insulated water pipes
If you have pipe insulation, give yourself 1 point.
If you have a low flow water saving showerhead or aerator, give yourself 1 point for each one that you have.

8.  Wall insulation
Are your outside walls insulated?  The best way to check is to take off an electric outlet receptacle cover plate and with a non-conductive probe (i.e.: a soda straw or other non-metallic probe) poke around the outside of the box and behind the wall to see if you can feel anything (it will be the insulation).
If they are insulated, give yourself 5 points.
No insulation? Sorry, give yourself 0 points.

9.  Air registers
For every air register that is blocked by furniture or curtains, subtract 1 point!

10.  Return register
Does your home have only one return register per floor?
If so, subtract 1 point!

11.  Programmable thermostat
Do you have a programmable thermostat that you have programmed to fit your schedule and lifestyle?
If so, add 5 points. If you rarely override it except for brief periods add two points.

12.  Old Fireplace
If you use your old fireplace, subtract 3 points!
If your damper is off its hinges and can’t close entirely (big energy loser, especially on very cold days), subtract another 3 points!

13.  Woodstove or insert
Do you have an air tight woodstove or insert?
If so, give yourself 4 points.

14.  Refrigerator
If your refrigerator and/or freezer are less than 5 years old and is an energy efficient or energy star model, give yourself 3 points each. If your refrigerator and/or freezer are over 10 years old or have faulty gaskets, subtract 1 point for each!

15.  Dishwasher energy feature
Do you use the energy saving feature on your dishwasher if it has one? If so, add 1 point.

16.  Windows
If your windows are new, shut tight, thermal paned and low E glass, give yourself 5 points.
If your windows are shut tight and are thermal paned, give yourself 4 points.
If you have storms windows (that work) & tight primary windows, give yourself 2 points.
If you have some storm windows and fairly tight primary windows, give yourself 1 point.
If you have metal framed windows (with or without storms), subtract 1 point!
If you have more that 3 windows can’t close and all are in poor shape, subtract 3 points!

17.  Weather stripping
Do you have weather stripping at each exterior door?
For each door that is properly weather-stripped, add 2 points.
For each door with an operable storm door, add 1 point.

18.  Caulking
If all windows, doors, pipe penetrations and discordant joints (where wood meets concrete – top of foundation where top plate starts the wall, siding meets brick – at chimneys, etc.) are sealed tight, add 5 points.
If only windows and doors are sealed tight, add 4 points.
If caulking is present around windows and doors yet starting to crack and break, add 2 points.
If most caulking is cracking and exposing seams, add 0 points.
If caulking is non existent or older than God, subtract 3 to 5 points!

19.  Light bulbs
For each compact fluorescent light bulb, add 2 points.
For any light fixture with a bulb over 200 watts – i.e.: standing Halogen torch lights, subtract 2 points!

20.  Attic hatch or pull down stair insulation
Does your attic hatch or pull down stairs have an insulation cover?
If so, add 1 point. If the hatch is weather-stripped and closes tightly, add another 1 point.

21.  Top floor ceiling insulation levels
If insulation is 12” or more & is evenly distributed, add 8 points.
If insulation is 8” to 12” high, add 5 points.
If insulation is 6” to 8” high, add 4 points.
If insulation is 3” to 6” high, add 2 points.
If insulation is less than 3”, subtract 1 point!
If insulation has been disturbed and not even, subtract 1 point!

22.  Attic bypasses (where you see dirty discolored insulation you have air bypasses).
If attic bypasses (plumbing stacks, electrical lines, top plates) have been air sealed with foam or caulk, add 4 points.

23.  Ducts in the attic
If you have any ducts in the attic, subtract 2 points!
If these ducts are either not insulated or if insulation is falling off (silver duct tape fails to hold up), subtract 4 points!

For more information and helpful free tips on home remodeling and other home related activities go to www.AmericanHomeowners.org. The American Homeowners Foundation is a nonprofit education organization serving the nation’s 75 million homeowners since 1984.

One Stop Real Estate Shopping

Testimony of the
American Homeowners
Grassroots Alliance

Submitted to the Senate Banking Subcommittee on Financial Institutions holding hearings on Bank and Financial Holding Company Engagement in Real Estate Brokerage and Property Management

May 23, 2002

The American Homeowners Grassroots Alliance (AHGA) is the national bipartisan advocacy organization representing the nation’s 70 million homeowners. AHGA believes that preserving and enhancing home ownership should be a national policy priority.

The American Homeowners Grassroots Alliance (AHGA) is a national bipartisan advocacy organization representing the nation’s 70 million homeowners. AHGA believes that preserving and enhancing home ownership should be a national policy priority. AHGA believes that homeowners and home ownership are generally benefited by domestic and international free market policies.

AHGA has carefully reviewed policy documents and testimony from the real estate and lending sectors and other sources on the issue of allowing banking organizations to be involved in real estate brokerage. From the consumer perspective there are significant potential benefits of such a policy. Those benefits clearly outweigh the limited potential risks. In addition a substantial majority of consumers would like the option of “one stop” shopping for real estate services. For these reasons AHGA believes that consumers will benefit if banking organizations are involved in real estate brokerage and urges Congress to support the entry of banks into this market.

Opponents argue that because banks lack the invaluable experience in local real estate markets and the in-depth knowledge of real estate law, consumers will suffer. While it’s true that most banks currently don’t have core real estate brokerage competencies, both experience and common sense suggest it is unlikely that consumers will suffer. Companies in the banking and real estate sector have successfully entered each other’s markets without serious problems. Federal savings institutions, credit unions nationwide, and commercial banks in about half of the states have had the ability to engage in real estate brokerage for a number of years. Many real estate companies, including Long & Foster, Century 21 and Coldwell Banker and many others currently provide brokerage, mortgage lending, title insurance, and property insurance. Consumers have substantial protection in the fact that real estate practice is heavily regulated, and state licensing requirements establish minimum competencies that all participants must demonstrate. Rather than build those competencies from scratch, it is likely that many banks will enter the real estate brokerage market through partnerships with or the acquisition of small local real estate agencies that have substantial experience in their real estate markets and in-depth knowledge of real estate law.

Another argument against permitting banks to enter real estate brokerage is that it will accelerate the consolidation process currently underway in both the real estate and lending sectors. This would reduce competition and increase costs to consumers. This is not a strong argument either. Other larger economic factors are driving the consolidation that will almost certainly continue in banking and real estate (and many other sectors as well), whether or not banks are allowed to enter real estate brokerage. AHGA believes that any contribution of this new policy to the consolidation process will be small. If banks are permitted to enter real estate brokerage the most visible difference will likely be that banks instead will purchase some of the small real estate brokerages that would otherwise be purchased by large real estate brokers. Because there will be more bidders the small independent brokers will benefit from higher selling prices when they sell their businesses. Fortunately there are a very large number of existing competitors in both sectors, so it would take many years before consolidation reduces the number of competitors in either sector to the point that any company or small group of companies could override market forces in determining prices of banking and real estate services. If and when we ever reach the point that market forces do not prevail in setting real estate service prices and lending prices and rates, U.S. antitrust laws are available to stop anticompetitive behavior.

Lastly, opponents argue that permitting banks to enter real estate brokerage creates a conflict of interest in that a lender owning a real estate brokerage will try to sell follow-on products or services to its clients its other services, and in many cases those products or services will not represent the best value for the consumer. Most consumers recognize that the products or services of only a few companies in a given industry can represent the very best value for a particular consumer. They also recognize that the consumer is in the best position to determine his or her needs and priorities and it is the consumer’s responsibility to sort out which products or services represent the best value. Cross-selling of follow-on products is a very common practice in many sectors, and the products and services a company seeks to cross-sell are no different with respect to their potential fit to a consumer’s needs that the product or service that attracted the consumer in the first place. AHGA believes that most consumers are sophisticated enough to recognize that any company’s follow-on products or services also may or may not be the best value for the consumer and act accordingly. There is therefore no greater conflict of interest between a consumer and business regarding a follow-on product or services or the product or service that attracted the customer in the first place.

In addition most consumers do substantial research regarding competing real estate and mortgage lending services before buying, selling or financing a home. There is a wealth of free and inexpensive information available to consumers on those subjects from a wide range of sources, including AHGA’s sister education and research organization, the American Homeowners Foundation (AmericanHomeowners.org). Almost every source strongly urges consumers to comparison-shop every major component of real estate services.

There are several arguments in favor of permitting banks to enter real estate brokerage. Businesses cross-sell because it is more efficient way to market, i.e. the costs are lower. In a competitive marketplace a share of marketing cost savings will inevitably be passed on to consumers in the form of lower fees and/or rates. In addition to potentially saving homeowners money, the closer coordination of home brokerage and lending services under one roof also potentially reduces the time between purchase and settlement, which can often be very important to consumers as well. These likely cost and time savings are a substantial potential consumer benefit. They would indirectly benefit individual real estate agents, because they will get their commissions sooner and the reduced costs and time savings will likely mean more home buyers and sellers.

Consumers are very concerned about the protection of their financial and other personal data. Currently RESPA requires that all real estate companies and banks provide disclosure notice to the customer of multiple services offered by affiliated firms. In addition banks are currently subject to greater privacy regulation than real estate companies. The current regulatory proposal to allow banks to enter the real estate brokerage requires real estate brokers to provide greater protection to the privacy of consumer data. Consumers support this requirement and will benefit from greater protection.

One stop shopping is by itself a substantial benefit to many time-starved consumers. Many home buyers are couples with two demanding jobs and often more demanding children. We believe many of those home buyers consciously and intentionally trade convenience for economy in many decisions. They make that choice with full awareness that they will likely be forgoing a better offer if they took the time to shop around.

From a policy standpoint the question is whether federal legislators should deny consumers this freedom of choice, and if so, what is the appropriate alternative. While AHGA strongly encourages consumers to take the time to shop competitively for all real estate and financing services, AHGA also believes consumers have the right to make their own choice. In addition, recent home sellers favor allowing banks to offer real estate brokerage by a 2 to 1 margin according to a 2001 survey.

For this reason AHGA urges members of Congress to oppose S. 1839 and H.R. 3424. If Congress concludes that the risks of permitting banking organizations to be involved in real estate brokerage outweighed the benefits, then consistency would require that federal savings institutions, credit unions nationwide, and commercial banks in several states that engage in real estate brokerage to divest themselves of their real estate businesses. Since the primary arguments against the bank’s market expansion go to core competencies and potential conflicts of interest, then conversely the many real estate companies that currently provide mortgage lending should also be required to divest themselves of their real estate lending businesses. While these steps would apply the principles contained in S. 1839 and H.R. 3424 on a consistent basis, it would deny many consumers what they want – one stop shopping.

If Congress truly believes action is necessary to protect consumers it would be more effective to require consumers to meet some minimum level of due diligence before entering a real estate or lending transaction (i.e. demonstrating that they have interviewed three real estate agents before listing a home, looked at three houses before making an offer to buy a house, or considered three lenders before applying for a loan). However as previously stated AHGA believes this would be too much of a restriction of personal choice.

In deciding whether to support real estate companies or bankers on this contentious issue, AHGA recommends that Congress choose the side consumers. Congress can best serve consumers by supporting the implementation of regulations to permit banking organizations to be involved in real estate brokerage.

The American Homeowners Grassroots Alliance (AHGA) is a national bipartisan advocacy organization representing the nation’s 70 million homeowners. AHGA believes that policies that encourage and protect home ownership are in our national best interest. Those policies encourage and sustain the maintenance of a strong and broad middle class, build a sense of community and responsibility, and facilitate investment in homes, which are the largest, most universal savings/equity-building vehicle for most Americans. AHGA’s positions and more information about the organization are available at www.AmericanHomeowners.org. The American Homeowners Foundation’s section of the website also contains free educational materials to help homeowners and future homeowners buy, sell, remodel, and finance their homes.

New Home Tax Letter

October 9, 2003

The Honorable Jim Jochum
Assistant Secretary, Import Administration
Central Records Unit, Room 1870
U.S. Department of Commerce
Pennsylvania Ave. & 14th Street, NW
Washington, D.C. 20230

Re:  Treatment of Section  201 Duties and Countervailing Duties

Dear Mr. Jochum:

The American Homeowners Grassroots Alliance (AHGA) is responding to the proposed Federal Register notice on September 9, 2003 requesting comments regarding the deductibility of Section 201 duties and countervail duties from the gross unit  price used in anti-dumping calculations. AHGA represents the nation’s 70 million homeowners as well as future homeowners. We are opposed the proposal.

We request that the Department of Commerce study the financial impact this proposed rule on U.S. home buyers. WTO and NAFTA panels have already ruled illegal many of the actions taken by the Department in imposing antidumping and countervailing duties on Canadian Softwood Lumber. We believe future WTO and NAFTA decisions will find similar flaws in the duties.

The continued imposition of antidumping and countervailing duties on Canadian lumber is hurting U.S. home buyers, slowing the U.S. economic recovery, putting innocent Canadian timber companies out of business and costing innocent Canadian timber workers their jobs. These tariffs may add $1,000 to the price of a new home, preventing 300,000 U.S. families from buying homes.

As we approach an election year in a weak economic recovery we urge you to put the interests of the 70 million US homeowners and millions of future homeowners ahead of a bunch of greedy U.S. timber companies.


Beth D. Hahn
American Homeowners Grassroots Alliance