5 Surprising Things Not Covered By Homeowners Insurance

June 29, 2020 by Tamila McDonald Leave a Comment

Overall, homeowner’s insurance is fairly comprehensive. It financially protects you from the burden associated with a variety of potential events. This ensures that you can move forward with repairs or replace stolen or damaged belongings. However, homeowners insurance doesn’t cover everything. In fact, there are some gaps that many don’t expect. These gaps can lead to a rude awakening if certain kinds of events occur. If you are wondering what is not covered by homeowners insurance. Here are five things that usually aren’t.

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Down Payment or Investment Opportunities?

June 17, 2020 by Jacob Sensiba Leave a Comment

The current dilemma I am having is whether to stash my savings for a down payment on a house or contribute to my Roth so I have cash available for buying opportunities.

I’m pinching pennies, and I’m saving money wherever I can so that cash is accessible when I need it. I just don’t know what to do with it.

Do I put it towards a down payment or set it aside for investment opportunities. Like most things in life, the answer will lie somewhere in the middle.

Down payment

I’ve mentioned in prior reflections that I’m renting right now.

I’m renting because I got divorced and exhausted all of my savings on the down payment for my house. That house is currently being rented by another family, and my ex-wife and I still own it.

That’ll help build equity into the house so we receive more if/when we decide to sell, which is good.

I’m happy with my current living arrangements. I like the place. I like the neighborhood. My commute to work is 2 minutes, and I’m close to all of my family and friends. All good things.

The only bad part is I have no outdoor space to call my own. I have no yard.

I’m trying to frame it positively by saying that I’m not spending my time on yard work, and instead, have more time to spend with my son/work on myself when he’s not here. These are both very good things.

However, I want to give my son a space to play. A place to put a jungle gym and a sandbox. A place where he can just run around and have fun.

I want to give him that because he deserves it. I want to use my savings for a down payment on a house so we can have a place to call our own.

Investment opportunities

Here’s the second part of my dilemma. I see a lot of chances to put my money to work in the market.

I’m able to play the long game because of my investment philosophy and my training. The best investors I have long term time horizons.

What I mean to say is I can see past the present and I have an idea of what my investments can do over the long term, and the [possible] reward for investing now can’t be ignored.

That’s why I’m having a difficult time deciding what to do.

What will I do?

As a parent, you want to give your kids everything. I want to have a place we can call our own.

At the same time, I know how valuable it is to start saving and investing early so I can take advantage of compounding returns.

So here’s what I’m thinking. I’m going to develop a “savings plan”. I’ll take the dollar amount for an ideal down payment and how far in the future (in terms of years) when I’ll want to use it.

I’m thinking of $25,000 for a down payment and four years until I’ll use it. I’ll, then, divide $25k by 48 to get my monthly savings goal. Anything over that number I’ll put in my Roth.

That’ll take care of saving for a house and for retirement.

My Last Reflection:

My Experience with Life Insurance

Are Home Warranties Worth It?

May 25, 2020 by Tamila McDonald Leave a Comment

Whenever you buy a home, regardless of its age, it’s highly likely that you’ll be given a chance to purchase a home warranty. Often, these services are marketed as safety nets. Offering you protection against potentially large expenses, like repairs or appliance replacements. In many ways, it sounds like the perfect way to get some peace of mind. Especially after making such a big investment by buying a house. But the big question is. Are home warranties actually worth it in the end? If you’re considering a home warranty. Here’s what you need to know.

The Appeal of Home Warranties

New homeowners often can fathom shouldering a major financial burden. After all, they’ve likely put down quite a bit of money to acquire the property. For most this means diving deep into their savings to make the purchase happen. As a result, the idea of having to pay for a new appliance or critical home system repair now is incredibly daunting. That’s why home warranties are appealing.

Home warranties are advertised almost like insurance. It protects homeowners from unexpected costs like those mentioned above. It’s essentially a service contract. One that allows home buyers to pay an amount upfront in exchange for financial assistance if a qualifying event occurs within a specific period. That concept provides a sense of security, making it enticing for many.

What Home Warranties Do and Don’t Cover

Every home warranty is different. However, the service contracts do typically have quite a bit in common. In most cases, they are limited to items and systems that were in good working condition at the point the homeowner bought the property.

Additionally, home warranties focus on failures that result from standard wear-and-tear, not events like thefts, fires, and floods, which fall into the hands of homeowners’ insurance companies. Further, if a homeowner neglects system or item maintenance, causing it to fail or to require repairs, that usually isn’t covered.

Which items and systems are included will be spelled out in the service agreement. Similarly, the approved failure circumstances will also be outlined.

The Cost of Home Warranties

The price of a home warranty can vary depending on numerous factors. The property’s location, existing items, and current systems all play a role in the cost. Similarly, the home’s age will impact the price tag. However, it isn’t uncommon for the price to come in between $350 and $600 a year, not including the service call fees, which usually run about $75 to $125 per visit for each contractor specialty involved.

In comparison to replacement expenses and typical repair costs, that can seem like a bargain. For example, central air conditioning replacements can run $5,000 or more, depending on the specifics of the system, and just one appliance can run from $350 to $8,000+.

Home Warranty Pros and Cons

A home warranty does provide some protection against the unexpected; that’s really the biggest benefit it provides. Plus, it can help reduce the cost of certain repairs, as the warranty itself may come with a significantly smaller price tag than shouldering the financial burden without one.

Additionally, if you are selling a property, throwing a home warranty into the deal could make your property a more attractive buy. It gives the homebuyer a degree of protection, which might make them feel more secure about moving forward.

However, home warranties are limited. If a lack of proper maintenance is a factor, the company won’t cover anything, and you still have to pay the service call fee. The concept of “proper” maintenance is a bit ambiguous, so there’s no guarantee that the home warranty company’s definition will match yours, leading to arguments. This is especially true if the previous owner was negligent, and the new owner can’t undo the damage on their own. That could be enough for a company to deny a warranty claim.

Claim and Dollar Maximums

Home warranties also come with claim and dollar maximums, along with exclusions. While they aren’t incredibly expensive, many are highly limited, impacting their value.

Finally, aside from providing peace of mind, you don’t get anything from a home warranty if you have no claims. If a person put that cash in a high-yield savings account instead, they may be able to afford any repairs or replacements on their own once the need arises.

Is a Home Warranty Worth It?

Ultimately, a home warranty does potentially have value, especially if a home seller wants to throw one in as part of your purchase. However, if you are considering adding one yourself, reading the fine print is a must. You need to see if the requirements and restrictions provide you with value.

It’s also wise to research the warranty provider using trusted resources. Not all companies are as reputable as others, so finding one that has a solid reputation is essential.

Otherwise, there’s always an alternative. If you build up a healthy emergency fund, you may be able to cover any unexpected costs yourself, eliminating the need for a warranty. For many, that approach works, so make sure to keep it on the table while you examine your options.

Do you think home warranties are worthwhile investments? Why or why not? Share your thoughts in the comments below.

What Happens When You Fall Behind On Your Mortgage?

March 4, 2020 by Jacob Sensiba 33 Comments

what-to-do-when-youre-behind-on-your-mortgage

What does the bank do if you’re barely hanging onto your mortgage? What if you’re still a little behind, or a lot behind, on your mortgage?

First, it depends on your definition of behind. It may not be the same as the bank’s definition (not shocking). Let’s examine:

1 – 15 Days Late

Most companies allow a 15-day grace period before tacking on any additional fees. I know that being self-employed, my mortgage company calls me on the second of the month if I didn’t pay on the first, but there’s nothing to worry about if you’re “behind” less than 15 days. No big deal. That’s why they call it a “grace” period.

15 – 30 Days Late

If you’re in that 15 to 30-day time frame, prepare for a ton of telephone calls from your mortgage service provider (probably between two and four a day). You’ll also begin receiving letters reminding you that if you forgot to pay your bill, now would be the perfect time to make that payment.

Back when my income was very unsteady, a sneaky trick my mortgage company would pull was to send out another bill insinuating that I was two months behind and that if I disagreed with them I should call ASAP. Sneaky snake oil salesmen they were.

During this fifteen to thirty day period, if you can’t pay, don’t worry about the phone calls. You’ll have to pay a small late fee of some kind, but there still won’t be any damage to your credit report.

30 – 59 Days Late

It’s important to note here: If you’re running up against that 30-day late period, it’s best to drop everything and pay your mortgage. Even if you’re habitually late 29 days; it’s better than being 30 days late from a credit reporting standpoint.

Now the letters and phone calls increase dramatically until you’re 60 days late. Your credit report will note your current late status. Your credit score will fall.

60 – 90 Days Late

Here the phone calls and letters will cease. Does the mortgage company give up? Ah…that would be nice, but alas, no. They change tactics.

Once you’re over 60 days late, they’re going to send someone out to your house, just to make sure it and you are still there. You can see these people coming a mile away.

They circle your block two or three times, usually, they don’t look like they belong in your neighborhood, then they run up to your front door, peer in a window or two and leave a note on your door saying “Sorry we missed you. Please call us at once.”

It’s at this point you should start preparing for your next steps. If you’re 60 or 90 days past due, it’s probably a lingering problem, but all hope isn’t lost.

The best thing you can do when you’re behind is to communicate with your lender. Home lenders have instituted a number of programs to help you work through your late status.

The second biggest thing to remember is that the people you talk to don’t know you and you don’t know them. They don’t care about your problems. It makes no difference to them whether you stay in your house. They’re a thousand miles away in a cubicle. Stay calm while talking to your lender.

When you’re behind more than 30 days, you need to start talking – but don’t wait until it’s too late. Call your mortgage company, explain your personal circumstances, and begin laying the groundwork to solve the problem.

Can you pay the late payment over a couple of months? How about rolling that payment to the back of the mortgage? Can they waive a fee or two? Sometimes they will, sometimes not, but you’ll never know if you don’t ask.

Next week I’ll talk about the different options you have when you’re really behind on your mortgage and what they all mean. Stay tuned!

For more on paying off your Mortgage and ways to help you do it check out these articles.

Pay a Little Extra on Your Mortgage – What a Difference it Makes
6 Tips for Paying off Your Mortgage Quickly (Without Going Broke)
Don’t Be Afraid to Refinance: 6 Options to Meet Your Financial Needs

Photo: Hanging On: Jess2284

Location, Location, Location: Why the Location of Your Home Matters

February 20, 2020 by Susan Paige Leave a Comment

We’re often told that the most important thing when buying a home is location, location, location, but do you understand what that means exactly? It means homes can go up or down in value based on where they’re located. (That’s why some people buy fixer uppers in good neighbourhoods.)

Location, location, location is the number one rule in real estate, yet many buyers overlook it. You can improve your home in many ways. You can upgrade the flooring, renovate the kitchen and throw on a deck, but the one thing you can’t change is the location. You could have the nicest house on the block, but if your neighbourhood is going downhill, you could have a tough time selling it.

Whether you’re thinking of buying a home in Toronto or Vancouver, every city has its good parts and its not-so-nice parts.

Signs of a Good Location

Safe neighbourhood: Before you buy, contact the local police department and ask about crime rates. You don’t want to find out after moving in that your neighbour has already been burglarized twice this year.
Good schools: This is especially important if you have children and for resale value. You’ll want your kids to have a bright future.
Transportation: Easy access to public transit and freeways is a bonus.
Amenities: Look for a location close to desirable parks and amenities like restaurants and shopping.
View: The view is especially important if you’re buying a condo. It can be a key selling feature.
New developments: Be on the lookout for new developments nearby, like condos. If neighbours are topping up their homes (adding a second-floor addition and redesigning the main floor), it’s also a good sign.

Signs of a Poor Location

Undesirable factors: Being too close to a fire station, a noisy schoolyard, railroad tracks or the freeway can hurt your home’s resale value.
High crime rate: Crime doesn’t pay.
Lack of pride of ownership: Are there lots of rental properties in the area? Are the homes and businesses run down?

Urban or Suburban?

Are you looking to live in the city, or do you prefer the suburbs? Deciding between urban and suburban can be as difficult as choosing between a house and condo.

Living in the city has its benefits. You’re closer to where all the action is. Usually, plenty of restaurants, shops and entertainment venues are nearby. You’ll save money and time on transportation if you’re within walking distance of work. You may not even need a car.

Urban living isn’t without its drawbacks. Since you’re buying in a prime location, you’ll typically pay more for less. In an urban area, you may only be able to afford a condo. Some people are suited for the condo lifestyle. If you’re used to living in a house, it might be a tough adjustment.

In the suburbs, you can typically stretch your home-buying dollar further. If you’re planning to raise kids, a house with a yard may be a priority. You may not have nightlife at your doorstep, but you’ll likely have the great outdoors—enjoy parks and outdoor activities.

For some, the biggest downside to the suburbs is the distance from downtown. If you work downtown, your travel time will be longer. You’ll also be farther from downtown shopping and entertainment.

Brought to you by Sean Cooper

Tips & Tricks for Selling Your First Home

February 13, 2020 by Susan Paige Leave a Comment

When you’re ready to sell your first home, you’re going to have a different mindset than when you were a home buyer. At this point, you’ll be familiar with the associated costs of home ownership, upkeep requirements, and the fact that being a homeowner isn’t as easy as it seems. Even with all that knowledge, however, when you’re selling your home you’ll be back to square one. [Read more…]

Guide to Cash Home Buyers: 3 Ways They Help You Sell Your House

August 24, 2019 by Susan Paige Leave a Comment

Cash home buyers are a relatively new trend, but have become an alternative to selling your house traditionally through an estate agent. Cash house buyers are generally companies with a team of people that are experts in surveying, estimating, buying, and selling houses. By having all of these skills in the business, they don’t have to rely on third-party people or companies to estimate or survey your house. This means you can get an estimate on your house very quickly, and the company will make a cash offer for your house. This comes with several advantages.

Avoiding selling fees

As cash home-buying companies have all of the stuff necessary to make the sale, you avoid the significant fees that come with selling a house. This includes the money spent on getting an estimate, which will usually be done by a third party for a cost. It also includes solicitor fees. Usually, both you and the seller will pay solicitors to do all of the communications and negotiations. With a cash home seller, this isn’t necessary. Some cash home sellers will try to add in a fee for the survey and estimate of the value of your home. If this is the case, then make sure to avoid them, as some can charge over $1000 for this service. Find a company that’s as inclusive as possible.

Quick sale

Most house sales take a considerable amount of time. Depending on if the house is a new build or not, you may find yourself in a chain of sellers all needed to get confirmation on the purchase of their own home before you can buy theirs. If one sale falls through, then you’ll need to wait for your seller to buy a new house before you can move in. This process can sometimes take a year or even more. This is how cash home buyers can help. Because cash home buyers are never in a chain and are buying your house with cash, the time of the sale is reduced significantly. There’s no waiting for your seller to find a new house, and there are no issues with mortgages falling through.

Lower stress

Selling a house is a traditionally stressful job. There’s a lot of money at stake, and the process can take a long time. This is particularly stressful if you need to sell the house of a loved one that has passed, or if you need to sell quickly to get the money to cover another investment. This is where cash house buyers can be very useful. You can get your house sold in a short amount of time with the least amount of stress possible. Be aware that the amount that a cash house buyer will buy your house will typically be 10-15% lower than if you sold privately through an agent. Some of these fees will be covered by the saving you make in fees, though, and the rest can be attributed to the cost of having a stress-free sale.

Appreciating vs. Depreciating Assets

October 3, 2018 by Jacob Sensiba Leave a Comment

I think it’s widely known that there are two types of assets: appreciating and depreciating. I think it’s less known what each of these means and why they are used.

I this article we will look at what each term means, examples of each, and how to use them effectively.

What’s appreciation?

Appreciation is the increase in value. The majority of assets used to accumulate and grow wealth are appreciable.

What’s depreciation?

Depreciation is the exact opposite. It’s the loss of value. The most common example is a car, but more on that later.

Appreciating assets

Stocks – It’s commonly known that investing in stocks is the best way to not only keep pace with inflation but to grow your wealth. A stock is a partial ownership in a public company. Popular examples include Apple, Amazon, Facebook, etc. (Click here to learn more about stocks)
Real estate – Single family homes, duplexes, apartment complexes, etc. Though the pace at which real estate appreciates dwarfs compared to stocks, it does so slightly over time. (Source)
Private equity – This can be starting a company of your own or you can invest in a startup. There are also private equity funds that exist, as well.
Alternative – Less common assets that could appreciate (cryptocurrencies, precious metals, art, and other collectibles)

Depreciating assets

Cars
Boats
Furniture
Equipment
Patents/Copyrights

What’s the point?

Appreciating assets – Owning and investing money in an appreciating asset is the key driver in growing your wealth. Those who’ve accumulated significant amounts of wealth have done so by earning a living, saving, and investing diligently over decades.
Depreciating assets – There are a few reasons to own a depreciating asset.
- Fun and convenience – We own and drive cars because we need them to go places. We buy boast because they are fun. In either case, you could also own a car or boat for your business, in which case it would serve a different purpose.
- Business – Owning and operating machinery and equipment is how many of us make a living or run a business.
- Tax write off – If you use equipment or machinery for your business, often times you can use the depreciation of that equipment as a tax write off. Financial advisors use a set of fancy calculations to come up with the tax benefits of depreciation, we won’t go into that here. Be advised: talk to your accountant about specifics.

Conclusion

Appreciating and depreciating assets both serve a purpose. It’s important to know the difference between the two and how to use each one effectively.

For more information about appreciating or depreciating assets, and for our disclosures, visit our website www.crgfinancialservices.com.

If reading this blog post makes you want to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

Must Know Tips When Buying and Selling a House

July 11, 2018 by Jacob Sensiba Leave a Comment

Seeing as the housing market is incredibly hot right now, I found it appropriate to talk about buying and selling a house.

This is a very big decision and can be an extremely stressful endeavor. You can alleviate some of that stress if you know what to do and what to expect.

Buying

Do your homework

Whether you are building new or buying an existing property, you need to do your homework. Hire reputable contractors, realtors, inspectors, etc. You can cheap out with these services, but over the long-term, it’ll cost you.

Always do the inspection

This is a must, must! The inspection can save you so much money! Say you visit a house and love it, but want to get in ASAP, so you skip the inspection. After a few months, you notice some significant shifting and cracking.

Guess what, you need your foundation fixed. That could run you, depending on the severity of the issue, $20,000 or more.

Another example and costly example would be a roof replacement.

Not only can it save you money, but some issues found in the inspection can be added to your contract. If the inspector comes back with some issues, you can include that in your amended contract, and have the seller fix whatever the issue is before closing.

Finances

There are many financial conditions that come into play when buying a house.

Hidden costs – Inspection, appraisal, down payment, earnest money, etc.
- Once you own it – property taxes, insurance, utilities, maintenance, etc.
Pre-approval – Get this done by a lender before you buy. If you have a pre-approval when you make an offer, your offer is more competitive
Improve your credit – Having your credit in the best possible condition is a must. A higher credit rating can lower your rate and could increase the amount you’re approved for.
Stay on budget – Don’t buy more house than you can afford. Live within your means and look for a price that’s below your pre-approval amount.
Avoid big purchases and new credit – This goes along with the rate you get and the approval process.
Debt/income ratio – This is one of the big parts in the approval process for your mortgage. The lender compares your income to all of your outstanding debt, along with what your possible mortgage payment will be. Income/debt ratio should be 43% or below.
What you need – W2s, tax returns, paycheck stubs, verification of employment

Selling

Clean and declutter

Make your home spotless. Vacuum and put lines in the carpet if you can. Sweep and scrub floors. Clean windows. Make sure the kitchen and bathrooms are especially clean.

Take pictures and art off of the walls, and leave minimal amounts of furniture. People want to walk into a home and imagine their art and their furniture. They want to “make themselves at home,” and imagine what it would be like if they lived there.

Fix the big issues

This could come out during the inspection too, but fix blatant, big issues. Roof repairs/replacement, furnaces, air conditioning units, etc. The goal is for someone to buy your house, so if you have the big issues taken care of, people have fewer excuses to say yes.

Curb appeal

Trim the hedging, cut the grasses, and make that garden look perfect. You need people to say wow before they walk in. If they love the house before they step inside, they’ll be in a better state of mind going in.

If your yard is ugly and they know it, they’ve already been disappointed, and everything they see inside won’t be as impressive.

Get the word out

Put that house on every and any social media, website, etc. as you can. Hopefully, your realtor does a lot of this for you, but the more people know about it the better.

Make sure you tell your neighbors also because the people who buy your house will, obviously, be living next to your neighbors. They want good people next door. Preferably, someone they know and trust.

Conclusion

Buying and/or selling a home is a very important decision, and probably the biggest purchase you’ll ever make.

Use these tips to help you through the process.

To learn more about the financial aspect of buying or selling a home, and for our disclosures, visit www.crgfinancialservices.com.

If reading this blog post makes you want to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

Getting Ready to Buy Your First Home

August 22, 2017 by james Leave a Comment

Getting financially prepared to buy your first home can be complex and potentially confusing to the uninitiated. But take a little time to familiarize yourself with the process and get some timely and targeted free advice from mortgage consulting groups like On Q Financial, and you can successfully navigate your way to home ownership.

Here are some key factors to take into consideration as you move to prepare yourself financially for your first home purchase:

1. Time Things Right

Don’t try to buy your first home until you are financially ready to do so. Having a defaulted mortgage on your record can be a hindrance for the second time you attempt to buy a home. Make sure you have the monthly income and enough savings to proceed. And it’s generally best to only buy a home if you think you will live there 5 years or longer (otherwise you may want to rent.)

2. Don’t Become “House Poor!”

It’s one thing to buy a home as an investment so you can quickly turn around and sell it. But if you are planning on living there for any length of time, make sure you house payment is less than 30% of your monthly income. There are exceptions on the exact number, but the point is you don’t want to scrimp on food, gas, bills, and other necessities in order to make your house payments.

3. Plan for Your Down Payment

It’s possible to get a mortgage without a down payment or with a very low one. It’s even possible to get financial assistance for your down payment. Usually, however, you need from 3.5% to 20% down. That’s a substantial chunk of change, with most house prices, but it can be worth it. It will lower what you owe and the total interest you pay on it over the years. And if you put less than 20% down, you will likely have to make PMI (private mortgage insurance) payments to the lending bank along with your house payment.

4. Get Pre-approved When House Shopping

You’ll want to find out your credit score and find ways of improving it quickly, if possible. You’ll need to collect pay stubs, W2 forms, checking and savings account statements, tax returns, and other documentation. This and other information will be used to get you pre-approved for a mortgage within a specific price range, which will put you in a much better position to buy the right home when you come across it (and to show the seller you are serious and good for it).

5. Get Sound Mortgage Advice

There is a plethora of mortgage options these days, and you can often “customize” a mortgage that fits your exact situation. But it can be very confusing to those not familiar with the process. Should I take out a 30 or a 20 year mortgage? Should I opt for fixed or adjustable rate? Where will I get the financing for my mortgage at the best possible interest rate? Talk to a mortgage consulting firm that will “simplify” the process for you and help you make the right decision.