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Preparing Your Home for a Disaster

Preparing Your Home for a Disaster

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Published by: api-3708315 on Oct 14, 2008
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Make the most of your home investment
Content That Works
Catalogs may not yetbe

crowding your mailbox and holi-
day decorations may still be
stored away. But it\u2019s 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, con-
dominium, townhouse, or co-
operative apartment, why not
consider one of the following
books? If you\u2019re shopping for
real estate, buy one for yourself.
You can never have too much
knowledge or peace of mind.

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 exhil-
arating step.Why else was the
phrase \u201cbuyer\u2019s remorse\u201d coined?
First-time homebuyers are likely
to experience a twinge \u2013 or even

a lot \u2013 of worry before they
plunk down a downpayment,
although most end up happy
they took the plunge. Summers\u2019
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

Content That Works

f hurricanes Katrina and Rita taught us any-
thing, it\u2019s that you can never be too pre-
pared for disaster to strike.

Whether it\u2019s 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

\u201cMany of us have the mentality that disas-

ters just won\u2019t happen to us,\u201d says Neal
Weichel, agent, RE/MAX of Valencia, Santa
Clarita Valley, Calif.\u201cBut between the
California fires two years ago and the earth-
quakes in 1994, my personal experience has
taught me otherwise.\u201d

\u201cFirst-time renters or buyers should pre-
pare for these incidents because it can save
them a ton of heartache and aggravation, not
to mention severe long-term economic, per-
sonal and property loss, especially to their
homes and future livelihoods,\u201d says Edo
Raday, real estate advisor for Halstead
Property, New York City.\u201cThese crises can set

you back severely.\u201d

Raday says one of the biggest mistakes
first-timers make is not to read their entire
insurance policy coverage.\u201cMany people are
not fully covered. Not having adequate flood
insurance is a common mistake,\u201d particularly
in flood-prone regions of the country, she

Review your homeowners, renters and
automobile insurance policies carefully and
upgrade to adequate coverage levels based
on your needs and territorial risks, says

It\u2019s important to contact your insurance

I\u2019d Like to Pay Off My
Mortgage More Quickly. Do I
Need an Outside Assist?

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\u2019s take a
look at what\u2019s good, what\u2019s 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\u2019s 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\u2019s the larg-
er 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 cal-
culator 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 han-
dle 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 fore-

If you want to make pre-payments that\u2019s fine, but
Ask Our Broker
Books to Help You Buy, Sell, Understand RealEstate
Emergency Planning for First-Time Homeowners, Renters:
Cross T\u2019s, Dot I\u2019s to Prepare for the Unthinkable
\u2018Disaster just won\u2019t happen to me\u2019: emergencies such as floods, hurricanes, mudslides, earthquakes and fires may seem remote to first-time renters or home-
owners 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.

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