5 New Year's Resolutions for Homeowners

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5 New Year's Resolutions for Homeowners
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When you make your list of New Years resolutions
this year, dont forget to include a few items
related to your home and finances. An annual
evaluation will help you make sure youre taking
care of your property properly.5 New Year's
resolutionsCheck up on your homeowners
insuranceCheck the limits of your coverage to
make sure you will have enough insurance to
repair or replace your home, if needed,
especially if you have made home improvements in
the past year that added finished space to your
property, says Mark Galante, senior
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vice president and chief marketing officer of
PURE Group of Insurance Companies in White
Plains, N.Y.He also recommends checking your
insurance coverage for other structures on your
property, since many homeowners dont realize
they need extra insurance for a detached garage,
a fence or a pool. If you have a basement, he
recommends optional sewer and drain backup
insurance.Check to see if you should buy flood
insurance says Michael Kodsi, CEO of Choice
Mortgage Bank in Boca Raton, Fla.
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It is not very costly if you dont live in a
flood zone and it covers you for floods caused by
storms.Galante also recommends reviewing your
personal property or contents insurance. Items
like jewelry or furs or art may need special
insurance coverage.Evaluate a
refinanceCompare your current mortgage
rates and term to see if you can secure a lower
rate to save on your monthly payments, says
Robert Lund, vice president for residential
mortgage lending for Bethpage Federal Credit
Union in Bethpage, N.Y.
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Lund suggests using a mortgage calculator to
compare payments on a shorter loan term. He says
homeowners should consider how long they plan to
stay in their home to determine whether
refinancing makes sense because it can take
several years to recoup the costs of a
refinance.Look at your mortgage bill to see if
youre paying private mortgage insurance, says
Kodsi. If you have enough equity you might be
able to eliminate the PMI, which will lower your
payments even if you dont refinance.
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Consider prepayingIf your mortgage rate or term
is already low, Lund says it could make more
sense to prepay your mortgage rather than
refinance.You can shave years off your mortgage
by setting up biweekly payments, making one extra
payment each year or rounding up your monthly
payment every month. The difference prepayment
makes depends on your loan balance, your loan
term and interest rate and how much extra you
pay, he says.
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Utilize a prepayment calculator to analyze the
benefits for your individual circumstances.Before
you decide to prepay your loan, find out whether
your home is appreciating or depreciating says
Kodsi. You might find that its better to use a
bonus or other extra cash for other
investments.Maintain and repairYour home,
just like your body, needs an annual physical to
make sure your systems are running right.
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You can find out the average life expectancy of
your appliances from the National Association of
Certified Home Inspectors so you can budget for
repairs or replacements.Check your HELOC
termsIf you have expensive repairs to make, you
may want to tap into a home equity line of
credit, but make sure you understand how it
works. Unlike home equity loans, which are
typically fixed-rate loans for a specific term,
HELOCs generally have an adjustable rate, says
Lund.
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You should check to see if youre in an
introductory, interest-only payment phase and
check the caps to see what your maximum rate
adjustment will be if you think your payment
will be too high when the loan adjusts, contact
your lender to see if you can refinance both your
first and second loans into one fixed-rate
loan.Kodsi says some lenders offer a
convertibility option that will allow you to
convert your loan to a fixed rate for a small fee.
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He also says that refinancing your first mortgage
to a lower rate and payment could free up funds
for your HELOC payments.Most of these
resolutions can be accomplished relatively
quickly yet provide big savings during the New
Year. http//choicemortgagebankinc.c
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