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REAL

ESTATE

Make the most of your home investment

Books to Help You Buy,Sell,Understand Real Estate

BY BARBARA BALLINGER

Content That Works

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

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

How to BuyYour 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 “buyer’s remorse”coined? First-time homebuyers are likely to experience a twinge – or even

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

See MORTGAGES, Page 2

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‘Disaster just won’t happen to me’: 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.

Emergency Planning for First-Time Homeowners, Renters:

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

BY CHARLES SCUTT

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I f hurricanes Katrina and Rita taught us any-

thing, it’s that you can never be too pre-

pared for disaster to strike.

Whether it’s gale-force winds, mudslides, fires, earthquakes or terrorist attacks, in a post-9/11 world, it pays to be cognizant of potential threats to our homes, family and way of life and to safeguard accordingly.This is especially true for first-time homebuyers or renters, who may not have given much thought to planning properly for worst-case scenarios. “Many of us have the mentality that disas-

ters just won’t happen to us,”says Neal Weichel, agent, RE/MAX of Valencia, Santa Clarita Valley, Calif.“But between the California fires two years ago and the earth- quakes in 1994, my personal experience has taught me otherwise.” “First-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,”says Edo Raday, real estate advisor for Halstead Property, New York City.“These crises can set you back severely.”

INSURANCE AND PAPERWORK

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

See UNTHINKABLE, Page 2

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WITH PETER G. MILLER

I’d 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?

are paid from this account. Do you recommend such accounts? A: This is a question I

A: This is a question I hear frequently. Let’s take a look at what’s good, what’s tricky and what you should avoid about these programs. With a right to pre-pay a mortgage in whole or in part and without penalty, any homeowner with the cash can repay a 30-year mortgage in 10 years. Let’s say you have a $100,000 loan at 6 percent.The monthly payments over 30 years are $599.55 for principal and interest. If you increase your monthly payment to $1,110.21 you will repay the entire debt in ten years. If held to term, interest on the 30-year loan amounts to $115,838.19.Total interest paid in a 10-year timeframe is just $33,224.60. Bi-weekly mortgages (paid every other week) work much the same way. If you have a $1,000 monthly mortgage payment and instead pay bi-weekly, you will make 26 payments of $500. In effect, instead of paying $12,000 a year ($1,000 x 12) you pay $13,000 (26 x $500).The trick is not the extra payments; it’s the 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- closed? If you want to make pre-payments that’s fine, but See ASK OUR BROKER, Page 2

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UNTHINKABLE

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

MAKE AN EMERGENCY KIT

“Everyone should create a ‘grab-and-go’ disaster supply kit,

BOOKS

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for a mortgage, helps calculate how much downpayment a buyer should expect to make and advises how to negotiate with confidence.

100 Questions Every First-Time Home Buyer Should Ask by Ilyce R. Glink (Three River Press, 3rd edition, 2005)

$18.00

Real estate writer Glink arranges her helpful information in an easy-to-follow format, start- ing with question #1:Are you ready to buy, both psychological-

ly and financially? She moves on

to provide worksheets that help

a buyer develop a wish list for

their future home and compare it to a “reality checklist.”She relays stories of first-time buyers,

including her own first purchase. When she and her husband were house-hunting, they put a wood- burning fireplace high on their wish list, at No. 5, but ranked a parking spot low, at No. 20, since they didn’t own a car. They regretted their choice, a vintage coop with a fireplace and no parking space, a few years later, when they got a car. Glink also helps readers understand how to weigh whether they should favor pur- chasing a new home or an old one, what type of home to buy – co-op, condo, single-family, mobile – and how the structure’s condition should influence the decision. Residences purchased in move-in condition make reset- tling smoother, but typically bear

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

PLAN WITH YOUR FAMILY

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

a heftier price tag. Glink also cov- ers how to select a good real- estate practitioner, negotiate the deal, get a mortgage and plan a move.

The Essential Dictionary of Real Estate by Lisa Holton (Barnes & Noble Books, 2003) Any business has its own lingo, and real estate is no differ- ent.There are 3,000 terms author Lisa Holton thinks you must be comfortable using when you set out to buy, sell or rent a home. Did you know, for example:ADA stands for the Americans with Disabilities Act; a trust account is an account to safeguard the

funds of buyer or seller; a trophy building is a landmark that’s well

known and highly regarded because of its materials, finish and trim; a zero lot line is a lot where the home is sited right at the lot boundary, leaving little space between it and the house. Holton’s book also includes use- ful appendices, including dia- grams of different types of hous- es – bungalow, Cape Cod, Georgian, and the like – and the most important parts of a house, such as its soffit and fascia.

Tips & Traps When Buying a Condo, Co-op or Townhouse by Robert Irwin (McGraw-Hill, 1999) Buying one of these forms of homes isn’t the same as buying a single-family residence, says author Robert Irwin, and he sets out to help readers grasp the financial, legal and social pros and cons of each. Example: with

a townhouse you won’t have

neighbors above your unit.

pending disaster is to be pre- pared and establish a plan that you’ve practiced with your loved ones, says Dr. Maurice Ramirez, a National Disaster Life Support (NDLS) instructor in Houston, Tex. Several national health organizations including the American Medical Association established the NDLS program to help prepare healthcare profes- sionals to respond to mass casu- alty events. Your emergency plan should be based on the “72-hour rule,” says Dr. Ramirez.“History has shown that it takes 48 to 72 hours for enough resources to arrive to a community to meet

the needs at hand. If you prepare

to be totally independent for 72

hours, you are planning for suc- cess.” Practice escape routes from every room in your home with every member of your family, says Dr. Ramirez.All rooms must have two separate escape points, and all family members must know how to escape all rooms by both routes and where to meet after the evacuation. Additionally, plan how your

family will stay in contact if sepa- rated by a disaster. Pick two meeting places: a location that’s

a safe distance from your home

in case of fire, and a place out-

side your neighborhood in case

you can’t return home. And reassess your emergency plan with your partner and any

children two to three times per year,”says Dr. Ramirez.

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Whichever form you select, know that you are become a part of a community, the equivalent, Irwin says, of “marrying into a family.”Hopefully, yours won’t be dysfunctional. There are important factors to

consider when you live as part of

a group, Irwin points out.You

can’t necessarily make structural changes within your unit or hall- way without permission. In many cases, you’ll need approval of the building’s architectural review committee or a board. Hours and days that workmen may work on your unit may be restricted. Before you become too infatu- ated with a certain unit, study by- laws to learn about possible rules regarding pets and how the building vets and approves new owners. Many of us have read stories about swank New York co-ops that reject politicians, rock stars and anyone whose name appears too often in bold- face type.You’ll also want to know a building’s history of spe- cial assessments. Irwin provides a very useful list of red-flag questions:What’s the tenant-to-owner ratio? Are there any lawsuits pending? How much insurance does the build- ing carry? Are its reserves ade- quate? Have there been big hikes in assessments? Are you responsi- ble for any areas outside your unit? Are there any rules you can’t live with? The bottom line:

Do your homework as you would to purchase any type of home. The bottom line, Irwin argues, is that a buyer can never be too

prepared.

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Ask Our Broker

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

Q: We listed a property, listed it again after the first listing ran out and a week into the second

listing decided we wanted to end the agreement

with the broker. The first broker said fine and asked if we would ask the broker agent to give her a referral fee to make up for some of the money she put out for ads and such. So, I asked the new agent if she would consider the fee and she said it wasn’t really customary but that she would discuss it with my former agent. Do you think the first broker should be paid?

A: If you discontinued the relationship when the first listing ended then the original broker would be owed nothing. By re-listing and then seeking an early termination you have asked the broker to modify an

agreement.The broker could say no but instead has

said yes and is effectively asking for money because of the investment in ads and such. The first broker could simply have asked for compen- sation from you in exchange for an early termination. Instead, she is trying to get paid in a way that will not require you to write a check on the spot.There is some

logic to this, but why involve the second broker and reduce his or her fee? This is a question the second bro- ker will surely raise.

Q: Can you back out of an offer to sell once you have signed and accepted the offer?

A: In general, a signed offer is considered contract. You cannot typically withdraw from a contract unless the other party agrees or the agreement is conditional and a condition has not been met. Please talk to an attorney for specifics.

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Do you have a question or a quandary about buying, sell- ing or renting? Peter G.Miller, author of The Common-Sense Mortgage, specializes in providing real solutions to real estate dilemmas. E-mail your questions to peter@contentthatworks.com.