Written by:
Juan Luengo
February 2, 2009
Although I've been on a hiatus for a period time, thanks to the growth of my business, I want to inform you, my readers, that from here on out I'll be writing consistenly twice a month (bi-weekly basis).
Aside from life insurance, stocks and retirement plans, many Americans know that their home is the number one consistent asset that they have that builds cash value over the years.
Moreover, with the worries that all homes have lost value in the past 3 quarters, let's put all the negativity aside and focus on YOU for a minute. What steps have you taken to make sure that your property maintains its value? If you do not know where to start, here are a couple of recommendations that can help you get started:
- Home Inspection - According to the US Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) doing a home inspection will provide a buyer, seller and a homeowner 1"detailed information about the overall conditions of the home." An assessor will look at your home to evaluate:
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The Tangibles
•a. Electrical - alterations, modifications or repairs
•b. Plumbing, Heating & Cooling - type of plumbing, no leaking, space heaters, hot water heater and furnace properly vented and appropriately distanced from walls
•c. Interior - no signs of water damage, no major cracks, unrepaired damage or separation of walls, flooring or ceiling.
•d. Roof - shingles and tiles are not missing or broken
•e. Exterior - siding is not cracked, broken or missing sections, paint is not cracked, windows are not broken or boarded.
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Appraising Home - an appraisal is good to have because it will calculate the overall value of the home, will make sure that the property is complying with the FHA rules and assures the homeowner that the home is marketable.
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100% Reconstruction Cost vs 80% - the current value of your home is completely different from what it would cost your insurance company to rebuild your home. Insurance companies estimate what it would cost them, at today's labor and material price, to rebuild your home. For this same reason, you need to make sure that your property insurance is at least $20,000 over the value of your home to anticipate inflation, labor and materials. I highly recommend homeowners to stay away from 80% reconstruction cost because in the event that the unexpected happens, then he/she is going to have to spend money out of pocket, which makes no sense when you are paying monthly premiums. Also, keep in mind that there are a lot of insurance companies that if you have 100% Reconstruction cost they will add an extra 25% (or cover your home for 125% total) for a small fee.
For more information regarding the topics that I covered earlier today, please, feel free to contact me at jluengo@farmersagent.com. Also, feel free to open a discussion as doing so will help others learn more regarding the subject.
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1. US Department of Housing and Urban Development (HUD). For your Protection get a Home Inspection. 07/31/2008
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