When you finally decide to purchase a house, a home of your own, you are ready to invest a lot of money. You are not only investing money but your time, effort and turmoil to find a home. Your home is one of your greatest assets and should be protected too. Whether you are a first time buyer or already living in dream house, home warranty is necessary as it provides you with an added layer of security that might save you money in the long run.
First and foremost, you should understand what actually a “Home warranty” is?
A Home warranty
A home warranty plan is a home protection or home owner’s warranty plan in which home owner enters a contract with the home warranty provider. In this plan, home owner gets facilities for a specific price if certain home appliances or systems break or are in need of maintenance. A home warranty plan may be purchased when a house is bought or sold or by a home owner who is currently residing in their home.
The whole home warranty plan covers the maintenance, repair and replacement of appliances as well as heating, cooling, plumbing and electrical systems. Here, it is important to know the difference between home insurance and home warranty.
Home insurance covers your home and belongings from accidental damage due to unexpected theft, storms, fires and natural disasters. A home warranty, on the other hand, covers system components and appliances that fail from age and standard wear and tear.
A home warranty is actually a contract between the owner of the home and a home warranty company that provides for discounted repair and replacement service on major home appliances and systems. The companies already have agreements with specific service providers. If the provider sent by the company determines that the needed replacement or repair is covered by warranty, he will complete the work. The home owner only has to pay a small additional amount for the service.
A Home warranty cost
The next step in the article is to know about the cost of home warranty. A home warranty may cost a few hundred dollars a year. You can pay at the moment or choose to pay in installments if the company agrees. The cost depends on the type of the property and the homeowner choice of purchasing a basic or an extended plan. A basic coverage can start from $300 and go up to $600 or more. Also, some home warranties charge for a service call while others allow unlimited service calls.
The cost of home warranty does not usually vary with the property’s age. If the home is brand new, the cost will automatically increase. The home’s square foot area is also not necessary in determining prices unless it is more than 5,000 square feet. It does not include separate structures in the house such as guest houses but can be covered with an additional fee. If a service needs more than one type of contractor (for example, a plumber and an electrician), the homeowner will pay separately to both the contractors.
One more thing to remember is that having a home warranty does not mean that you will not be paying any money for the services of home repair. Home warranties do not cover for the components that are not maintained by you or by the previous house makers. Also, if the company denies the claim, the homeowner will still pay for the service and also will be responsible for repair costs.
Advantages and disadvantages of getting a home warranty
The subject of home warranty comes often on the sale or purchase of a house. It reassures the home buyer about the maintenance of home components. It is also helpful for people who have just bought their new home with all the savings and do not want to spend any further. It also helps people who do not want to tackle problems of finding a contractor every time the house system needs a repair. Warranties also make sense for people who are fond of buying expensive appliances.
If home warranties were so perfect, why doesn’t everyone have one?
Here is the trick. It has many disadvantages as well. One major disadvantage of home warranty is that it does not cover those appliances or systems which are not well-maintained. If it’s your bad luck, many companies can use the improper maintenance clause as an excuse to deny your valid claims. Sometimes, homeowner and the company have a clash on this clause. Also, when a home owner purchases an old used home, it may have items that were not properly maintained by the previous owner. In this case, the negligence can’t be taken care of.
Home warranties aren’t expensive as compared to the cost of replacing or repairing of any home component. This becomes the major selling point of warranties. Although it eliminates the trouble to find a contractor, but if you do not like the work of a contractor sent by the company, then you are stuck. Also, homeowner cannot say anything if he does not like the replaced component or appliance.
Use a reputable home warranty service
When you need a home warranty, always look up for the reviews online and talk to their previous customers to get an idea. Find out if the customers are happy? Does company have a quick turnaround time? Does it offer online support? How easy it is to get something fixed quickly?
It is also reasonable to know beforehand how they resolve a dispute about a home warranty claim. Find the company’s policy in such matters and also their dispute resolution process.
A home warranty may or may not prove to be a perfect solution. Before buying one, read the detail in the given file of contract and carefully consider whether it is worth of your money. The homeowner or the seller or buyer should do a thorough research in finding a reputable company that will be there for paying when you need it.
Refinancing your home can save you money-or cost money. Learn the difference.
Refinancing can cost between 3% and 6% of a loan’s principal. Also, it will require original mortgage, an appraisal, and title search and application fee. It’s important for a homeowner to decide carefully whether refinancing will prove to be a smart financial decision.
Refinancing a home loan means paying off an existing loan and replacing it with a new one. There are many reasons why homeowners refinance; to obtain a shorter or longer term of mortgage, to obtain a lower interest rate, to convert from adjustable rate mortgage to fixed rate mortgage or vice versa, to consider debt and many more.
Refinancing can save tens of thousands of dollars in interest and years of mortgage debt repayment. But it takes effort and time to start the process. However, the time and effort could be worth it depending on your situation. Here, we have gathered few reasons to consider refinancing your home loan.
If your home is financed at a higher interest rate, consider refinancing it to decrease the loan term. You can also avail it with a meager change in monthly payment. For example, 30 year mortgage rates are more expensive than a 15 year loan rate. Refinancing will save you money just by taking the time to fill out the necessary paperwork and gather the needed documents.
- To lower the interest rate
You can also consider refinancing to lower the interest rate. Historically, the rule of thumb is that refinancing is a good idea if you can reduce your interest rate by at least 2%. It can downsize your monthly payment. As of now, 30 year mortgage rates are hovering above 3% and 15 year loans can be secured for lower interest rates. May be the time is right for you to get your loans fixed.
When you are refinancing your home loan for lower interest rates, you can drastically reduce your payment and save hundreds of dollars per month. The saved money can be invested or used elsewhere.
- From ARM to FRM and vice versa
If you are refinancing your home, consider switching from adjustable-rate mortgage to fixed-rate mortgage. Fixed rate mortgage can protect you from rising interest rates. Also, a fixed payment is easier to plan for and budget. You can also move from fixed rate to adjustable rate according to your circumstances.
- To consolidate debt or having an equity
Home refinancing can be a battle that never ends debt. Home owners take the facility of having equity in their homes to cover major expenses such as the cost of home renovation or child’s education. Also, a key point to remember is that the interest on mortgages is tax deductible.
It is also a common practice in home owners that they do refinancing to consolidate their debt. In this way, it becomes easy for them to pay their debt.
Some people also refinance because they want to increase the loan term as it becomes unbearable for them to pay monthly payments. In such cases, the monthly payment reduces to affordable price. It costs more interest but gives you an advantage for a time-being.
Earlier we talked about people moving from ARM to FRM, few individuals often like to move from ARM to ARM. They do this to reset their rate and also reset their fixed-rate period on new ARM. Plenty of wealthy people move from ARM to ARM. This action allows them to take advantage of cheap short term rates.
To avoid a steep monthly payment increase, a home owner might like to fully amortize and leave the IO product as IO period lasts only for 10 years.
May be home owner only want to refinance simply to get cash out of his home.
Perhaps you want some home improvements or buy a second home or any other property, or maybe you want to diversify and move your cash into stock market instead. There can be thousands of reasons.
In certain situations, you want to remove someone out of your mortgage or from the title. Then, refinancing can be the best option.
For example, there can be a divorce between a couple or someone wants to remove parents as co-signers. For all the above reasons, you can consider refinancing as an option.
- To integrate many mortgages
Another reason to refinance your home can be consolidating your multiple mortgages (hopefully two) into one. By refinancing, you will be taking benefits of lower interest rates. Many other mortgages have sky-rocketing interest rates but are adjustable. Consolidating into one can be money-saving more.
- To access a specific program
You may also want to refinance because you want to take advantage of a specific program. You fear that it will be gone before you can take it. For example, this could be a program like HARP which allows underwater borrowers to refinance.
If you like the program and see it as a fair trade, you can easily go for refinance.
- Always on the table option
One final reason of refinance is simply because you can. While you can enjoy the benefits of refinance in the present-time, you should go for it. There is never a guarantee whether you will qualify or not for it in the future. You could also face some kind of financial hardship or troubling circumstances in the future. So make it possible to refinance now when you can easily qualify.
At the end, we warn you to consider refinancing decisions carefully as it is a tricky business. You should thoroughly study your needs and act according to your particular situation. With some thorough research and smart planning, refinancing your home could turn out to be the best thing to you and your family.
Each year, millions of people file bankruptcy as a means of erasing their consumer debts. While this approach may relieve stress, a bankruptcy is damaging, and will hang over your head for the next ten years. Still, it is possible to overcome bankruptcy. The key is making smarter financial and credit decisions. With this said, some people choose to purchase a home after a bankruptcy. Here are a few pointers to consider when buying a home.
Reasons to Delay the Buying Process after Bankruptcy
If you consult with mortgage or financial experts, they will likely discourage you from buying a home following a bankruptcy. After your bankruptcy is discharged, there is a black cloud that looms over your credit report.
When any prospective lender reviews your report, they will be notified of your recent or past bankruptcy. In some instances, this justifies an immediate denial. On the other hand, there are lenders eager to help you establish or rebuild your credit. Thus, they will approve a loan request. Nonetheless, the penalties are steep.
Higher mortgage rates can be anticipated when purchasing a home after bankruptcy, especially if you have not established other credit accounts. Mortgage lenders consider two factors: credit scores and credit reports.
Although a bankruptcy appears on your credit report, having a high credit score will increase your odds of getting a comparable rate. Unfortunately, if you buy immediately following a bankruptcy, you will not have the opportunity to boost your score.
Reasons to Buy a Home after Bankruptcy
Lenders will approve mortgage loan applications one day following a discharge. Therefore, it is possible to get a home after a bankruptcy. Buying a home is perfect for rebuilding credit. Moreover, it is the quickest way to increase your credit score.
After a bankruptcy, the average person has a credit score below 600. Good credit consist of credit scores 650 and above. Maintaining current mortgage payments will gradually increase your score. After two years of regular payments, you will have established a good payment history. Hence, you may qualify for a low rate refinancing, which may lower your mortgage payments.
I am sure that if you’ve decided to purchase a home security system, by now you must be utterly confused. The prices seem to vary a lot even for the very same device. This guide complements our guide called How to Choose the Right Home Security System and will help you make the right decision based on your needs.
If you are an average homeowner, then I strongly recommend purchasing a security kit. These offer the standard protection against common intruders and have proved their effectiveness time and time again. In the security systems industry, it is not the systems themselves that cost a lot but rather the customization. Just like buying a ready-made bicycle, it is far cheaper to buy it as-is than to select the individual components you want the bicycle to have and have everything put together. Security kits excel in providing a reliable standard for a do-it-yourselfer. Because these systems involve the bundling of multiple systems, you can expect a hefty discount. Who said that security must be expensive? The security kits demolish this myth and allow do-it-yourselfers to install and have a quality home security system.
There is another way of cutting back costs. I am introducing this method in this guide precisely because at some time you will no doubt feel attracted by it. I am talking here about the price leverage you will get from choosing a lesser known brand (or no-name brand) instead of a more well-known brand. This is not something I recommend. Those companies with strong brands have invested heavily in building up their reputation through well-made products.. What you have here is a distinctive difference in quality. So if you plan on buying a cheaper system from a no-name brand which manufactures its products in South East Asia I strongly advise against it. In the long-term you will realize that the money saved wasn’t worth it. Why save a couple of dollars only to have a false sense of security? It is far better to invest a little extra now than to risk your home, the safety of your family as well as your own when intruders break-in later.
But perhaps the single, most effective method of deciding what security measures are appropriate and cost effective for your home or business is to hire a security consultant. Believe me when I tell you that the money spent on their services will actually help you cut down costs, either by suggesting the right and appropriate security installations or by detailing the weaknesses in the system. It is more than a low price that you should aim for; your goal should be to obtain an effective security system.
I hope that this guide to saving money on a home security system has put you on the right track. Remember that you must strive to achieve a balance of maximum benefits and protection while keeping the costs at a minimum.
We are all looking for the cheapest electricity and natural gas prices, after all the less we spend on our fuel bills the more we have left over for the pleasures in life. So how attractive would it be to heat your home for free? It is possible by using geothermal energy.
The Queen of England is planning to cut energy bills at Buckingham Palace for centuries to come by creating an underground network to extract heat from the earths natural warmth. The pipes containing water and a refrigerant chemical will run from the palace to the 4 acre lake in the grounds. As the water runs through the coiled loops of pipe placed on the bed of the lake it is warmed to a temperature of around 55F/12C. When the water arrives back at the palace it will go through a compressor which raises the temperature to around 140F/60C, and then through a heat exchanger (metal plates) which warms the water used in taps and the heating system in the palace. There is of course considerable capital expenditure required to get the system up and running, but it is estimated that this will be recouped in 3 years by savings on the heating bills.
The liquid in the pipes can also be decompressed so that instead of generating heat, it can cool air for an air-conditioning system. This system was used in a small trial at the palace in 2002 when the Queens staff drilled 400 feet into the chalk aquifer under the palace grounds to run an air-conditioning system in a new art gallery. The results of this trial were reportedly so impressive that work on planning the larger scheme began soon after.
Other high net-worth people like the singer Elton John with large estates in the UK have installed a similar system. But can the ordinary householder tap into geothermal energy and save money on heating and electricity bills? Yes, for the price of a small car it is possible to drill hundreds of feet into the ground and you can not only reduce heating and electricity costs by around 70% but you can also benefit from a free supply of pure water.