Most people don’t give much thought to their homeowners insurance policy unless a tree punches a hole in their roof or they come home from vacation to find that the basement has been transformed into an indoor swimming pool.

But if your homeowners insurance claims have been limited to those types of calamities, count yourself among the fortunate. Thousands of families in Joplin, Tuscaloosa and other tornado-stricken communities have seen their homes flattened and the contents destroyed. And sadly, many of these homeowners will soon discover that their insurance won’t cover all of their rebuilding costs.

The good news is that typical homeowners insurance covers damage from tornadoes. Other natural disasters, such as floods and earthquakes, aren’t covered under standard policies. But while 96 percent of homeowners have insurance, 64 percent of homes are undervalued for insurance purposes, according to a 2008 study by Marshall & Swift, a research firm.

Even if you don’t live in Tornado Alley, you should review your policy periodically to make sure you could recover from a catastrophe. Typical homeowners coverage falls into three categories:

Replacement cost. This covers the cost of repairing or replacing your home, based on a set dollar limit. The problem is that it may not reflect increases in the cost of construction and labor since you took out your policy. If a disaster strikes your entire community as was the case in Joplin higher demand could push up the cost of building materials and labor, says Amy Danise, managing editor of Insure.com.

Extended replacement cost. In this case, the insurer agrees to pay a certain percentage above the replacement cost to account for inflation, Danise says. For example, if your replacement cost is $250,000, extended replacement cost coverage would pay up to 120 percent of that, or $300,000. Even with this adjustment, you could come up short, particularly if it has been a long time since you updated your coverage. There are several online tools you can use to calculate the current replacement cost of your home. You can get an estimate at AccuCoverage.com for $7.95.

Guaranteed replacement cost. This coverage will pay the total cost of replacing your home, no matter how much prices have increased since you took out the policy, Danise says. This type of coverage is more expensive and increasingly difficult to obtain because insurers want to control their costs, she says.

In addition to these levels of coverage, many policies include an “inflation guard” provision that automatically adjusts your coverage limit when you renew your policy to reflect increases in construction costs. Some policies include this as part of standard coverage; for others, it costs extra, says Jeanne Salvatore, spokeswoman for the Insurance Information Institute.

Replacing your stuff

Most homeowners policies also cover lost or damaged possessions. Typical coverage ranges from 50 percent to 70 percent of the amount of insurance you have on the structure of your home. For example, if your policy provides up to $250,000 to rebuild your home, you could get an additional $125,000 to $175,000 to replace your belongings.

Again, though, there are different levels of coverage. You can insure belongings for their actual cash value, or the replacement cost. Actual cash value means what it says: If you lose a 10-year-old TV, your payment would be based on the value of a 10-year-old TV. Replacement cost coverage would get you enough money to buy a new TV.

Replacement coverage costs about 10 percent more, but it’s worth it, Salvatore says, because most household items depreciate quickly.

All homeowners should do an inventory of their belongings to figure out how much insurance they need and make it easier to file a claim, Salvatore says. Store a record of your inventory on a secure website, in a safe deposit box or with a relative or friend.

The Insurance Information Institute offers free home inventory software. The National Association of Insurance Commissioners also has information.

© Copyright 2011 USA TODAY, a division of Gannett Co. Inc.

So what does your kid’s college fund have to do with real estate? A whole lot if you’d like to have more control and leverage your money to reap a greater return on your investment.
When you say the words “College Fund” what usually comes to mind is the 529 plan. The 529 plan is an education savings plan that is managed by a state or educational institution that is designed specifically for families to save money for future college costs. These plans are simple to set up and as long as the plan meets certain qualifications there are some tax benefits. Your financial advisor or the 529 plan manager can help you set up the account.
Now let’s talk money. If your child is 1 today, you will have 17 years to sock away money every month. How much do you need to pay for 4 years of college in 17 years time? This number will vary depending on the college that your child will attend and if you plan on paying for room and board. To get a more accurate number visit http://www.savingforcollege.com/college-savings-calculator This tool will help you calculate the future costs of attending university and will allow you to base the calculation on your school of choice. When I did a calculation of $17,336/year which is the national average for an in-state school including room and board and transportation, for 4 years, the amount that I’d have to save monthly was $432. We would invest $88,128 over the next 17 years and at 7% interest that would yield us $204,215. And that is for just one child. We have two so to make it easy, let’s double that. Yes $864 each and every month for the next 17 years or a whopping $176,256. That’s another mortgage payment that we would have to pay for the next 204 months. Yowch! But it is a good return, right?

If that number is just as staggering to you as it was to me, and expect it to be more if your child is older or if you have multiple children, don’t stop reading just yet. The 529 plan is a good plan but it’s not the only way to fund your child’s education. There has never been a better time to buy real estate than today. With the amount of foreclosures, short sales and just plain motivated sellers on the market coupled with historically low mortgage rates your child could have a much brighter future.

The typical home will double in value every 10 years and since we are at the bottom of the market buy now and you could be the one laughing all the way to the bank. Let’s say you found a property for $50,000, the bank is going to want to see 20% down if this is an investment, so that’s $10,000. Let’s assume it needs some work for another $10,000. So you’re now at a $20,000 investment, but you decide to rent the property out and have someone else pay the mortgage on the remaining $40,000. Only buy a property that will give you a positive cash flow. So now your putting money into your pocket, there are tax benefits to owning real estate and you can expect that property to double in value every 10 years. In 17 years time you’ll be sitting on a property worth $150,000 or more. If you took that same $20,000 and invested it into your 529 plan you would only get about 5 years into the plan and you’d still be on the hook to pay for the next 12 years. So let me ask you, would you rather invest $20,000, make some additional money every month and enjoy the tax benefits or would you rather invest $88,128? Although, you end up with a $90,000 return at the end of 17 years if you were to sell the property, the initial investment and the other benefits along the way is true leverage of your money and time.

You obviously want to consult with a financial advisor, an experienced Realtor, have the home inspected thoroughly as well as speaking with a rental management company to find out what you could rent the home for before you buy. And whatever number you’re told that repairs will amount to add 20% as a buffer for the unexpected. No matter how good of a home inspector you have it’s always a good rule of thumb to plan for the unexpected.

In normal market times, the National Association of Realtors says, 49 percent of buying decisions are based on curb appeal.

These are not normal times – in fact, some Realtors call current market conditions the “new normal.” Yet curb appeal is still of major importance, especially with so many houses for sale.

It’s unlikely to get you more money for your house. But it will get buyers’ eyes on your prize.

In effect, curb appeal is “outdoor staging,”. Even if the interior decor is Buckingham Palace-quality, no one will ever know if the place isn’t appealing from the street – because no one will ever ring the doorbell to see it.

“You need to pay attention to outside as well as the indoors,”.

Still, Marilou Buffum of Eichler & Moffly, Realtors in Philadelphia’s Chestnut Hill neighborhood, who concentrates on Northwest Philadelphia properties, cautioned that curb appeal “depends upon what a buyer is looking for.”

“If you have an urban-oriented buyer, a house with a lovely lawn isn’t high on the list,” Buffum said. “Clean windows, paint that isn’t peeling, an attractive front door, nice plantings, leaves raked and the lawns mowed set the tone of what the buyer thinks the house should be.”

There are challenges to curb appeal everywhere.

“The city is the best place to live, and I wouldn’t live anywhere else,” said Prudential Fox & Roach agent Jeff Block, who focuses on the Center City real estate market. “But city properties do deal with unique curb-appeal issues. “One is simply windblown bags, wrappers and leaves,” he said. “You can sweep your sidewalk every day, but if the wind blows right before an appointment, the buyer doesn’t know that.”

Also affecting curb appeal may be the condition of neighboring houses.

“We deal mostly with townhouses and twins,” Block said, “so sellers can point their brick, paint their door and trim, and the house can look perfect. But it does not help if the attached house is beaten up.”

Said Buffum: “You have to look at your neighbor’s house when considering curb appeal. If there are issues, and you get along well with your neighbor, you might ask if they wouldn’t mind trimming hedges or cleaning their yards.”

In some cases, sellers have even paid to have the house next door painted, she said. “Remember, you are selling your neighborhood, not just your house.”

Among the easier-to-fix curb-appeal issues are the weeds that pop up between pavers on sidewalks and patios, said Weichert Realtors agent Carolyn L. Sabatelli. “Bushes should be trimmed neatly, and plant beds should be trimmed out,” she said. “If driveways are asphalt, they should be nice and clean, and, if needed, another coat of blacktop applied.”

Think mulch, agents say. Fresh dark mulch adorning even barren landscapes gives them a warmer look.

Except for when a property cries out for professional help, boosting curb appeal does not have to be expensive, Buffum said.

“A fresh coat of paint or windows washed and fixed don’t add up to much of an expense,” she said. “Will you get the money back on your investment? Not necessarily, but you are making your house more appealing to buyers,” she said. “It gives buyers the impression that you care.”

Some agents recommend having at-the-ready photos that show how your house looks in other, more colorful seasons. In fact, Buffum and other agents make booklets of such pictures and leave them inside the house for prospective buyers to see.

U.S. housing prices overall are expected to hit bottom by spring 2011 and begin a gradual rise in 2012, Frank Nothaft, chief economist and vice president of housing lender Freddie Mac said on Wednesday.

“I do think we’ll see these housing prices bottom out, maybe by the spring,” Nothaft said.

Nothaft presented Freddie Mac’s January 2011 Economic Outlook to reporters at the annual International Builders’ Show in Orlando.

Nothaft predicted that potential home buyers who have been sitting on the sidelines will start to get back into the market. He said this prediction is bolstered by historically low mortgage interest rates and other positive economic indicators, a small drop in the rate of unemployment, increases in purchases of durable goods and a slight slowing of serious delinquencies feeding the glut of foreclosed housing stock.

“This is the time to come in the market if you’ve got the financial resources and wherewithal,” Nothaft said.

However, the housing market will continue to recover unevenly around the country with regions of Florida, Nevada and California continuing to slog through the effects of the economic bust, he said.

Homebuilders and suppliers at the home builder event, where attendance is off nearly 50 percent since the show was staged in Orlando in 2005 through 2008, viewed the forecast through the lenses of their home communities’ experience of the recession.

“I’ve been in a crash for four years,” millwork supplier Jeff Thompson of Vero Beach, Florida, told Reuters. “But I’m almost seeing a glimmer of light in getting new projects.”

“We’ve pretty much already bottomed out,” said Jeffrey Capogrossi, a custom homebuilder from Columbia, South Carolina, said. “Now, how long we’re going to stay flat is hard to tell.”

Custom home builder Robert Leslie said his company in Fargo, North Dakota, never stopped growing through the national housing bust.

“Our markets, if anything, just leveled off for awhile. So now, they’re starting to move up,” he said.

Freddie Mac and the National Association of Home Builders are projecting a 20 to 21 percent increase in new housing starts – from 475,000 in 2010 to 575,000 in 2011, according to Nothaft and David Crowe, the NAHB’s chief economist.

“Twenty percent may sound like a really big increase, but keep in mind it comes off a very low base,” Nothaft said.

Justifying the projection for new housing starts, Crowe said the national inventory of new homes is at a 40-year low. In addition, Crowe estimated that 2 million people who normally would have moved into their own homes stayed put through the recession, many of them young adults who remained in their parents’ homes or continued to share living quarters with roommates.

“We have an enormous pent-up demand for households,” Crowe said.

Thompson believes Florida, one of the hardest hit states, is well positioned for a resurgence as a result of the precipitous fall in housing prices and appraisals. “You put all that together and Florida has become affordable again like back in the 1960s, 70s and 80s,” Thompson said. “I think there are a lot of opportunities that are coming our way. We are on the cusp.”

(Editing by Greg McCune)

The recently enacted Small Business Jobs Act contained one provision that may have escaped the notice of taxpayers who own rental property, but will affect them starting in January. Under the provision, owners of the property who receive rental income will be required to issue Forms 1099 to service providers for payments of $600 or more during the year.

The act subjects recipients of rental income from real estate to the same information-reporting requirements as taxpayers engaged in a trade or business. Thus, rental income recipients making payments of $600 or more to a service provider in the course of earning rental income are required to provide an information return (typically, Form 1099-MISC, Miscellaneous Income) to the IRS and to the service provider. This provision will apply to payments made after December 31, 2010, and will cover, for example, payments made to plumbers, painters or accountants in the course of earning the rental income.

While rental property owners will not actually issue the required 1099’s until early 2012, they need to start keeping adequate records of payments starting January 2, 2011, so they will be prepared to issue correct 1099’s. They will also need to obtain the name, address, and taxpayer identification number of the service provider, using Form W-9 or a similar form.

Exceptions

The law provides exceptions for individuals who can show that the requirement will create a hardship for them. The IRS is directed to issue regulations on this, but has not done so yet, so there is currently no guidance on what constitutes sufficient hardship to qualify for the exception or how a taxpayer would demonstrate that hardship.

The law also contains an exception for individuals who receive rental income of “not more than a minimal amount”. Again, the IRS is directed to issue regulations to determine what constitutes “not more than a minimal amount” but has not done so yet.

If such guidance is not forthcoming before January 1, all individuals who receive rental income should start keeping records of payments to service providers so they are prepared to issue 1099’s in 2012. The law also contains an exception for members of the military or employees of the intelligence community if substantially all their rental income comes from renting their principal residence on a temporary basis.

Information Return Penalties

Taxpayers should also be aware that in addition to creating a new reporting requirement, the act increases the penalties for failure to file a correct information return. The first-tier penalty increases from $15 to $30; the second-tier penalty increases from $30 to $60; and the third-tier penalty increases from $50 to $100. For small business filers (with average annual gross receipts under $5 million), the calendar-year maximum increases from $25,000 to $75,000 for the first-tier penalty; from $50,000 to $200,000 for the second-tier penalty; and from $100,000 to $500,000 for the third-tier penalty. The minimum penalty for each failure due to intentional disregard increases from $100 to $250.

The increased penalties apply to information returns required to be filed on or after January 1, 2011.

Expanded 1099 Reporting After 2011

Currently, payments to corporations are excepted from the 1099 information reporting requirements, but starting for payments after December 31, 2011, businesses (including, now, individuals who receive rental income) will be required to file an information return for all payments aggregating $600 or more in a calendar year to a single payee, including corporations (other than a payee that is a tax-exempt corporation). This change was made by the Patient Protection and Affordable Care Act, which was enacted in March. That act also expanded the information reporting requirements to include gross proceeds paid in consideration for property

In today’s economic climate, people want to save money wherever they can. Here are four ways to reduce homeowners insurance rates compiled by HomeownersInsurance.net.

1. Shop around. Some insurance companies have raised house insurance costs to recoup losses from the financial crisis. Others are competing for new customers by offering lower rates. By shopping around, people can find better deals on homeowners insurance.

2. Re-evaluate coverage amounts. Many policies have inflation protection provisions, which automatically increase coverage amounts. This was a good item in the years leading up to the crash, but today they should be looked at more closely.

3. Check personal credit reports. Homeowners insurance companies check credit history before figuring rates, similar to how lenders do. This is done to help them assess the risk of payment and likely individual responsibility.

4. Avoid small claims that can become expensive. Homeowners should have the highest deductible they can comfortably afford and repair minor items out of pocket rather than filing a claim. Filing a claim for every broken window or leaky pipe can increase premiums by 10-15 percent.

Are you a buyer sitting on the fence looking at the real estate market and asking the question, “Is now a good time to buy a home, is it safe to buy?” The answer may be yes if you plan on living in the house for the next 5 years or more.

The problem I see is that people have forgotten that a home is a place to live not an investment account! Robert Kiwosaki, real estate mogel and author of the book Rich Dad Poor Dad states that the home we live in is a liability, not an asset, unless of course it is paid off. Thinking that the home you purchase and will live in for the next “x” amount of years is what is going to change your retirement account is a risky strategy. Now I’ll admit I enjoyed the crazy days when my home doubled in value. The only problem was to many people took out our equity lines and we purchased new cars, went on wonderful vacations or purchased that boat that hardly ever gets used. But the basic fact is a home is a place to live and if we follow the normal path of appreciation a home should go up in value at 3-5% per year in a normal market. This is the norm, the real estate market that we had 5-8 years ago was not the norm.

So, does that mean it’s not a good time to buy? NO WAY! Interest rates are at a historic low – meaning money is on sale right now and with all of the bank owned properties on the market and sellers becoming reasonable about their prices – real estate is on sale too! Let me give you an example if your mortgage was for $200,000 at 6.25% on a 30 year fixed mortgage your payment would be $1,232 PI (principal and interest) and you would need to have $3,571 per month of income to qualify for the loan. With the way today’s rates are right now at 4.25%, the same $200,000 loan for a 30 year fixed mortgage would only cost $984 PI and you’d need an income of $3,020. That’s a savings of $248 per month or $2,976 a year! Now take that savings and start your investment account or buy your boat.

So I ask you, can you really afford to sit on the side lines and watch the best time in history to buy a home pass you by or are you going to jump in the game and take advantage of this season before it’s gone?

Our team of real estate agents are here to help so call us anytime or search the MLS like an agent by “clicking here”

July 2010 Pinellas County real estate stats

July 2010 Market Stats Click Here

Some interesting things to notice here with the housing stats, the number of available single family homes in Pinellas County is up for the 1st time based on a year over year comparison since 2007. July 2009 active listings in Pinellas County were 6,525, July 2010 6,675 that’s a +2% increase. Sales were also down by -23% from July 2009. This I fell is due to the huge number of sales over the last 4 month where sold homes were up from 2009 number ranging from +7.5% to +31.5% this was due to the tax credit.

If you have any questions about the real estate market in your neighborhood in Pinellas County call us!

The tax credit expired, but it’s still a great time to buy a home thanks to low mortgage rates and motivated sellers. Here are five reasons why now is a great time to buy:

1. Low mortgage rates serve as an equity shock absorber. When buyers borrow at today’s record-low rates, they start building equity as soon as they close. That means they can absorb a few ups and downs as the still-recovering housing market gains traction.

2. Houses are in move-in condition. Homeowners continue to spend on maintenance and repair, according to the Harvard Joint Center on Housing. As these houses enter the market, they stand in marked contrast to tattered foreclosures.

3. Terrific houses are coming on the market. Foreclosures are finally starting to clear the system, and they are being replaced by some very attractive properties.

4. Appraisal regulations are finally aligned with market realities. Fannie Mae has adjusted its appraisal guidelines, giving appraisers more flexibility to set values that reflect the current market.

5. Plenty of programs. Many programs that encourage middle-class families to buy homes still exist, despite market downturns. Buyers who qualify can get a big boost by combining one of these programs with today’s low mortgage rates.

Source: ForSaleByOwner.com (07/29/2010)

PALM BEACH, Fla. – July 28, 2010 – With today’s reduced property values and increased unemployment, it’s tempting for some homeowners to just throw their hands up in defeat, allow the bank to take their home in foreclosure and rid themselves of the monthly mortgage burden.

Even suffering through the paperwork and stress of a short sale may seem too much for an overwhelmed borrower to handle.

But Florida homeowners should be aware of unique rules in the state that make the benefits of a short sale typically outweigh the ease of walking away in a foreclosure.

“I want to be very clear on this, short sales are a better solution than a foreclosure, even when all the options in a situation where you lose your house are not great,” said Mark Greene, owner and president of Short Sale Operations LLC in North Palm Beach.

The biggest difference between Florida and many other states when it comes to losing a home is the deficiency judgment.

While some states ban lenders from collecting the remainder owed on a loan after a foreclosure or short sale is completed, Florida law allows banks to go after borrowers for up to 20 years. That can lead to a garnishment of wages long after the home is gone.

In a short sale, where the bank agrees to take a lesser amount for the home than what is owed on a loan, lenders sometimes are willing to write off the deficiency on the front end.

Greene said in 90 percent of the cases he handles, the bank has waived its right to seek a deficiency.

That was the case with Jupiter resident Kathryn Lorello, who in 2008 found herself in a home she couldn’t afford.

Following a divorce, and with three children, Lorello bought a $408,000 home that she lived in comfortably for a year. But then she lost her job as a manager of a real estate company.

She remembers the day the bank served the notice of foreclosure.

“I cried my eyes out,” Lorello said. “That’s when I panicked because I really didn’t want it to happen.”

Lorello got advice from Greene on doing a short sale.

Her bank, Wells Fargo, waived its right to seek a deficiency even though it ended up taking $200,000 less than what was owed on the loan.

Also, if a bank refuses to waive the deficiency in a short sale, it still would have to go back to court to seek a judgment.

In a foreclosure, at the end of the proceeding, a deficiency judgment is automatically awarded by the courts and the bank is free to seek a claim.

“In the past, people just wanted to move from the property and get on with their lives and didn’t understand what the lenders’ rights were in terms of pursuing a deficiency claim,” said Paul Baltrun, director of loss mitigation at the LaBovick & La-Bovick law firm.

“I think people are more aware now about what can happen after the fact and that their nightmare can continue.”

Another consideration is the effect of a foreclosure or short sale on credit.

According to the Fair Isaac Corp., which developed the widely used measurement of credit risk called a FICO score, the negative effect of a foreclosure is only marginally worse than a short sale.

But in Florida, a deficiency judgment from a foreclosure is likely to have a much larger impact that will prohibit your ability to buy another home for many years.

Daniel Poulos, a mortgage broker with Elite Lending in North Palm Beach who has studied the effect of foreclosures and short sales on credit, said unless a borrower pays off the deficiency, it may be 20 years before someone is eligible for another mortgage.

“That’s the kind of information that’s not getting out in Florida,” Poulos said.

There are a few situations where some experts believe it is better for someone to go to foreclosure rather than do a short sale.

To do a short sale, a borrower must give all of his or her financial information to the bank before it will decide whether to allow the short sale. The idea is that if a person can afford to pay the mortgage, the short sale may be denied.

“Now the lender knows everything about your finances and they can better decide whether they will go after you or not,” said Jon Maddux, CEO of YouWalkAway.com, a company that advises people on strategic defaults.

If a lender doesn’t know your finances, Maddux argues, it reduces the chances it will go after you following a foreclosure.

“You might fly under the radar,” he said. “With the millions of people going through this, they are probably going to go after the low-hanging fruit.”