Mortgage – HomeownersInsurance.org http://www.homeownersinsurance.org Homeowners Insurance Tips and News Fri, 28 Jun 2013 15:01:02 +0000 en-US hourly 1 https://wordpress.org/?v=4.8.1 Home Sweet Home Gone Wrong http://www.homeownersinsurance.org/home-sweet-home-gone-wrong/ http://www.homeownersinsurance.org/home-sweet-home-gone-wrong/#respond Mon, 11 Jun 2012 15:31:20 +0000 http://www.homeownersinsurance.org/?p=1655 Owning a home can be an exciting time in life, especially for first time buyers. However, there are a handful of scams of which new homeowners should be wary about. Given the current state of the economy, protecting your money and credit has become increasingly more important. Unfortunately, scammers are equally motivated to pick-pocket for cash whenever they can and will use a variety of creative tactics.

 

Home Repairs

In Massachusetts, a 92-year-old man was scammed out of $90,000 for various “home repairs” that three men conducted. Although they actually did work, it was hardly worth the massive fees they incurred. The men allegedly charged the elderly gentleman $8,000 for a five-hour job cleaning out his basement according to CBS News. Neither the man nor his 70-year-old daughter found the charges odd. Thankfully, the men were arrested and face charges for larceny among other things.

The lesson learned here is to pay close attention to what and how you pay for home repairs. Even professional services can overcharge for painting or plumbing fixes. Comparing rates is the best strategy to avoid paying too much for menial work.

 

Contractors

Don’t let one natural disaster turn into another. The National Insurance Crime Bureau (NICB) published a press release warning homeowners not to be tricked into accepting damage clean-up service offers from “reputable” contractors. Although there are certainly legitimate providers, there are also a high number of door-to-door vendors who will take your money without returning to do the work you paid for.

Those who do show up might use poor quality materials or repairs that aren’t worth the cost. More recently, the NICB mentioned a scam that involves contractors doing further damage to your home to try to convince you further services are needed. Others will have you file a claim on damage that occurred over the years prior to the storm, while claiming that it actually was storm-related damage. Careful oversight of these proceedings, should you choose to hire contract work after a storm, will prevent risk of these scams.

 

Waterline Letters

Playing off the assumptions and ignorance of some homeowners, scams are popping up on technical issues as well. Anita Liggins noticed something was odd about the letter she received in the mail about her responsibilities relative to her waterlines. The letter was from HomeServe USA, who claimed she was responsible for the maintenance and repair of certain exterior waterlines and suggested she look into purchasing insurance from them.

Because of the suspicious elements of the letter (lack of return address, zip code tracking back to a different area than stated in the letter, etc.), Liggins made a few phone calls to determine the legitimacy of the suggestion. Apparently she was not the only one who received the letter scam. Several similar cases were reported for the same area according to WAFB News. The Newport, Ore. City Police website notes that this scam is occurring in multiple cities. Although the letters appear to be from the city, the company is usually illegitimate.

 

Mortgage

By far the most common — and usually most expensive — scam on homeowners is related to mortgages. The California Association of Realtors President LeFancis Arnold stated that mortgage fraud complaints have jumped nationwide by 60% this year alone. Experts think this may be related to the fact that the housing market is in such a desperate state and homeowners are more vulnerable than ever to the appeal of saving money on lower rates.

This is the leverage scammers use to obtain credit information and make fast cash off of homeowners who are deceived by the perceived legitimacy of the mortgage companies. In one instance, a man was called by a company who claimed they could drop his payments from $783 a month to $386. After collecting the fee of $1,900 up front, they informed him that he could quit paying his monthly mortgage. Of course, it was not long afterwards that the bank foreclosed on his condo as payments ceased.

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Is Buying a Home a Good Savings Vehicle? http://www.homeownersinsurance.org/is-buying-a-home-a-good-savings-vehicle/ http://www.homeownersinsurance.org/is-buying-a-home-a-good-savings-vehicle/#respond Mon, 05 Jul 2010 17:57:07 +0000 http://www.homeownersinsurance.org/?p=706 Until recently, most anyone would tell you that it makes more sense to buy a house than rent, if you are able to afford to do so. The reasons, they would claim, are simple. Namely, when you rent, you throw your money away, and will never see it again, but when you buy, you build equity. But, when you factor in other concerns like home maintenance and repair, homeowners insurance, and taxes, is it really the best way to build a nest egg?

It Depends

The answer varies, depending on a number of circumstances, including your location, your credit (and the resulting interest rate), and market factors over which you have no control and likely can’t predict with any degree of accuracy. Ultimately, if you really want to know what makes sense for your situation, you need to do a little homework.

Understand the Interest

With most mortgage loans, the overwhelming majority of what you will be paying for the first 10 years is interest. Interest paid is money thrown away that you will never see again, every bit as much as rent is. For the first 5 years, an average of 80% of what a homeowner pays covers interest. Years 6-10 still see the homeowner divesting 70% of his payment into interest. Unless your housing costs are actually lower than what you were paying to rent, you probably would do much better investing your money into something else.

What Constitutes Housing Costs

When determining your housing costs, it’s important to keep in mind that your mortgage or rent is just the beginning of it. If you’re a homeowner, you also need to factor in homeowners insurance. You also need to consider the costs of upkeep. Small things like gas for the lawn mower stack with larger tag issues like fixing plumbing or wiring, repainting every 8 years or so, and replacing the roof every 20 years. By the time many homeowners have any significant equity, they find that they need to borrow against it to maintain the house, keeping them in a cycle of debt.

If You’re Going to Buy

There are at least one very good reason to buy a house, in any market. To live in it. If you are going to be in the same house for the duration of a 30 year mortgage, then you can certainly make a case that it is a worthwhile investment. You will get back a good part of what you put in (though by no means all, in most cases), and you will have had the benefit of living there. Today, however, homeowners average barely 7 years in a home before trading it in for another house and another mortgage. And if you do that, in most cases, you throw away considerably more money than if you had just rented.

Photo via alancleaver_2000

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