Looking for the right contractor

As a contractor in business for over 10 years, I have seen a lot in regards to the economy, the housing market and the construction industry. As times get tough in the construction industry, contractors look for ways to trim costs. Often this is done by cutting insurance coverage. Verify your contractor has coverage. Requesting a “Certificate of Insurance” does this. The certificate of insurance (aka COI) shows the policy dates and the coverage amounts.

All contractors should have a general liability and workman compensation policy. If they do not have these two basic coverage’s and something happens to either an employee or your home while they are working, you could be held liable. In addition to this basic information, make sure your contractor is insured for the work he is performing. For example: Dryvit or Stucco repair contractors require special coverage to work on your home. In another example a roofing contractor should be covered to work on roofs. If he does not have this coverage and lets say a storm blows in while he has half your roof off and your home suffers severe water damage, your insurance could be liable. His insurance will deny coverage since his coverage did not include the roof. In the unfortunate event this happened at the renewal of your policy, your insurance company will more then likely not renew your home since it had a major claim that could have been avoided. In an extreme case, your insurance could also deny coverage, leaving you to cover all damage on your own.

In addition to insurance, the Illinois Attorney Generals Office requires you to receive a copy of the “Know Your Consumer Rights” on all projects over $ 1000.00. A contractor that does not provide you with this basic informational pamphlet is in violation of state law and can be fined under the law. To view this pamphlet and your rights visit: http://www.illinoisattorneygeneral.gov/consumers/homerep0505c.pdf

Most contractors are reputable and will often give you this information without you even asking.

Lastly, all contractors have the same expenses: labor, materials and insurance. Their bids should be within 5 – 10% of one another. If there is large discrepancy investigate – don’t just take the low bid. If you don’t understand the bids involve someone that does. Several home inspectors will review the bids and give you their opinion. They do charge for this service, but in could be well worth it.

Remember, if it looks to good to be true, it probably is and you always get what you pay for!

Is the Spring Market Coming Early???

Punxsutawney Phil, the Seer of all Seers and Prognosticator of all Prognosticators saw his shadow on February 2nd. He says there will be six more weeks of winter. Mainstreet's January housing reports say maybe the spring housing market is coming earlier.

The average sales price for single family detached homes jumped 4.5% for closed sales in January 2010. That is the first increase since December 2007 with most of the months since then being in the negative percentile. Now may be the best time to jump into the buying and selling marketplace. The first time buyer credit is available until April 30, 2010 and the closing must take place by June 30, 2010.

Many communities showed significant gains in average home sales prices. This could mean that the move-up buyer is utilizing the other tax credit which is available. If you have lived in your current home 60 consecutive months out of the last 96 months, you are eligible for a $6500 tax credit also.

Now is the time to get that home on the market. It looks like March and April could be exactly like October and November 2009 when many first buyers were jumping into the marketplace trying to get a contract on a home before the deadline expired.

Punxsutawney Phil says there may or may not be 6 more weeks of winter. One thing we do know for certain, you have only 10 more weeks to use the buyer tax credits.  Hopefully, whether you are buying or selling, the spring market will work for you.

ENERGY STAR Appliance & HVAC Rebates in Illinois!

The State of Illinois recently announced rebates to Illinois home owners from now through Earth Day. Some of the rebates can be doubled-up with Federal tax credits for additional savings!  All ENERGY STAR products are tested to ensure that they save energy over traditional models, and pass additional quality checks so that they will last.  If you have been thinking about making improvements to your home, now is a great time! 

See the full details on how to earn the rebates, and how to earn Federal tax credits as well.  The quick summary is below:

*  WATER HEATERS - State rebate of 25% off at the register from now until they run out. Buy models that are >= .82 efficiency to earn additional 30% federal tax credit!

*  FURNACE & AC - State rebate of $350-1200 off (depending on unit) at the register from now until they run out.  See link above for details on how to earn additional 30% federal tax credit too!  Always best to do an Energy Audit of your home before you purchase new HVAC equipment. 

*  FRIDGES, FREEZERS, DISHWASHERS, CLOTHES WASHERS & WINDOW AC appliances - State rebate of 15% off at the register.  Additional mail-in rebate up to $100 if you recycle your old appliance!  Available only from April 16-25.

FHA Guideline Changes for 2010

FHA Guideline Changes for 2010

There are many new guideline changes for FHA in 2010. Some are positive and some are not so positive. However, many of these will benefit real estate professionals and home buyers. Here are some highlights of some of those changes:

• Increase Up-front Premiums for FHA Mortgage Insurance
  Effective on or after April 5, 2010, FHA will collect an upfront mortgage insurance premium of 2.25 percent. This will increase premiums for purchase and refinance transaction.
• New Down-payment/Credit Score Requirement
  Effective on or after April 5, 2010, loans with FICO scores of 579 or lower will require a down-payment of 10% and loans with FICO scores of 580 or above will require the current 3.5% down-payment.
• Decrease in the Maximum Seller Contribution
  Effective on or after April 5, 2010, maximum that is currently at 6% will  become 3%.
• New Approval Process for Condominium Projects
  Spot approval process being replaced by new streamlined process, which may affect buyers, sellers/developers and homeowner associations.

So what are the benefits to real estate professionals from these changes?

1. More buyers will enter the market because they can afford the lower down payment.
2. No single investor can purchase more than 10% of the units, so the idea of a controlled association by one or two investors is no longer a threat.
3. More inventory will offer wider choices tending to keep prices in check, as "FHA approved’ condominiums come on line.
4. The lender who provides the mortgage will have to approve not only the condo documents, but the condo association’s budget, reserve account and its fidelity insurance policy.
5. New construction developers have the guidelines needed to create urgency in their pricing strategies, which is key to building and maintaining momentum.
6. Commercial lenders will have a more comfortable level with developers. While the 50% presale requirement may look obtrusive, it is actually a benefit to the developer, because it will create urgency for buyers to purchase.
7. Established associations that have dragged their feet to get their finances in order, now have a valid value-based reason to become "FHA Approved. "
8. Real estate agents will show FHA approved condominiums with confidence in the association’s finances, not just because the down payment is low.
9. Forward thinking lenders will hustle to become a "an approved lender’ in resale and new communities alike.
10. Knowing the property already has approved lenders will make competition for listings tighter and will attract more buyers and more prospects to the listing.

Brokers taking listings in condo communities without FHA financing will be competing with ones that do, making it important for associations to seriously consider becoming FHA approved.

First time home buyers are generally thought of as the primary market for FHA financing. There is something to that, but in today’s world, many who bought their first homes years ago and lost them during this recession will appreciate the FHA financing availability even more than those coming out of rentals.

Ice Damning Warning Signs

It is not uncommon this time of year to see water stains at wall and ceiling corners where you have never seen it before.

Typically this type of water entry is caused from a phenomenon called "ice damning". Ice damning occurs when we have snow and ice followed by above freezing temperatures. The surface snow and ice melt and pool in an area that the ice was too thick to thaw at the same rate. It then re-freezes at night as the temperatures drop making the block of ice even thicker. The next day the same cycle happens. The pond gets deeper and eventually goes over the top of the flashing and enters the house at the wall, soffit or the roof deck. Once this happens you see either water staining or wet spots on the inside walls, ceilings or floors.

This is something that should not be ignored, over time mold and wood rot came develop. If you see this at your home or building have it looked at sooner rather than later.

Keepsakes: How I Turned my Muddled Mess into Meaningful Memories

Are you hanging on to physical reminders of people and events thinking it will be a great way to reminisce or even to honor the people those things represent? Keepsakes can be a challenging area to pare down, especially when you feel forced to do it because you're moving to a home with less storage space.

I knew the time had come to pare down my burgeoning collection of mementos when I tried to stuff just one more greeting card into one of my four keepsake boxes and a cascade of papers came tumbling down - with no lid to hold back the avalanche, I received a very tangible wake-up call that I can't save everything.

Greeting cards, ticket stubs, old toys, and even clothing can bring on all kinds of emotions. However, as I discovered, it might be time to realize that boxes loaded with a disorganized collection of memories may be more overwhelming than comforting. I hope my description of the process I went through to turn my muddled mess into meaningful memories will help you do the same.

1. I took it slowly. I took a deep breath and recognized that getting through even one box was going to take quite a bit of time. So I set aside a half hour per day to work my way through the piles.
2. I stored photos separately. I put all photographs in their own box to be dealt with as a separate project.
3. I sorted by person. I grouped the remaining objects according to the originator. For example, the greeting cards, "something old" handkerchief from my wedding, and letters from my grandmother all went into one pile.
4. I contemplated the significance. For each pile, I considered which items captured the soul of the person or experience and whether letting go of any particular item would have any impact on my memories of, or relationship with, the person they represented. I had some good laughs, shed a few tears, and at times shook my head and wondered why I had saved some of the items.
5. I kept only the gems. I let go of most items without much trouble, recognizing that their importance had diminished over time or that other items were more meaningful keepsakes of the person or event. I kept any items that stirred a twinge of nostalgia, but later photographed many of them and let go of the original article. Throughout the entire process, I reminded myself that the item was not the person or the event and I was not dishonoring anyone by letting go of things.
6. I stored the remainder in a meaningful way. I put a date on all items, and for some, I also included a sticky note with a description of why the item was significant. I placed the sorted keepsakes into a banker's box and used file folders to divide the box into sections by person. My goal was to get everything into a single box - after all, I just wanted to capture the essence of my relationships and life experiences, not every trinket from them. However, I created a second box for things from my kids and husband after realizing that the most important people in my life were worthy of more than just a couple of keepsakes.
7. I'll keep a lid on it. I don't miss any of the items I've discarded, and I'm glad to know I've got some room to spare in my two boxes so I can add meaningful items as they come along. I've vowed that I will not add any additional boxes to accommodate my keepsakes - I'll have to delete an item in order to add one, take a photo, or find some other means to capture the memory without keeping the item.
8. I'll live in the moment. While keepsakes help me reflect on how meaningful the people and occasions in my life have been, making the most of each day is the best way to make sure I fully experience and appreciate the important people and events that enrich my life.

Spring Housing Market Might Be Early!!!

Sales of single family detached homes jumped by about 10 percent in 2009. As a homeowner, if you are thinking of putting your home on the market, now just might be the right time.  There is more confidence in the market and the first time buyer credit is helping boost sales.

The impressive gains aren't in just one area. Southern Cook County, Western Cook County and Dupage County have all seen substantive increases in closed homes:

Bridgeview 49 percent increase over 2008
Summit 100 percent increase
Justice 65 percent increase
Bellwood 112 percent increase
Melrose Park 107 percent increase
Schiller Park 89 percent increase
Addison 75 percent increase
Bensenville 106 percent increase
Glendale Heights 71 percent increase over 2008

Townhomes and condos have seen improvement, also. December '09 showed a 28 percent increase in attached home sales plus an 89 percent increase in pending sales.

The first time buyer credit is working. The holidays are over and the weather appears to be improving. The April 30 deadline for the tax credit is looming. All factors could heat up the spring market earlier than anticipated.  As a seller, get your home ready and on the market in the next couple of weeks. Buyers, get your mortgage pre-approval from the lender you will be using.  Whichever you are, now is the time.

Foreclosure Rescue Scams

It's always sad when scams have to be addressed, especially when many homeowners are financially strapped and are trying to avoid being foreclosed on. It is imperative that if you are having mortgage problems, that you address them with your mortgage company right away. Additionally, should you choose to seek assistance from an outside source, that you are using legitimate options. According to an article published by houselogic, 2.8 million properties were hit with foreclosure notices in 2009. Scam artists specifically target those consumers so it's well worth your time to invest the time and effort to research legitimate options and don't make any hasty decisions.

The article goes on to report that the U.S. Federal Trade Commission has identified 71 companies running suspicious foreclosure rescue ads, and the Better Business Bureau counts foreclosure rescue rip-offs among its top 10 scams.

For details on these scams, please follow this link.

The U.S. Department of Housing and Urban Development (HUD) website has a list of HUD-approved counseling organizations listed by state. To view the list, visit www.hud.gov/counseling.

Homeownership Ain't for Sissies

I hate New Year's resolutions. I really do, but not for the reason most of you are thinking. For most people I've heard talking about New Year's resolutions this year, I've been mostly reminded of the windbag promises that politicians make. Yes, we have huge goals, laudable goals, and vast sweeping declarations of intent with absolutely no way to accomplish the goal. Sure, the goal is to "loose weight" or "become better parents" but those simply are not concrete achievable goals.

I am not making any resolutions this year; I'm still working on executing last year's resolution: Learn new skills to take care of my home.

So how do I learn new things? I make a plan and do research to give myself small achievable steps to get to where I want to go. Think of it this way, a doctor doesn't wake up one morning and just "become" a doctor. A student dreams of being a doctor. A student takes basic science classes in high school, pre med classes in graduate school, attends and survives medical school and residency. Finally, after years of grueling study and sacrifice, they have transformed themselves into a doctor.

The first thing I did is make a list of all the chores, maintenance, and projects I dreamed about for my home. Cleaning the furnace filter is the one chore I always forget. When should I put fertilizer down on the lawn, trees, and azalea shrubs? Did I seal coat the driveway last year, or was it in 2007? When do I schedule time to check the windows and doors to see if they need new caulking? (I check every September before it gets too cold for caulk to flow easily.) I did small projects with my son, projects that required nails to be hammered, drills to be used, simple safety rules reviewed. He built his pinewood derby car mostly by himself. We then built a dolly for moving heavy furniture, then a cabinet, a box, a small set of stairs. Each project matured our skills and gave us greater confidence. By fall, I felt prepared to start planning the finished basement project. Now when I approached the village building department for guidance, I understood the requirements and I could ask intelligent questions of the officials.

A good friend came to visit in August and he happened to see my home's calendar on my workbench. We had a great little conversation about how it helped me keep things under control. He had asked a great question "Why wasn't a regular check on the sump pump and ejector pump on my maintenance list?" Frankly, I didn't know how to perform maintenance on a sump pump. Now I know to check the float mechanism to see if the pump turns on. I check to make sure the outflow pipe is clear and the discharge flows away from the foundation. I check the battery back up and change that battery every five years (July 2011 for me). I then seal the pit cover with some caulk and know the system is in good working order.

It dawned on me; my first step was to create a calendar just for my home maintenance, filled out each snowy January that charts out exactly when each chore is due. Once I know when the regular chores are done, I can schedule the extra projects. Because I started the schedule last January, this fall I finally started the basement remodeling project I've been thinking about for six years.

If becoming a better homeowner is one of your resolutions, try my method of scaffolding your resolution. Make your resolution concrete, something you can physically do, right now (make a calendar in my example). Decide which steps you can take now, and which steps need to happen later. Be kind to yourself, just like children start with addition and move on to multiplication and division, start with changing the furnace filter and using basic tools before you begin remodeling the basement. Brushing up hibernating skills or learning new skills take time. Make your resolution open ended, it's not "finish the basement", the goal is to become proficient and grow your skills. Good luck in 2010 with all your home improvement goals!

RESPA CHANGES Effective 2010

I think everyone has heard the news about the changes to the HUD-1 Settlement Statement and GFE (Good Faith Estimate). HUD, in an attempt to bring more disclosure to the Consumer and hopefully cut down on predatory lending has adopted new guidelines that took effect on January 1, 2010. For the consumer it's great. For Realtors, it's one more thing that they're going to need to keep up to date. Any changes to the contract will need to get to lender very quickly.

Summary of Changes

There are a number of changes and they can be found on HUD's very informative website at: www.HUD.gov

They offer this summary:

Fact Sheet on HUD's final RESPA Rule

• For the first time ever, HUD will require mortgage lenders and brokers to provide borrowers with an easy-to-read standard Good Faith Estimate (GFE) that will clearly answer the key questions they have when applying for a mortgage including:
  • What's the term of the loan?
  • Is the interest rate fixed or can it change?
  • Is there a pre-payment penalty?
  • Is there a balloon payment?
  • What are total closing costs?

• HUD estimates that by improving upfront disclosures on the GFE, and limiting the amount estimated charges can change, consumers will save nearly $700 in total closing costs.

• Based on substantial public comment, HUD withdrew a proposed requirement that closing agents read and provide a 'closing script' to borrowers in favor of a new page on the HUD-1 Settlement Statement that allows consumers to easily compare their final closing costs and loan terms with those listed on the GFE.

• HUD's new Good Faith Estimate has been reduced from four to three pages, including an instructional page to help borrowers better understand their loan offer. In addition, the GFE will consolidate closing costs into major categories to prevent junk fees and display total estimated settlement charges prominently on the first page so the consumer can easily compare loan offers. HUD will specify the closing costs that can and cannot change at settlement. If a fee changes, HUD will limit the amount it can change.

• To help borrowers compare their Good Faith Estimate with their HUD-1 Settlement Statement, each designated line on the final HUD-1 will now include a reference to the relevant line from the GFE. Borrowers will now be able to easily compare their estimated and actual costs in the same manner many revisionists suggested.

• HUD will require lender payments to mortgage brokers (often called Yield Spread Premiums) to be disclosed in a more meaningful way. These payments are directly dependent on the interest rates that consumers agree to. To ensure that HUD's new requirement will not create a consumer bias against brokers, the Department did rigorous consumer testing and found the new Good FaithEstimate helped consumers to select the lowest cost loan nine-out-of-10 times, regardless of whether the loan was originated by a lender or a broker.

• Loan originators will be required to provide borrowers their Good Faith Estimate three days after the loan originator's receipt of all necessary information. To facilitate shopping, loan originators could not require verification of GFE information (tax returns etc.) until after the applicant makes the decision to proceed.

• HUD will allow lenders and settlement service providers to correct potential violations of RESPA's new disclosure and tolerance requirements. Lenders and settlement service providers will now have 30 days from the date of closing to correct errors or violations and repay consumers any overcharges.