YOURNEWSPAPER.

COM/HOMES
AD / SPONSORSHIP

Make the most of your home investment

stock.xchng
Ask Our Broker

I often see ads by lenders

claiming to cut my payments
in half. Too good to be true?
Q: I have a 5.5-percent, fixed-rate
mortgage. However, I keep seeing ads
from lenders who say they can cut my
payments in half. Should I refinance to
get the lower cost?

A: No.The ads say they will cut your “pay-

ments” in half, not your loan cost or your interest rate. In
other words, you will pay less than you should for a teaser
period, anywhere from one month to several years.
However, the interest you do not pay will be added to the
loan balance, thereby increasing your debt.When the teas-
er period ends you will have a bigger debt plus less time
remaining to pay off the loan.The result will be vastly high- Plan, plan, plan: Knowing what you really want to take with you – and what you can toss in the heap – is the start of a hassle-free move.
er payments than you now have.
If you have a 5.5-percent, fixed-rate loan, you have an

All’s Well That Moves Well

asset – a hedge against higher rates.This is a loan to keep –
at least until financing with a lower fixed-rate is available.

Q: I purchased my home in 2003. It was new con-

struction and was listed as 1,732 square feet on the
multiple listing service. Last week I discovered that
the heated/cooled space in my home is actually
1,312 square feet, with my garage being 420 square
feet. I have been under the impression that when
advertising a home’s square footage, it usually
shows the heated/cooled living area and not the
gross size of the house.
I paid $76.73 per square foot to include the garage
for a total of $132,900 for my house. Is this correct?
Or should I have paid less considering the
heated/cooled space? If so, do I have any recourse at
this point?
A: Four years have passed since you bought, making it
difficult to complain. More importantly, there’s no standard
definition of square footage. For instance,American
National Standards Institute protocol Z765-2003 shows
how to measure residential square footage; however, this
approach is voluntary.
This may seem terribly inexact and unscientific, but to
me a better way to value homes is to see them as a pack-
age that includes price, features, design, condition, location
Don’t let a bad move ruin the first day in a new home. Here’s a foolproof plan for a smooth transition
BY BARBARA BALLINGER
CTW Features
Along with death and divorce, moving is
considered one of life’s biggest stressors. It
requires countless decisions sparks potential
problems and involves emotional adieus.
Moreover, it’s expensive.The cost goes up
with the more stuff you move and the farther
away you go, says Barry J. Izsak, a professional
organizer with Arranging It All,Austin,Texas,
and author of “Organize Your Garage in No
Time” (Que, 2005).
For instance,Anne Carroll, vice president
of business development at Moving.com, says
Do You Have 80/20 Vision?
moving the contents of a three-bedroom helps to know where you’re headed. Study
house – 10,000 pounds – from New York to your future floor plan and determine how
Florida, with movers packing at the house much room you have.“Be ruthless when sort-
but homeowners unpacking, might run ing and packing. Don’t move anything you
between $9,000 and $11,000. don’t want into your new house,” says
After spending time to get your house in Lindsey Jesch, who recently survived her first
shape and get an acceptable offer, don’t let a post-college move.
haphazard move complicate your new life. Izsak concurs and says it’s important not
Plan in advance: to store stuff that you pay a monthly fee for
in the hope that you or loved ones may want
DECIDE WHAT TO GET RID OF, KEEP OR STORE it, what he terms the “someday syndrome.”
Go through your home room by room. Get rid of it unless it’s beautiful, useful or you
Make piles of what you want to discard, give love it and it has great sentimental value, he
to family or friends, donate to charity, sell or
put on consignment.To do so efficiently, it See MOVING Page 2
Here’s all you need to see clearly on private
mortgage insurance

and space.You can then compare one property with

another and not worry about specific costs per square BY CHARLES SCUTT
CTW Features
foot.
OPHTHALMOLOGISTS MAY consid-
Q: I have a vacant lot in a rural area. The property er 20/20 vision to be ideal, but
when it comes to the picture-
See ASK OUR BROKER, Page 2 perfect loan-to-value ratio, 80/20
is the number to set your sights
on if you want to avoid paying
for private mortgage insurance.
PMI is the coverage that a
mortgage lender may require
when a borrower puts less than
20 percent down to purchase a
home, says Kevin Hardin, CEO of
the IMI Group, an international
mortgage lender in Phoenix.
PMI is required because it
“reduces the lender’s risk in the
event the borrower defaults on
the loan and the lender incurs a
loss,” says Myron Headen, a vice
president at Bryn Mawr Trust
Mortgage Co., Bryn Mawr, Pa.
The amount one can expect
to pay each month in PMI often
See VISION Page 2

AD / SPONSORSHIP
 MOVING
underline head here
CONTINUED FROM PAGE 1
says.
FIND TOP-NOTCH MOVERS
Finding a qualified mover is
much like picking a good doctor,
lawyer or accountant.Ask friends
and family for recommendations.
Check with sources like the
American Moving and Storage
Association for tips, planning
guides and quotes.Ask real estate
experts for companies that
clients have hired.
KNOW WHAT TO ASK
Are they licensed? How much
do they charge to pack and are
supplies included or extra? Are
they experienced in moving spe-
cialty items such as antiques,
pianos, artwork? Do they offer
discounts during slower periods,
such as winter? Do fuel-cost
changes alter prices? Also, check
complaints with the Better
Business Bureau and any state
moving organizations. Randy
VISION
underline head here
CONTINUED FROM PAGE 1
is difficult to generalize “because
it depends on many different
factors, including the amount of
the down payment, the amount
of the loan, and the specific
terms and condition of your
mortgage,” says John Turner,
president, DebtHelp.com,
Columbus, Ohio.“To get some
idea, however, you can expect to
pay about a half- to 1 percent of
the loan amount, not including
the amount of the down pay-
ment, in PMI.”
For example, Headen says
that a $100,000 home purchased
with a 20-percent down pay-
ment and an $80,000 30-year,
fixed-rate loan at 6.625 percent
interest would equate to a
monthly principal and interest
payment of $512.25.The same
home purchased with only a 10-
percent down payment would
result in a monthly principal and
interest payment of $615.28,
which would include a PMI pre-
mium of $39.
Typically, PMI premiums
Shacka, assistant vice president
of operations at Two Men and a
Truck in Lansing, Mich., recom-
mends checking the Web site
www.protectyourmove.gov.
GET THREE TO FOUR BIDS
It’s always better to get an on-
site written estimate, says Ram
Katalan, founder and president of
NorthStar Moving Corp., Los
Angeles. Don’t pay in full until
you’ve moved and are satisfied,
though you may have to put
down a deposit for an out-of-
state move, Katalan says. Be sure
your mover provides you with an
inventory and be sure every box
is labeled with contents, as well
as the room where it will go in
your new home.“This saves time
and effort when unpacking,” says
Laurie J. Bloom, author of The
Homebuyers’ Guide. For more
peace of mind and to cope with
potential complaints, take photos
of belongings before you move,
says Lynn North of Alain Pinel
Realtors in the San Francisco Bay
area. Finally, watch while boxes
are loaded on a truck, so you
know all gets included, says
Sandy Ernst, with The Warren
range between $50 and $100 a
month on a median-priced
home, says Jeff Lubar, director of
communications for the
Mortgage Insurance Companies
of America,Washington, D.C.
“A borrower has two options
to pay PMI,” Hardin says.“They
can pay a single premium up
front or pay a monthly amount
that is determined by their loan
type and their credit.”
While PMI does make the
monthly payment slightly more
expensive, it is often unfairly
criticized as a pricey, excessive
stipulation by greedy lenders,
say the experts.
“PMI permits first-time buyers
to get into a home much sooner
and with much less money out
of pocket,” says Lubar.“Indeed,
amidst the current downturn in
real estate values and home
sales, a loan with private mort-
gage insurance is the smart
choice for many home buyers
because it is the safe, affordable
and predictable way to buy a
home with a low down pay-
ment.”
“It often gets a bad rap,” adds
Hardin.“Without PMI, first-time
homebuyers would have to turn
to higher-rate, non-prime loans
Group, an insurance company in
Chesterfield, Mo.
THINK ABOUT MOVING IT YOURSELF
Some prefer to rent a truck,
pack everything and move them-
selves. Before you do, weigh the
costs and time, as a professional
may do the job more efficiently,
says Izsak.Advance preparation
helps, says Keith R. Pillow, a self-
mover who lives in Camarillo,
Calif.Another tip he offers:
Getting free boxes by visiting
local stores that have unloaded
their stock.
CHECK YOUR INSURANCE
Ask your insurance agent
whether your homeowner’s poli-
cy covers your possessions dur-
ing a move, and line up coverage
in advance for your new home. If
you’re temporarily moving to a
rental, get a renter’s policy that
covers your property – every-
thing from electronics to cloth-
ing to art, says Ernst.
UNPACK SLOWLY
Set up the kitchen and make
the beds the day you move in,
but you can slowly unpack other
for home purchasing, and we’ve
all seen the disastrous effects of
those most recently.”
What’s more, it’s important to
realize that PMI can be canceled
once the principal is reduced to
80 percent of the loan-to-value
ratio or when the property
reaches a loan-to-value ratio that
meets the lender’s requirements
for removal (often around 78
percent). In fact, nine out of 10
borrowers discontinue their PMI
within 60 months, Lubar adds.
Plus, just like mortgage inter-
est, PMI now is tax deductible.
Homeowners earning less than
$110,000 in adjusted gross
income can deduct, for the 2007
tax year, some or all of the PMI
premium payments – but only
on mortgages closed in 2007.
PMI can be avoided right
from the start, however, with
some careful strategizing.
“One option is to take out a
‘piggy-back’ loan, which is actu-
ally two separate mortgages,”
Turner says.“For example, if you
make a 5 percent down pay-
ment, you would get one mort-
gage for 80 percent and a sec-
ond for 15 percent, both of
which are small enough not to
require PMI.”
AD / SPONSORSHIP
furnishings, Jesch says.As you
unpack, keep a running list of
anything broken to make a claim
to the moving company or your
insurance carrier.
BE PATIENT
Eventually, your new house
will feel like home but probably
not right away, says Leslie Levine,
author of “Will This Place Ever
Feel Like Home? How long does
it take?” (Real Estate Education,
1998).“That’s the first question
everybody asks me,” she says.
“There’s no timetable. It may be
once you have a good friend or
serve your first meal to friends.”
LAST-MINUTE TO-DO’S
Call your service providers –
cable, gas, electric, phone compa-
ny, post office – ahead of time to
disconnect or move the service,
and arrange with a locksmith to
change locks at your new home,
prior to moving.
© CTW Features
In the past,“the blended inter-
est rate between the first and
second mortgage would end up
resulting in a combined payment
that might be slightly higher
than a normal high loan-to-value
first mortgage plus PMI,” says
Hardin.“But with the tax
deductibility of the mortgages,
this would result in a net benefit
to the borrower.”
“It may also be possible to
obtain a mortgage that is self-
insured,” says Turner,“but the
interest rate on it will be higher
than it otherwise would be.”
Above all else, says Headen,“a
borrower should never stretch
his or her finances to the limits
to purchase a home.They should
always try to live below their
means so that they can comfort-
ably afford to make their mort-
gage payments and have funds
available for savings and to pay
all their other living expenses.”
The bottom line, Hardin says,
“is that if a borrower is properly
qualified by the originator of the
mortgage, the borrower ends up
buying the appropriate house
for the appropriate payment.”
© CTW Features
Ask Our Broker
CONTINUED FROM PAGE 1
is paid for, so do I need insurance?
A:Yes.We usually think of homeowner’s insurance as
covering fire, theft and liability risks, and as something
required by mortgage lenders. In fact, you want insurance
– whether there’s a mortgage or not.
In the case of a vacant lot, you want liability coverage
since there is nothing to steal or break into. Liability cover-
age for vacant lots is available from insurance brokers and
typically is inexpensive because coverage is limited.
Q: My daughter and her new husband want to buy
a house. She has great credit and a good job that
she’s been at for seven years. His credit is less than
perfect. Should she try and buy a house in her name
only, or try with her husband with less than perfect
credit?
A: The first step for both your daughter and her hus-
band is to go to AnnualCreditReport.com.This is the Web
site where – under federal rules – consumers can order
one free credit report every 12 months from each of the
three major credit-reporting agencies – a total of three free
reports per year.
The reason to check credit reports is to see if any items
are out-of-date or factually incorrect. Such errors and inac-
curacies can lower credit scores, so it’s important to get
them fixed. If you find a problem, contact the agency
immediately.
If the credit reports seem accurate, then begin to speak
with lenders. Let them run a credit check for your daugh-
ter and her husband (they use merged reports from the
three major agencies) and then have them show how your
daughter and her husband can borrow money at the low-
est cost individually and together.
Q: Can a real estate broker represent both a buyer
and a seller?
A: In most jurisdictions, yes.This is typically done by hav-
ing the broker act as a disclosed dual agent, an arrange-
ment sometimes also called “designated agency.”
The existence of dual agency must be known and
approved in advance and in writing by both buyer and sell-
er. By having agreements in writing, the broker is protect-
ed against possible claims of undisclosed dual agency, a
violation of real estate regulations.
As an alternative, consider a buyer brokerage agreement,
if you are a purchaser. For specifics, speak with your bro-
ker.
© CTW Features
Need real estate advice? Peter G. Miller, author of “The
Common-Sense Mortgage,” would love to hear from you. Send
your questions to peter@ctwfeatures.com. Due to the volume
received, not all letters may be answered.