Realizing the American Dream

ProtectingYourInvestment

Agenda

• Getting to know your home

• Assuring home safety

• Saving energy and money

• Preventive maintenance and minor repairs

• Remodeling and major repairs

• Investing in your neighborhood

Agenda (Cont’d)

• Asset building

• Keeping records

• Taxes and insurance

• Protecting your equity

• Prepaying your mortgage

• Coping with hardship

Why Protect Your Home

• Three-way Investment1) shelter for your household

2) life and heart for your community

3) financial asset for your future

Things You Need to Know

• Main cutoff valves for water and gas• Main electrical switch• Marked fuse or circuit breakers• Hot water heater thermostat

Questions for the Seller

• What is the history of the home?

• Are there wiring diagrams or blueprints?

• Are any appliances or repairs under warranty?

• When is trash day? Who picks it up?

• Who provides water and sewer?

• What other services are available?

More Questions• Who is the fuel oil supplier?

• How to use energy-efficient systems

• What seasonal maintenance has been done?

• Who has worked on the house?

• How much do the utilities and services cost?

• Is there extra (matching) paint available?

Building a Healthy Environment

• Eliminate smoking from home• Check smoke and carbon monoxide alarms• Avoid accumulation of moisture and chemical

pollutants indoors• Vacuum weekly and reduce clutter• Increase air flow in the home • Reduce use of pesticides• Do not run car in attached garage

More Ways to Healthy Environment

• Do not heat home with unvented heater• Address water leaks ASAP• Use cleaners and pesticides in well-ventilated

area• Look for natural alternatives to household

products• Keep food and trash in sealed containers

First Priorities on Move-In

• Post emergency numbers• Have a fire safety inspection • Install smoke and carbon monoxide alarms • Place fire extinguishers on each floor• Plan fire escape route• Stock first-aid kit (out of children’s reach)

Keep Safe and Secure!• Change all locks on doors & windows

• Lock doors and windows when you go out

• Trim shrubs that hide windows and doors

• Install outside lighting

• Put up “beware of dog” sign

• Stop mail and newspaper

when you go away

Energy-Saving Tips

• Turn lights off when you leave a room

• Don’t let water run during chores

• Plan meals to cook more than one item at a time

• Don’t use appliances during the heat of the day

• Close windows when the heat or AC is on

• Close the refrigerator door completely

• Dress appropriately for the season

• Adjust the thermostat to the season

Energy-Savings Tips for the Home

• Add attic insulation• Change to low-flow faucets, shower heads

and toilets

• Service furnace and change filter regularly

• Caulk around doors and windows

• Install storm windows and doors

More Energy-Savings Tips

• Set water heater low and cover with blanket

• Install attic fans or vents

• Buy energy-efficient appliances with Energy Star® logo

• Install ceiling fans

• Monitor your heating and cooling systems

The Cost of Replacement

• High-efficiency forced air furnace

$2,500 - $5,000 • 50-gallon electric hot water heater

$400 - $600 • Roof for an average, 3-bedroom ranch house

$10,000 - $15,000

Do-it-Yourself Repairs

Resources:

– Books

– Videos

– Classes• Community Center

• Lowe’s, Home Depot

Basic Tools

• Screwdrivers

• Claw hammer

• Pliers

• Adjustable wrench

• Hand saw

• Assorted nails, screws, etc.

More Basic Tools

• Tape measure

• Flashlight with batteries

• Putty knife

• Utility knife

• Caulking gun

Still More Basic Tools

• Plunger

• Handheld power drill

• Carpenter’s level

• Ladders

• Sandpaper

Most Common Problems

• Clogged toilet, sink, tub or shower• Running toilet• Tripped circuit breaker• Tripped GFCI outlet• Malfunctioning heating/cooling system

Questions to Ask Before You Remodel or Repair

Do you need to hire a contractor?

Will the job add value to your house?

How much can you afford to spend?

Adding Value with Improvements

$80,000 $100,000

$20,000

Your home’s value

Highest priced homes

Money for improvements

Improvements that Usually Add Value

• Adding another bathroom

• Modernizing a kitchen

• Creating more closet and storage space

• Building a garage

• Adding a deck, patio, screened porch and skylights (if they’re common in your area)

Planning Your Project

• Think about the finished product

• Consider your budget

• Make sketches

• Do research on local permits and codes

• Think about timing and weather

Working with Contractors

• Decide which type of contractor you need

• Interview at least three contractors

• Get references

• Visit at least one completed job

• Ask how long the contractor has been in business

More to Know About Contractors

• Check out the contractor’s reputation

• Check the contractor’s insurance

• Ask about guarantees

• Get firm, line item bids

• Get contract specifics

Managing Your Contractor

• Control costs by controlling changes

• Agree on payment up front

• Don’t make the final payment until the job is done

• Specify responsibility for permits

• Get a lien waiver on larger jobs

Know Your Community• Meet your neighbors

• Read community newspapers

• Contact Welcome Wagon

• Visit city or town hall

• Join a service or professional club

• Volunteer for special events

• Attend neighborhood association meetings

Asset Building

• Manage your money• Mortgage payments• Utilities• Maintenance & repairs• Reserves

• Develop a savings plan• Beware of the credit trap

Keeping Records

• Design a system for filing records in fire-safe box

• Collect important papers from the sale, making copies if kept in the home

• Keep copies of homeowners insurance policy, service contracts, owner’s manuals, warranties, and model numbers

• Take photos of home’s exterior and interior• Make list of documents in file

Income Tax Deductions

• Mortgage interest

• Mortgage insurance (years ‘08, ‘09, ‘10)

• Points

• Moving expenses (sometimes)

• Property taxes

• Capital Gains exemption on sale of home

Filing a Homeowners Insurance Claim

• Report burglaries to police

• Call your agent immediately

• Make temporary repairs

• Provide data to your insurance company

• Keep receipts for additional living expenses

• Re-read your insurance policy

• Get a claim identification number

Other Insurance

• Mortgage Insurance (required by lender with less

than 20% down payment)

• Life insurance

• Term insurance

• Whole life insurance

When There’s Equity, There are Options

Refinance your home

Get a home equity loan

Get a reverse mortgage

Common Reasons for Refinancing Your Home

• Save money by lowering your interest rate

• Convert to another type of mortgage

• Build up equity faster

• Convert some equity to cash

• Hope for Homeowners as refinancing option

Warning: You Pay a Price With a Predatory Lender

• High-pressure sales tactics and steering

• High interest rates and fees

• Balloon payments and negative amortization

• “Packing” and padding costs and fees

Predatory Lending Practices

• Flipping

• Locking in borrowers

• Equity stripping

• Deceptive practices and fraud

Protect Yourself from Predatory Lenders

• Shop around• Don’t sign incomplete documents or anything

you do not understand• Work with a homeownership or credit

counselor• Use your right to cancel (three-day right of

rescission for refinance)

What to Do If …

• Cannot meet your financial responsibility• Are in danger of foreclosure

COMMUNICATE WITH YOUR LENDER AS SOON AS TROUBLE STARTS!!

Call national foreclosure prevention hotline: 888-995-HOPE

Loan Workout Programs

• Payment plan

• Forbearance

• Loan modification

• Partial claim

Moving On

• Pre-foreclosure sale

• Deed in lieu of foreclosure

Delinquency Counseling:There’s Help for You

• Nonprofit agency that helped you buy

• HUD: (800) CALL FHA or hud@custhelp.com

• Your mortgage insurance company

• National foreclosure prevention hotline: 1-888-995-HOPE

• Local VA office for a VA loan

Make the Most ofDelinquency Counseling

• Be honest

• Be cooperative about gathering

information

• Be willing to make sacrifices and changes

Summary

• How to keep your home and family safe

• How to save money by conserving energy

• The importance of preventive maintenance

• Asset building with timely payments and value-adding improvements

Summary (Cont’d)

• The importance of becoming involved in your community

• When it makes sense to consider refinancing

• How to cope when disaster strikes

Your Best Resource

For more information, contact:NeighborWorks® America1325 G St., NW, Suite 800

Washington, DC 20005

Call 202.220.2300 or 800.438.5547 orvisit www.nw.org