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Ask the Experts: Real Estate, Cyber Security, Homeowners Insurance

| Canyon Country Magazine | August 16, 2017

When is a good time to buy a home?

It’s the American dream to stop paying rent and own a home. Many people wait to buy real estate, but the truth is, you buy real estate and wait. There are many benefits of owning a home and, in the long run, it is the truest way to build stability and wealth for your future.

In many areas of Canyon Country, you can still buy a home with a payment equal to what you would pay for rent, yet get all the benefits. With mortgage rates at historic lows and with loans such as VA no money down and FHA 3.5% down available, now is the perfect time to buy a home.

Most of a home payment comes back to you over time. Let’s take the typical entry-level home in Canyon Country, which goes for around $450,000. If you put down 3.5 percent on an FHA loan you would only need $15,750 down and you can also receive that as a gift from family as well. The loan balance at current rates would be a payment of around $2,000 plus add property tax, home and mortgage insurance, and your total payment is around $2,690 a month, which is about what it would cost to rent currently.

Now let’s look at the additional benefits and savings:
Income tax benefits – By deducting loan interest and property tax on your income tax return you can save approximately $500 a month.
Principal reduction – On a 30-year loan approximately $600-$700 a month would go towards paying down the loan and building equity at the start.
Appreciation – Historically, homes have gone up an average of over 3.8 percent per year over the last 60 years. Over time, you could get back up to $1,425 monthly.
So, just by looking at only three of the benefits, you can see that your $2,690 monthly payment minus income tax benefits of $500, principal reduction of $700 and appreciation of $1,425, you would be getting back $2,625. That means your monthly home payment over time should only cost you $65.

Also, with inflation and current rents going up at 8 percent a year, you would save an additional $215 a month after the first year by paying a fixed rate mortgage instead of a rent increase. And with capital gains benefits you would pay no tax on the profits of up to $250k for a single person and $500k for a married couple. That means that if you sold the home in 30 years for $950,000 it would all be tax exempt.

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By putting down $15,750 to control a $450,000 home that is saving you $2,625 a month, or $31,500 a year, you get a return of 200 percent a year on your home investment, where you can also live. That is why a homeowner’s net worth is 36 times that of a renter, and 95 percent of people’s wealth usually comes from owning a home.

Many of my clients are renters and first-time buyers, and I work with several lenders that have these kinds of programs to help them get qualified.

Craig Martin / Realty ONE Group / 661-361-6843 paid advertorial

What tips do you have for password security?

Keep your passwords private — never share a password with anyone else. Do not write down your passwords on that little yellow “post-it note,” for instance, right there on your PC for everyone to see.
Use passwords of at least 16 characters or more (longer is better).

Use a combination of upper case letters, lower case letters, numbers and special characters (for example: !, @, &, %, +) in all passwords.

Avoid using the names of people or pets, or words found in the dictionary. It’s also best to avoid using key dates (birthdays, anniversaries, etc.).
Substituting look-alike characters for letters or numbers is no longer sufficient (for example, “Password” and “P@ssw0rd”). A strong password should look like a series of random characters.
If you have a desktop or laptop and your screen is full of application icons that require passwords, I suggest you use a reputable password management system. These types of password managers have helpful features to boost your security. First, they encrypt all your login information and other types of data that you might often hand over to a website, such as your address or credit card information. This allows you to not only keep your personal data secure, but organize the dizzying array of passwords that many of us have to manage. Second, many password managers generate unique, complicated passwords that are extremely difficult to crack. Through these two functions, password managers ensure that you have the strongest possible password, and do the hard task of “remembering” your passwords for you. Any password manager you use should, ideally, perform both of these security functions, which saves you time in having to create new passwords for each application.

Think Before You Click!
Tina Louise Penn
Cloud Technology Specialist
VoIP Certified Technician
888.871.6584 paid advertorial

Are all homeowners insurance policies the same?

No, they can be very different, and you want to be sure your insurance professional has access to the most comprehensive coverage available.

Homeowners will sometimes assume they only need “fire insurance,” which is actually “hazard insurance,” the minimum insurance you need to cover the mortgage. It doesn’t cover water damage, theft, vandalism, lightning, weight of snow, etc.

Homeowners insurance covers a lot more. In my 28 years of experience I’ve only lost maybe one home a year due to fire. But about 95 percent of my clients’ claims are for water damage. A good homeowners package covers everything you’d normally expect in your home, with the exception of flood and earthquake.

Water damage, which is separate from flood damage, includes such problems as damage from broken pipes within the house. Homeowners insurance doesn’t cover true flooding, which is what flood insurance covers. Flooding involves rising water from an outside source, such as rain coming down too fast, where storm drains can’t handle the volume.

A homeowners package policy, not just fire insurance, covers the estimated value to rebuild a house. Land is not included. Coverage A is your dwelling. Coverage B is separate structure, such as fences or a barn. Coverage C is personal property. Coverage D is loss of use, when you are not able to occupy your house due to a covered loss. Coverage E is liability, which includes someone getting hurt on your property. Coverage F is medical, for guests who hurt themselves where you aren’t necessarily liable for it.

If your agent says you only qualify for Covered California, it is only the bare minimum. Make sure the agent you choose represents a company offering a policy with the widest parameters possible. When these clients come to me, nine times out of 10 I’m able to place them with a more complete homeowners policy; it’s one of the advantages of representing several different companies.

Robb Nelson can be reached at 661-296-5123
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