General

Another Potential Fire

Why do home inspectors enter attics?  There are many things for the inspector to check in the attic including ventilation, insulation, wiring, plumbing pipes, termination of bathroom vent fans, moisture levels and the picture shown below.

 

 

 

When is it time to refinance your home mortgage? or, Are the Mortgage Rates Ripe for a Refinance?

Are the mortgage interest rates near historical lows? Could today’s rates be close the lowest that any of us have ever seen? Guess what, they are. What can this mean for those of us who are worried about the economy and our own financial future? There is an opportunity for home owners and investors to save money on their mortgages. This is also an opportunity to save money on a mortgage for a new purchase. Did you know that a 1% change in rate can increase (or decrease if the rates go up) your purchasing power by 10%.

So what about a refinance? When is it time to refinance? There is the old tale of needing a 1% reduction in rate for a refinance to make sense. Could this be true? NOT! Sorry, I learned that from my kids.

There are many things that can make a refinance good or bad. The key factor is the “Recapture Period”. How long will it take to recapture the cost of the refinance through the “savings in interest rate”? This quote is very important. A sales person has the capacity to make a bad refinance look like a good one. If you look only at the reduction in monthly payment you not be getting the whole story. The re-amortization of a mortgage could save you hundreds of dollars in cash flow but not really save you any money through true savings on the new rate. Mortgages are re-amortized when they are refinanced. This means that if you are 8 years into a 30 year fixed rate the payment could be reduced significantly by the addition of another 8 years of payments without having any significant savings in interest rate.

So how can you really know if you are getting the good deal on a refinance? Can you really trust your salesperson loan officer? That is a hard question to answer. If you know the right questions to ask you will be able to find out exactly how much you are going to save on your refinance. I’ll bet you are thinking “Sure buddy, what are the questions?”. Here we go.

1. What is the recapture period of this refinance? This tells you how long it will take to recoup the upfront costs of the loan through the interest savings, not the savings in cash flow from a lower payment. This is important even if you roll all of the costs into the loan. When rolled into the loan they are still real and it is money spent. There are times when a lower payment is sufficient reason to refinance.

2. Always ask what the recapture period is with points and no points. When paying points the industry standard is 2.0%. Please remember that Origination fee, Points and Discount are all the same thing. They are fees that the borrowers pay to get a lower interest rate.

3. What is the benefit to you if you do pay points? Does it increase or decrease your recapture period? Does the payment of points put you into a higher loan to value that could increase your interest rate or mortgage insurance?

4. How long do you think you will be in the house? If you are not sure about how long you want to stay you could be throwing thousands of dollars away. I would recommend that you have a plan to stay in the home several years beyond the recapture period.

5. If everything looks good at this point it is time to look at future financial needs. A refinance is a great time to get some cheap money for projects, new vehicles or possibly a rebuild of an older vehicle. I have even seen people us this opportunity to pull some cash to max out their retirement accounts for the year. I call this forced savings as you will now have to make payments on this money that you “Saved”.

This is all great information if used. Going back to the beginning of this blog, remember the interest rates are great right now. If you are not sure where to start try your Realtor. Realtors rely on reputable lenders to help them get buyers into houses. These same lenders can help you evaluate your refinance potential. Most lenders can tell you if you are in a good position to refinance with a simple 5 minute phone call. I hope that you found this information helpful . If this saves one person from getting a bad deal I will be happy. Sincerely, Jack DeCook Sr. Home Mortgage Consultant. Please feel free to give me a call for a free recapture analysis.

“An opportunity is never lost, it is simply found by someone else” Benjamin Franklin

Fire Waiting to Happen

This post is about solid fuel burning appliances and potential chimney fires.  Solid fuel appliances are usually wood burning fireplaces or stoves, including inserts.  The chimney serving these appliances should be cleaned every year.  The picture below shows a chimney with major creosote buildup.  The very next fire in the stove could be the one to set off a chimney fire; and chimney fires often burn houses down!

 

 

Composition Siding: LP and others

There has been a lot of controversy regarding composition wood fiber siding. Many brands of this type of siding by different manufacturers are known to deteriorate and/or fail prematurely due to moisture penetration. Failure is typically visible in the form of swelling, cracking and delamination, especially at the bottom edges. Class action lawsuits have been filed or are being filed against most manufacturers of this material. 

 

The following photos show siding in the early stages of this deterioration.  These can all be treated with the “Permanizer Plus” product.  The important thing to note if you happen to won a house with this type siding is that regular maintenance is absolutely necessary.  If you are buying a house with this siding, be sure that your inspector looks long and hard at the condition.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following photo shows LP siding inentification.  You have to look closely.  The knot in the pattern shows an L and  P in the creases.

 

 

 

 

 

 

 

 

 

Pittsburgh Paints, PRIMERS -THE FOUNDATION FOR A TOP QUALITY JOB
Failing LP Siding Help Page

Thanks for reading.

David Helm, Bellingham home inspector

http://www.helmhomeinspections.com  

No Support!

I have done a few blogs on this site about various things that are found on home inspections.  This one is structural.  We inspectors spend a lot of time in crawl spaces, looking at many things.  One common one is caused by plumbers and HVAC technicians.  This isn’t to badmouth them.  They have their job to do and may not know about how structures are supported.

 

 

 

Crawl Space Ventilation

The purpose of crawl space ventilation is to keep the moisture/humidity level in the space at as low a level as possible.  This is important because wood destroying organisms thrive in moist environments.  Anobiid beetles (most common and most destructive wood eating insect in Western Washington) for instance, thrive in a wood moisture level as low as 13%.  An unventilated, or inadequately ventilated crawl space is apt to have high moisture levels.  Most newer homes are provided with adequate ventilation through building codes.  Homeowners often defeat this ventilation by installing foam block inserts, thinking they are protecting water pipes.  The proper way to protect water pipes is with pipe insulation.  Closing off foundation vents does not allow moisture to leave.  Older homes often have inadequate ventilation. Standard building practices require one square foot of vent area for every 150 square feet of crawl space.  Vents should be evenly distributed and within a few feet of corners to promote air circulation. One example of inadequate ventilation is the louvered vent cover shown below.

This type of vent actually has only half the vent surface area that it appears to have.  This restricts air flow.  A better solution would be to replace the louvered vent screen with 1/4 inch mesh galvanized hardware cloth.  This would give full ventilation surface area.  I always advise my clients to do this.  To sum up; keep vents open.  The only time, in this county, to block vents is when we are having a serious northeaster with the temperature and wind chill down around O degrees fahrenheit, and only for the duration of the northeaster. 

As always, thanks for reading.

David Helm, Bellingham home inspector

http://www.helmhomeinspections.com

Pest Inspection: What is it and what does it cover?

Back in the early days of home inspections all that was done was called a pest inspection.  These days, a home inspection is much more comprehensive, covering grounds, structure, roof, crawl space/basement, all systems and of course, pests.  The term for pests is Wood Destroying Organisms (WDO).  This is a state mandated term that covers very specific things.  A WDO inspection searches for evidence of all the state recognized WDO (see my earlier post on WDO) and conditions that are conducive to WDOs.  What are conducive conditions?  They are things like plumbing leaks, inadequate ventilation, restricted or non functioning gutters, vegetation touching siding, earth to wood contact, failed or missing caulk or grout in water splash areas and conducive debris (cellulose based or storage that restricts air flow) in the substructure.  These are all important issues and generally represent at least 50% of issues found in home inspections.  In order to report on these issues, according to current Washington law, an inspector must be licensed as a Structural Pest Inspector by the Washington State Department of Agriculture.

As always, thanks for reading this.

David Helm, Bellingham home inspector

http://www.helmhomeinspections.com

Insurance 101- The Learning Curve Series: What Factors Make Up My Insurance Pricing?

There are many Factors the go into the Pricing of an Insurance Policy. Some of these are age of the home, location to fire protection, condition of the structure, presence of hazards, Insurance Scoring which may include credit, prior claim history, and building materials.

Many companies give great discounts for having protection such as smoke alarms, deadbolt locks, and fire extinguishers. Also discounts for having both the Home and the Auto Insurance with the same company.

For more information contact an Insurance Agent.

Insurance 101- The Learning Curve Series: Insurance Binders

What is a binder and why do I need one? When you are buying a piece of Real Estate you typically leverage your purchase and put some of your money as a down payment and secure the balance with a Mortgage. The lender wants to make sure you that you are a good risk and that the property  is protected in the event of a loss so they don’t lose the money they loaned you. This is their investment in your property.

The lender then requires you purchase Insurance naming them as a loss payable on the policy. The Insurance Agency then applies for a policy and issues a Binder (coverage) and sends it to the lender. The Insurance Company then reviews, inspects, and evaluates the application and if acceptable issues the policy.

It is important to get this part of the process handled before going into closing the transaction (No Binder no Loan).

Insurance 101-The Learning Curve Series: Renters Insurance

Why this topic on a Real Estate Web Page? It is important to know that either while waiting to purchase a home or if you sell your home and you are in flux to get another home you still have insurance needs.

A Renters Insurance policy is a Contents and Liability policy that provides Valuable protection. Look up Home Insurance in this series and think about Renters Insurance as a Home Insurance policy without the home.

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