In efforts of keeping roots planted, many homeowners eventually decide to renovate their current home to suit spatial needs. Whether the family needs an additional bedroom or simply more space, a home renovation and expansion can be a big project requiring the need for a specialized contractor who can perform and supervise the work properly.

However, with rampant nightmare stories of how homeowners received terrible workmanship or even uncompleted renovations, how do you get assurance from a contractor that the job will be completed – and completed properly? A little investment on your part in a surety bond can help assure that your home renovation gets completed as agreed contractually.

What is a Surety Bond?

Surety bonds were developed as early as Egyptian times to help protect the interests of landowners or property owners, as well as ensure that work on the land was completed as agreed. In today’s time, a contract performance surety bond fills the same role. A surety bond involves a neutral third party to help assure that contract work is completed as agreed and on budget.

A surety bond has three parties: the principal, who is the contractor performing the work; an obligee, who is the receiver of the work; and a surety who ensures all obligations are performed from all parties.

Where Do I Get a Surety Bond for My Renovation?

The surety bond is generally purchased through an insurance company. Insurance companies are in the business of underwriting and enforcing contractual obligations. They also are experts at risk assessment and risk avoidance. What better place to get help with such a potentially risky activity as home renovation than from a group that tries to avoid risk at all cost?

An insurance company can also help filter and screen contractors. They will assess the risk of each one as determined by past performance, financial resources, and access to the appropriate equipment. With this extra help in obtaining the best contractor, you can be more assured that the job will be performed by the best qualified contractor.

Though insurance companies often will provide surety bonds, they are not an insurance policy. An insurance policy transfers risk to the insurance company, who will pay an agreed amount in the case of unforeseen circumstances. A surety bond, however, is quite tangible. The outcome is known, predictable, and controllable. Some insurance companies will even offer surety bonds that provide the obligee with a penal sum, or prescribed dollar amount, if the contract is unfulfilled by the contractor.

State it in the Contract

Since a surety is there to see that all contractual obligations are met, it is best to get everything you want stated in your contract with the builder or contractor. Even a little time spent with your attorney to draw up a document with all your needs can be money well spent.

It is not always enough to state that you agree with a contractor to build an addition to your home. Be as specific as possible on the outcome. Do you want all work to exceed building codes? Do you want extra waterproofing to assure that the new addition will be leak-free? What type of construction materials do you want incorporated in the addition? The more specific you can be in the contract, the better your surety can serve you when they see that the contract is fulfilled.

Building an addition to your home is a big project. You can help protect your home investment and also help avoid disaster with a good surety bond from a reliable company. Also, visit the SBA surety site for more info.

FEMA has a National Flood Insurance Program so that if the home you purchase is determined to be in a flood area, you can get insurance to protect you. They warn that flood insurance is not usually covered by homeowner’s insurance. Most people would think that home owner’s insurance covers all natural disasters, but flood are not covered even though they are the leading natural disaster in the U.S.

Some more facts that you should know about flood hazards before you purchase a home are:

• According to FEMA, close to 25% of all the claims made in their flood insurance program are from areas that were considered a minimal flood risk. This is why it may be important to have flood insurance even if your risk of flooding is low.

• The FEMA flood insurance program has a 30 day grace period before insurance coverage goes into effect, so make sure and get coverage before you need it.

• According to FEMA, everyone lives in a flood zone. Water levels can rise and flood anywhere, it is just a questions of the risk of it happening to your property.

• The amount of risk is what is determined when looking at if you are in a flood zone or not. If you are considered to be in an official flood zone where your risk is high, then you will be required by your lender and the VA to carry flood insurance which is an added expense to you and your family.

• The VA requires a third party representative who is not personally invested in the property or parties involved to do the flood zone determination.

For more information on the FEMA flood insurance program, and to see how high risk your property is for flood damage go to FloodSmart.gov.

Even though you may qualify for a large loan that does not mean that you want to take that amount.  There are factors that mortgage lenders do not consider about your lifestyle and money choices that you need to think about when considering how much you want to pay into your monthly housing payment.  Here are some things you should always consider when taking out a mortgage loan:

•    How much can you really afford?  If you are approved for a $400,000 loan do you really want to purchase a $400,000 home?  Along with that large price tag comes large tax bills, maintenance, and depending on the area you are in, it may take a while for you to sell a high priced home in the case you choose to resell the house.
•    What type of lifestyle do you enjoy?  Many people are house poor because they allowed themselves to get carried away and take a large loan amount that they can barely afford.  Now they better like the home they purchased because they are not going to be going out much because they are spending all their extra money on their home.  If you enjoy eating out, vacationing, shopping, or other luxuries that are costly make sure you consider these expenses when you are budgeting how much you can afford for your monthly mortgage payment.
•    Do you have any expensive hobbies?  If you like to go boating, skiing, sky diving, or any other costly extra curricular activities you should consider these as expenses when you are tabulating how much of a mortgage payment you can afford.  The more pricey the hobbies you have are, the less money you should spend on your home unless you are willing to give them up.
•    How secure is your job, and do you work in a field where jobs are readily available?  If you are not sure about what your employment status will be in the future, you should consider taking out a mortgage that will be affordable even if you have to take a lower paying job.  This will also allow you to save up some rainy day money in case you are unemployed for any period of time.
•    How much do you need to save for the future?  Consider how much a month you would like to put away for savings, retirement, and other long term goals.  Figure your monthly budget without this money when you are considering how much to spend on your mortgage payment.
•    Do you have a large family or expect to start a family?  Children are extremely expensive at all ages.  Once you have children you may want to begin college funds, take out larger amounts on your life insurance policies, or other family related expenses that you may not have right now.  Consider future expenses when you are budgeting for your monthly mortgage payment.
•    Think of any future expenses.  Are you going to get insurance for your mortgage in case something happens to you like death or disability?  Are you planning to get a new car payment soon, and with that how much will your car insurance increase?  You should always keep in mind possible expenses in the future in order to really be prepared for your financial circumstances and know how much home you can afford.

For those of you who are currently renting and considering buying, but want to know what you are getting yourselves into here are some things to consider before you take the plunge and purchase a home:

•    Owning a home means you are responsible for all of the general maintenance for that home and the surrounding property.  You have to mow the grass, clean out the gutters, trim the hedges, remove any debris in your yard like tree limbs and leaves in the Fall, plow the snow out of the driveway, and more.
•    You are also responsible for the appliance maintenance or replacement in your home.  Appliances like your stove, refrigerator, dishwasher, furnace, hot water heater, water softener, and more.  If these items stop working or need replaced it can be a large unexpected cost to you.
•    Routine maintenance can also be extremely costly.  If you have a septic system it is suggested that you have it pumped out every two years, your water softener needs to be kept full of salt, the furnace filter needs routinely changed, and other regular costs that can add up to a lot of money in the long run.
•    Any large problem with the home, like roofing problems, plumbing problems, electrical problems, well problems, and sewage problems can be extremely expensive to fix or replace.
•    The upkeep of the home such as painting, landscaping, interior decorating, and remodeling can also be costly.
•    Property taxes are a necessary cost to any homeowner.  The cost of these taxes depends on the assessed value of your home and need to be paid on time twice a year or a lien could be put on your home for not paying these necessary taxes.
•    Home owners insurance is another necessary cost.  Your lender may also require you to have mortgage insurance which can be costly.

Some of the more positive aspects to owning your own home include:

•    It is a great investment.  You are putting a lot of money into your home when you pay your mortgage every month and it is money saved for you and your family as equity builds in the home.
•    You are not paying rent for someone else’s home.  The money you pay in rent goes towards paying your landlord’s mortgage which benefits his financial situation instead of yours.  When you purchase a house your mortgage payment goes towards your future wealth.
•    You can decorate the home the way you want.  Remodel it, paint it, change it in any way because it is yours.
•     Your mortgage interest is tax deductible.  At the end of the year you should get a statement from your lender with the amount of mortgage interest you paid that year which is a tax deduction and can save you money on your federal income taxes.
•    The security that comes with owning your own home.  If you rent you can be evicted if the landlord decides to sell the home, but if you own your own home you can settle in and feel secure in your location.

So when considering if you should purchase a home you should really look at your own personal lifestyle to help you make that decision.  If you are gone a lot and like the freedom to do what you want without a lot of responsibilities then you should consider continuing renting unless you can afford to pay someone to help with the upkeep the homeownership requires.  If you are a home body who likes to keep busy around the house then maybe purchasing a home is a great idea for you.  Think about what you value in the way of time and money and then make an informed decision that reflects your priorities and goals in life.

• Native American Housing & Homeownership Fair in Portland, Oregon
• Homeownership Community Party in Aiken, South Carolina
• Atlantic City Housing Authority Housing Symposium in Atlantic City, New Jersey
• Homebuyer Fair in Jonesboro, Arkansas
• Basic FHA Continuing Education Class in Las Vegas, Nevada
• Foreclosure Prevention Conference in Houston, Texas

Visit the HUD website to find events in your area!

A California-based mortgage firm has pioneered a program called the Home Ownership Accelerator. Financial experts at CMB Financial Services created a method of making principal payments that combines a traditional mortgage with the basic tenets of a checking account at your local bank.

Here’s a snapshot of how it works: Instead of writing a check for the mortgage each month, homeowners deposit their entire paychecks, as well as all other sources of income they receive, into their mortgage, completely bypassing a checking account. Those deposits eat away at the remaining principal on the mortgage, while interest is calculated at the end of each month based on the amount remaining on the loan.

Meanwhile, homeowners can access that mortgage throughout the month like any checking account, either by writing checks or using an ATM card. Withdrawals, of course, pull money back out of the principal payments made each week or month.

The loan pays off faster than a traditional mortgage because with a lower average balance, there is less interest charged and therefore more of the person’s income can stay in the mortgage in the form of principal, ” Doug Nesbit, a vice president with CMG, told The San Francisco Chronicle recently.

The company says the loan is “is ideally suited for homeowners with a stable salary, good credit and financial discipline.” In other words, it’s geared more toward people who can afford to sink their salaries into this type of fund. Those living more paycheck to paycheck should probably look elsewhere.

Mortgage Loan Place is here to help you make sense of the mortgage world and find options that fit your needs and lifestyle.

In order to get a great deal on a home equity loan you should consider where you are going to get your loan, for how much, and for how long you want to take to pay back the loan.  Consider these facts:

• Home equity loans are better than refinancing your current mortgage if rates are higher now.  As long as your first mortgage has a better interest rate than the current loan rates you will save money by taking ut a home equity loan rather than refinancing.

• How much money do you need?  The less the better because then you will have a lower monthly payment and you will not overextend your finances.  You will also get a better deal and lower interest rate if you don’t take too much of the equity out of your home so that the fees are lower for the loan and the lender does not consider you high risk because you are leaving some value in your home.
• You can take home equity loans for different terms.  Do you want to pay back the loan quickly over 3-5 years or longer over 10 years?  The less time you take the loan for the lower interest rate you will get, but the monthly payments will be higher.  If you can afford the larger monthly payments you will usually get a better deal if you take the second mortgage for a shorter amount of time.
• The more you shop for your home equity loan the more you can save.  Look at may different lenders and compare the offers they give you.  Then choose the best deal that will save you the most money.

For whatever reason you need a home equity loan consider what you need in order to save yourself money and get the best deal possible.

Many homeowners who purchased their homes with FHA aid believe that the required appraisal constitutes some sort of warranty as to the value or condition of the appraised property.  The truth is that if a borrower discovers some sort of defect with their FHA mortgage loan property, the FHA will do nothing to repair it.  It is the borrower’s responsibility to order a home inspection to find out if the property has any major defects or is in bad condition.  Just remember – the FHA is indeed a mortgage insurer, but this fact does not protect you from problems in the house.

FHA mortgage loans aren’t for everybody.  Though the standards of obtaining an FHA mortgage are lower than mortgages in the prime market, there are still requirements.  For one, an individual taking out an FHA mortgage must be able to put down 3% of the loan in cash.  Furthermore, the borrower’s credit rating can be blemished and imperfect, but the borrower cannot have had a foreclosure in the last 3 years.  As for loan limits, the FHA rates vary widely around the United States, so it’s best to check with your local lenders.  Some have claimed that the low FHA loan limits have caused their decline in the last decade, as the FHA loan limits are lower than traditional Freddie Mac or Fannie Mae loans.

If you can afford to make a 3% down payment in cash, and fit the rest of the requirements, then there is only one more thing to consider: would another type of mortgage suit your needs better?  The decline of FHA loans have been partially blamed on option adjustable rate mortgages and interest-only mortgages.  Check out all of your options in order to decide what would work best for you.  The FHA does do a credit check, obviously, so be prepared to deal with this process when applying for an FHA mortgage loan.

In order to use a monthly mortgage calculator there are some important things to know including:

- You will need to have some general information to put into the mortgage calculator like your interest rate, the amount of the loan, what type of interest rate it is, and the length of time you are planning to borrow the money for. For instance, if I am wondering what my monthly mortgage payment would be if I borrowed $150,000 to purchase a home at an interest rate of 6% for a term of 30 years with a fixed rate, I would input this information into the mortgage calculator and it would tell me my monthly mortgage payment amount would be $899.33 per month.

- The monthly payment you get from your mortgage calculator does not include your property taxes and home owners insurance. Your mortgage lender may require you to have an escrow account. An escrow account is a separate account from your mortgage loan where you pay extra money every month with your mortgage payment and that extra money is put into the escrow account in order to pay the property taxes and home owners insurance. The lender does this to ensure that the home is safeguarded from damage and any federal liens that may result from not paying these necessary home expenses.

- You can use a monthly mortgage calculator to get on a budget. If you know the interest rate you are going to qualify for with your lender, then you can put in many different house price amounts and figure out for yourself how much you are willing to pay for a home in order for it to fit into your budget. If you know that you like to spend a lot of money traveling, or on an expensive hobby, then you can purchase a home for a lower value than the lender approved you for so that you have more money left over every month for yourself.

- You can use the monthly mortgage calculator to save you money on your mortgage. If your lender offers you a choice of various loan types you can input the information into a mortgage calculator in order to see what the best deal is. For instance, if you are taking out a $100,000 mortgage and your lender has offered you a choice between borrowing the money with a 6% interest rate or borrowing with a 5% interest rate by paying 3 points now (a point is worth 1% of the loan value), then with the 6% loan according to a mortgage calculator you will end up paying $599.55 a month with a total of $215,838 paid for the loan over 30 years, and with paying 3 points now and getting a 5% interest rate you will have to pay $3,000 up front, but your payments would be $536.82 per month with a total of $193,255.20 paid for the loan over 30 years. By taking the deal with the 5% interest rate you would save a total of $19,582.80 over 30 years.

When you are shopping for a mortgage you should use a mortgage calculator to figure out your monthly payments in order to budget your income and expenses, but also use the calculator to get the best deal on your loan possible.