How to Insure Your Home

Homeowners insurance protects your home, its contents, and, indirectly, your other assets in the event of fires, theft, accidents or other disasters.

A standard homeowner’s policy will protect you from things like fires and fallen trees. Notice how we didn’t mention floods, windstorms or earthquakes—those events are specifically not covered by a standard policy and require additional coverage. Homeowners in some areas of the country may be required by their mortgage company to carry these kinds of policies.

A standard policy will also protect your possessions from said disasters as well as theft. But a standard policy is not a blank check: there’s a limit to how much you’ll be compensated. If you have specific items of value, such as jewelry or artwork, you can pay a little extra each year to insure them for their full replacement value.

Now, if someone is on your property and slips and falls and sprains his ankle, he might sue you for his medical expenses. Homeowners insurance covers your liabilities in this situation as well. And like the examples mentioned above, you can pay more for extra coverage. Homeowners insurance isn’t required by law, like auto insurance. But mortgage companies usually require you to obtain a policy before they’ll give you a loan.

Your home-insurance policy should cover enough to entirely rebuild and furnish your home were it wiped off the map. Ask a home builder to walk through your home and give you an estimate of what it would take to rebuild; that figure should be the basis for how much replacement coverage you’ll need. Be sure to point out any unique and/or expensive details that would add to the replacement cost.

Once you’ve determined the replacement cost of your home, you’ll need to know what kind of coverage you want. There are a few key terms here:

• Guaranteed Replacement Cost Coverage– This means that the insurer will pay for the rebuilding of your home no matter the cost. These policies are hard to find these days.
• Extended Replacement Coverage– Many insurers offer coverage that caps the payout at around 125% of your home’s insured value.
• Inflation Guarantee – This feature makes sure that your home’s appraised value stays current with the marketplace.

If you get a reliable appraisal, extended replacement coverage and an inflation guarantee, you should be in good shape. The appraisal provides a realistic starting figure and the inflation guarantee makes sure that your home’s price stays current. The 125% coverage means that, even if construction prices outpace inflation, they probably didn’t outpace it by 25%, so you should have enough money for whatever work you need done.

One last thing: The law requires you to have flood insurance if you live in an officially recognized high-risk area. To find out your flood risk and to find plans (which are offered by the government), go to [1] floodsmart.gov.

When it comes to protecting your possessions, you may want more coverage than your standard policy allows. If you have anything of exceptional value (a family heirloom, a piece of art, jewelry, etc.), you should insure it separately. Insurers will charge extra for this coverage (something like an extra $10 on your monthly premium per $1,000 of value insured), but it pays to be covered.

Also keep in mind that there are two different kinds of coverage when it comes to personal articles. There’s “actual cash value” and there’s “replacement cost.” You want coverage for replacement cost. Actual Cash Value Insurance is what you’d get if you sold your valuable today — a lower amount than what you initially paid. Replacement Cost Insurance pays you the amount of money you’d need to buy a brand-new item to replace your old one.-

For more information, contact us at www.contractorscapital.com or call at
763-784-3400.

Spring Maintenance on Your Home

Follow the maintenance tips below to keep your home running smoothly!

Check and clean your gutters and downspouts
Check your basement or crawl space for leakage
Change your furnace and A/C filter
Adjust your thermostat for seasonal temperature changes
Check and repair any window screen damage
Check ground settling after the spring thaw
Adjust humidifier for seasonal temperature change
Open valve to outside hose connection
Turn on sprinkler system to check for leaks
Trim shrubs that weren’t trimmed in fall

Got a leak? Windows old? Build a new home! Give us a call - we can help! 763-784-3400 or visit our website at www.contractorscapital.com

Mortgage and Construction Loans

Avoid the "bait and switch". The mortgage lending business is notorious for baiting and switching, which is when a loan officer or advertisement offers you one thing and then tries to sells you something else. Remember that if it sounds too good to be true, it probably is. Make sure you always get your quote in writing.

Typical signs of baiting and switching are obvious, some basic examples are:
o Over the phone, you are offered a much lower rate than any other quote and once you've sent in your application the rate you were quoted has all of a sudden vanished.
o You are offered a construction loan with no points and no loan fees. What you are not told is that you are paying for it with a higher interest rate and the costs are built into the loan.
o You are told that you will not have any payments while you're building. What you're not told is that construction loans often have an option of "interest reserves" and the payments are added to the loan amount.

For upfront information on a mortgage loan or a construction loan, give us a call at 763-784-3400 or visit our website at www.contractorscapital.com.

American Dream?

When will the nation’s property values begin to appreciate again? This is the $1MM question that real estate professionals, investors, and mortgage professionals would like to know. The truth is nobody can accurately predict the return of the real estate market. Like everyone else, we can’t predict the end of this crisis either, but what we can do is tell you what will have to happen to facilitate that change. The answer is quite simple: America must reinvest in herself once again.

Think back, or read a history book, about how families in the ’40s and ’50s used to buy homes. Young couples lived with Mom and Dad during the “courtship” prior to getting married, until they had saved 20% to put down on their “dream home”. They made an investment in America, (i.e. the American dream). In the years that followed we have devalued that investment in lieu of credit and the easy access to it. Property values rose artificially and our nation became addicted to credit.

The value of the dollar has been demolished due to the same principle. When we place value in assets based on their ability to be easily bought and sold versus the value that has been invested in the asset, we devalue its worth. For example, two years ago I could have bought an $600,000 house (and I assure you that I cannot afford a house that expensive). The owner of that asset (the $600k house) placed value on his asset based on the availability of buyers like me who could buy the home. The problem is, this homeowner probably had less than 5% invested in the home. Where do you think that homeowner is today?

Had he put 20% down on his home, he would then own a valuable asset in which he has a real investment. This outlay of cash forces him to buy and sell his home in the same manner he would move an $800k investment around in the stock market – very carefully. Thus, the home has REAL value. However, having bought the home with little or no money down, the asset became disposable and so follows the real estate market.

So, as I said earlier, I cannot predict when the real estate market will bounce back, but I can tell you what needs to happen before it does. America needs to reinvest in herself by getting back to solid buying and selling principles. This strengthens home values, which encourages investors who employ builders who employ carpenters, painters, real estate agents, loan officers and so on. America was built on the “American Dream”.

Call us if we can help you with your "American Dream" at 763-784-3400 or visit our website at www.contractorscapital.com.

Reminder - Take Advantage of the Tax Credit

If you’ve been thinking about buying a home, and weren’t eligible for the first-time home buyer tax credit, here’s some good news: the housing tax credit has been expanded and extended.

President Obama signed into law the Worker, Homeownership, and Business Assistance Act of 2009, which enables many more Americans to take advantage of new government incentives to buy a home. In fact, the National Association of Home Builders (NAHB) estimates that close to 70 percent of all potential home buyers should now qualify for some form of the housing tax credit.

Congress has extended the time limit for the first-time home buyer tax credit, added repeat buyers and increased the income limits! Home buyers that didn’t qualify before may be eligible now, providing a great opportunity to market to higher-income or move-up buyers. Use these print ads, flyers, Web banners and other resources to let consumers know that buying a new home right now is the opportunity of a lifetime. NAHB’s consumer Web site will answer detailed questions: www.federalhousingtaxcredit.com or give us a call at 763-784-3400 or visit out website at www.contractorscapital.com to see how we can help you find a home. We have bank owned properties in excellent repair! Give us a call.

Some Reasons Why You Need Title Insurance

There are many things that can come up in the time you own your property that cause title defects of one type or another. Lenders will require title insurance to make certain they are covered and owners should look into insurance and make certain they know what they are purchasing insurance for, or if they decide to forgo it, what they might be relinquishing as far as coverage. Some examples of title issues are:


Any forgery of documents in the chain of title

Any document signed by a person under age at the time of signing or signed by an insane person

The testator of a will might have had a child born after the execution of the will, a fact that would entitle the child to claim his or her share of the property.

Any document signed by a power of attorney and the power of attorney expired

An heir or other person presumed dead may appear and recover the property or an interest in the property

Title insurance covers attorneys’ fees and court costs

By having insurance, it simplifies the sale process

Title insurance reimburses you for the amount of your covered losses.

Each title insurance policy is paid in full with a one time premium for as long as you or your heirs own the property

Recording errors are covered under the policy

Marital status and validity of divorces come up frequently. Title insurance protects against claims made by non-existent or divorced "wives" or "husbands."

Over the last 24 years, claims have risen dramatically.

These are just a few of possible scenarios that title insurance would cover. When you intend to buy a property, carefully research the advantages and disadvantages of purchasing title insurance. It is probably the cheapest insurance you will buy. If you have questions about purchasing your property from us, please call one of our loan officers at 763-784-3400 or visit our website at www.contractorscapital.com.

Today's Mortgage Rates

Deciding to be a homeowner is one of the most important decisions you will make. So, having all of the facts in front of you is very important. We at Contractors Capital are ready to answer any questions that you may have and help you in your decision making process.

We are lending and open for business.

Act now, while the interest rates are still at an all-time low.

Loan Program
30 Year Fixed ~ 5.06%
15 Year Fixed ~ 4.49%
1 Year ARM ~ 3.79%
30 Year Fixed Jumbo ~ 5.88%
5/1 ARM ~ 4.10%
3/1 ARM ~ 4.68%

Please call on us at 763-784-3400 for assistance or visit our website at www.contractorscapital.com.