What you need to know about your home warranty

The first thing you need to know about home warranties is that they are neither insurance nor warranties. They are, in reality, service contracts.

They were created to provide financial protection for homeowners faced with the failure of major mechanical systems, such as the home’s heating and air conditioning. Home warranties provide, most of all, peace of mind.

What does a home warranty cover?

Home warranty companies offer a variety of plans and typically the more you pay, the more your plan covers. Most of the basic warranties – first-tier and second-tier plans – cover the following:

  • HVAC System – heating, ventilation, and air conditioning system components such as heat pumps and ductwork.
  • Plumbing – all of the home’s interior plumbing systems components such as pipes, drains, and faucets. Some home warranty plans cover outdoor plumbing as well, such as the sprinkler system. Some companies offer a separate policy for hot tubs and pools.
  • Electrical system – wiring, doorbells, electrical panels, and other electrical system components are covered under either Tier 1 or Tier 2 plans.
  • Major appliances – the basic plan typically covers the range, refrigerator, garbage disposer, washer, dryer, and water heater.



Ah, those nasty “exclusions.” Just like your health and homeowners insurance even a home warranty contains them. Not everything in the home is covered under a home warranty. Like inclusions, exclusions vary, depending on the company. The following are some common home warranty exclusions:

  • Normal wear and tear
  • Problems that arise from deferred maintenance
  • Insect or vermin damage
  • Damage caused by the homeowner
  • Structural problems (leaky roof, cracks in walls)
  • Acts of God (earthquake, flood, etc.)

Optional coverage, at additional cost, is usually offered for:

  • Well pump
  • Septic system (if you have one, this is highly recommended)
  • Spa
  • Pool
  • Central vacuum system

How much does a home warranty cost?

Since the price of a plan varies for several reasons, and it also depends on whether the buyer pays an annual lump sum or makes monthly payments, there’s no single answer to this question.

When paying a lump sum, the average starting cost for a basic plan is $413.89 per year. On the high end of the price range, comprehensive coverage averages $799.82 per year.

“A home warranty will typically cost a homeowner between $264 to $1,425 per year, with a national average cost of $600,” claims  Meghan Wentland and Evelyn Auer at BobVila.com.

Here’s how the home warranty typically works

In the event of a mechanical failure or appliance problem, you will place a call to the home warranty provider’s service department who will then send out a service technician of their choosing.

The technician then bills the home warranty company directly, but you will be required to pay a service fee (think of this as akin to a health insurance co-pay) each time a repair person comes to the home.

The nationwide average service fee price range is $55 to $150, according to Wentland and Auer.

Many home warranties not only cover repair but replacement of appliances as well, meaning that if it can’t be repaired they will install a new one.

Are home warranties worth their cost?

This is a hotly debated topic among real estate agents. Some say they aren’t worth the paper they are written on.

Many more say that because of the peace of mind they offer new homeowners, they are absolutely worth the purchase.

Especially during the first year you are in your new home, when you may be strapped for cash, a home warranty may be well worth the price of it. When a major system in the home malfunctions, the price to repair or replace can devastate your savings. A home warranty offers both peace of mind and financial security.

Check out the plumbing before you put in an offer on that home

Snooping around a home’s plumbing is not one of the more glamorous parts of buying a home. Yet far too many homebuyers ignore this aspect.

Common problems include leaks, water heater problems, and lead pipes and they can cost a small fortune to remedy.

You don’t necessarily need to put on your coveralls and construction boots to sleuth out any possible problems, but you do need to know what to look for.

Keep an eye open for plumbing leaks

Did you know that a plumbing leak won’t necessarily show up right where the leak originates? In fact, the symptoms can show up significantly far away from the source. Check ceilings, walls, foundation and driveway for the telltale signs.

  • An increase in water bills over time. Ask your agent to find out the water bill amounts for the past 12 months.
  • Stinky odors emanating from the walls or floors.
  • Cracks in the foundation.
  • Hearing running water when faucets and toilets aren’t running.
  • Unexplained warm spots on the floor
  • Ensure no water is running and check the water meter. If the dial is turning there may be a water leak.
  • Wet or spongy areas in the yard.

What are the home’s pipes made of?

“If the home was built before 1930, there is a good chance that the pipes are made of lead. “An estimated 18 million Americans are at risk of lead leaching from old pipes in their homes and city water systems; such exposure can cause neurological problems in adults and—in children—delayed or stunted brain development,” according to Robert F. Service at Science.org.

If the pipes in the home are a dull gray in color, suspect that they’re made of lead. Another test you can try is to use a key or other implement to scratch the pipe. Lead pipes can easily be scratched.

The only solution to lead pipes is to replace them with modern plumbing supplies.

A lack of lead pipes doesn’t rule out lead in drinking water. Lead can be present in groundwater, particularly in well water, and lead solder may have been used to join the pipes together.

The only reliable way to determine if lead contaminates the home’s drinking water is to have the water tested. Lead-contaminated tap water is colorless, odorless, and tasteless. Possible signs that tap water contains lead include:

  • Corrosion of pipe joints.
  • Frequent leaks (caused by corrosion).
  • Rust-colored water when taps are turned on.
  • Stained sinks, dishes and/or laundry.

Does the water heater heat the water?

It’s important to check the water heater when buying a home. How old is it? The “… typical water heater has a lifespan of about 10 years,” claims Nick Gromicko with the International Association of Certified Home Inspectors (NACHI).

If it is at, over, or near the end of its life, you may want to ask for it to be replaced by the homeowner.

Otherwise, ask your real estate agent to find out if the current owner has experienced any problems with it and has been maintaining it according to the manufacturer’s specifications. This typically includes a bi-annual check by a professional. Then, to avoid problems with the buildup of rust, sediment and corrosion, water heaters should be flushed every year.

You also need to determine if the water heater has enough capacity for your needs. This depends on a number of factors, with the most obvious being the number of people who live in the house. A family of five will, presumably want a hot water heater with more capacity than a couple without children.

Plumbing problems are always nasty surprises, but perhaps never more so than when you’ve just moved into a home. You can save yourself a lot of headaches and cash by making sure the plumbing is in good shape before buying a home.

Are you prepared for the next natural disaster?

“The U.S. has sustained 341 weather and climate disasters since 1980,” according to the National Oceanic and Atmospheric Administration (NOAA). This averages to 7.9 weather and climate disasters per year.

Then there are the wildfires we experienced, all 66,255 of them.

Are you ready for the next natural disaster?

Disaster preparedness can save your home, your life, and even thousands of dollars on homeowners insurance.

Is a disaster headed your way?

Florida and Louisiana may be the most common victims of the Atlantic hurricane season, but as we have seen in the last few years, everyone from Texas to the Jersey shore needs to be prepared.

Anyone who has been through a hurricane or other natural disaster will tell you that waiting to prepare when a disaster is on the horizon isn’t wise.

Get supplies now and make plans for what you’ll do when the next disaster hits.

Evacuate or hunker down?

If an evacuation order is mandated, then you should absolutely pack up and go. In fact, even if there is a chance a hurricane will hit your area, you ought to get out of town early if you can.

Otherwise, you face becoming trapped and vulnerable in the ensuing traffic jams. Plus, as we have seen during the worst weather disasters of the last decade, it isn’t always the wind and rain that is the worst threat to your safety – often it is the mayhem that follows. Whether you are staying or going, you need to have your emergency kit ready and be well-stocked on essentials.

What you need if you decide to hunker down:

  • Plenty of water (at least 1 gallon of water per person, per day)
  • First aid kits
  • Medications
  • Flashlights
  • Radio
  • Batteries
  • Copies of important documents including ID and your homeowner insurance policy
  • Weather-appropriate clothing, such as heavy jackets, boots and rain gear.
  • Food for three to seven days (don’t forget pet, baby food and infant formula)

Evacuating? Before heading out, do the following:

  • Turn off all pilot lights and shut off the gas line into the home.
  • Turn off the water supply and the master electrical breaker.
  • Secure anything outdoors that might fly away
  • Board up the windows or close hurricane shutters.
  • Use sandbags where necessary

Get approaching hurricane, tornado, or other storm alerts and forecasts by visiting the National Weather Service’s National Hurricane Center online at nhc.noaa.gov. For wildfire preparedness, visit nfpa.gov, the National Fire Protection Association’s website.

The nuts and bolts of the mortgage process

If you think that making the decision to purchase a home was a tough one, wait until you see what’s next! The very first step in the process involves revealing your finances to complete strangers and then waiting to see if what you’ve shown is acceptable enough to be given a loan for hundreds of thousands of dollars.

That’s pretty scary stuff, right? Fortunately, it doesn’t have to be. There’s a process to follow when applying for a mortgage and the first part of it involves shopping carefully for a lender and a loan.

Where to find a mortgage lender

Mortgages are available from banks, credit unions, savings and loans, private mortgage companies and the government. Take your time and look into the different types of lenders and what they offer so that you can intelligently compare them.

The best way to narrow down the choices is to get referrals from your real estate agent, friends, neighbors and family. Then, check their current rates online. CreditKarma.com offers a handy rate-checker that is updated daily.

If you’re going after an FHA-backed mortgage, make sure that the lender you choose is FHA-approved. You’ll find a list of those lenders online at the US Department of Housing and Urban Development’s website.

The most commonly used FHA-backed mortgage for a single-family residence or condo is the Title II.

Differences in rates and terms between lenders can be striking, so choose several with attractive rates and then compare what each has to offer. Ensure that you are comparing the annual percentage rate (APR) of each loan.

This rate includes “… your interest rate as well as additional fees and expenses associated with taking out your loan, such as any prepaid interest, private mortgage insurance (PMI), some closing costs, mortgage points (also called discount points) and other fees you may need to pay,” according to Victoria Araj at RocketMortgage.com.

You might also want to consider visiting a mortgage broker. Instead of offering loans from one lender (their employers), brokers work for themselves and shop around for loans that fit particular circumstances, such as credit scores, financial situations and more.

If you are a veteran of the U.S. military, a senior or a member of a labor union that offers loan assistance, you have access to programs that other consumers don’t.

Meeting with the lenders

Later on in the loan process you’ll be at the lender’s mercy if your income and credit are less-than-stellar. Right now, though, you are in the driver’s seat, so take full advantage of the situation. Get all the information you can to help you make an informed decision about who will be your lender.

Get clear on the exact amount of money you have for a down payment. Then, when you meet with lenders, ask about:

Interest rates

  • Ask the lender for current rates and whether that rate is fixed or adjustable.
  • If you want an adjustable rate, ask when the rate will increase, how that will impact the payments and whether your payments will decrease when rates do.
  • This is critical: request the loan’s APR. Expressed as a yearly rate, this figure includes the interest rate, fees, points and other charges. It is the APR you should use when comparing loan offerings.


Points typically confuse first-time borrowers but when explained, you’ll “get it.” Bank of America has the easiest to understand explanation:

“Points are fees paid directly to the lender at closing in exchange for a reduced interest rate. This is also called “buying down the rate,” which can, in turn, lower your monthly mortgage payments. A point is equal to 1% of your mortgage amount (or $1,000 for every $100,000).”

See how easy that is? If only everyone in the real estate industry explained concepts so clearly!

Take this knowledge and use it to ask the lender to express the points in a dollar amount versus the number of points. In other words, make him or her do the math for you.

The fees

There are a lot of people involved in the loan process, from the appraiser to the notary public to the real estate agents and the lender. Oh, and Uncle Sam has his fingers in the pie as well. Naturally, they all expect to be paid, so the list of fees (included in your closing costs) will be lengthy and somewhat confusing. Some of the fees are negotiable, and the Consumer Financial Protection Bureau walks you through the process.

In 2015, the federal government decided that Americans needed a better tool with which to compare loan products. “Know before you owe” changed the Good Faith Estimate that lenders were required to supply borrowers to two forms.

The first is the Loan Estimate, which you will receive within three days of submission of your loan application. This form includes all the facts and figures having to do with the loan that you discussed with the lender. The figures, however, are not set in stone but they will give you a rough estimate to compare against those you receive from other lenders.

Pay close attention to the “Estimated Cash to Close” section. Again, this figure is an estimate, and not the final amount you’ll owe. That could be higher or it could be lower.

Then, at least three business days before closing your lender is required to send you the Closing Disclosure. Yes, it looks very much like the estimate but these figures are set in stone, unless you dispute them.

You have three days to peruse the form and compare it to the estimate. Have questions? Call your lender immediately to get the answers. Remember, you are about to close on the loan ― time is of the essence.

If all goes well you’ll sign a stack of papers and be handed the keys to your new home. Congratulations!

Alternatives to granite kitchen countertops

Thinking of upgrading the kitchen countertops in your home? While granite is still quite popular, several other surfaces are gaining on it.

If you’re tired of the ubiquitous granite countertop, read on to learn about some stunning alternatives.


The most popular countertop material going into 2023 is quartz. Not only is it in-demand, but it also performs the best, according to tests performed by Consumer Reports.

Many designers have been hailing quartz as the new granite for countertops. It’s attractive, durable and easy to maintain. No sealing is required and it comes in a variety of colors. And, it provides a glossy finish, which many homeowners find attractive.

Because these countertops aren’t made of natural stone, they don’t have the porosity of natural stone counters, lending them an antimicrobial feature. The downside to quartz countertops is that they are sensitive to heat.

The cost? “$50 to $200 per square foot to install and about $125 per square foot on average,” according to the experts at AlphaStoneUSA.com.


Prefer natural stone? Consider quartzite, which is all natural. It does, however, have its drawbacks:

  • You will need to seal it annually.
  • It cannot be customized, “. . . which limits design and color options,” advises the pros at Alpha Stone.
  • It costs more to install.
  • Scratches easily

The advantages of quartzite countertops include:

  • They are environmentally friendly
  • UV resistant
  • Heat resistant


While Caesarstone has been around for some time, it’s experiencing a bit of a surge in popularity. A manufactured countertop, Caesarstone typically contains around 90 to 94 percent quartz and the rest is polymer resins and other additives for color.

Again, because it’s not a natural stone countertop, it doesn’t require sealing and maintaining it is easier than maintaining a natural stone countertop.

Finally, you’ll find Caesarstone in a variety of designs, many mimicking other surfaces, such as marble.


No, concrete countertops don’t look like the stuff you walk on outdoors. In fact, manufacturing is so versatile that you’ll find designs to fit kitchens from rustic to modern.

And, no, they aren’t a green alternative. Creating concrete countertops is energy intensive, but that hasn’t seemed to cause a reduction in the material’s popularity.

Disadvantages of concrete countertops include:

  • They are quite costly.
  • Concrete countertops need to be sealed once a year and waxed twice a year to keep up their durability.
  • These countertops are prone to staining and chipping.

Learn more about concrete countertops online at the Concrete Countertop Institute’s website.


Bamboo countertops are ideal for those seeking a “green” alternative to manufactured countertops. Bamboo is not only a renewable resource, but it is completely formaldehyde-free. Best of all, bamboo is tough – stronger than steel, as a matter of fact.

Here are some additional reasons to consider bamboo countertops:

  • They are mold and mildew resistant.
  • Bamboo contains anti-bacterial properties
  • Bamboo countertops are durable.

Yes, there are some drawbacks to bamboo countertops:

  • Bamboo countertops are not heat, stain and moisture resistant.
  • You’ll need maintain the sealant.
  • Bamboo is not scratch or chip resistant.

You’ll need to reapply the mineral oil or beeswax finish more frequently than you would reseal other countertops, however. Learn more about bamboo countertops online, here.


If your aim is for a low-maintenance-yet-attractive countertop consider soapstone. A natural stone material, it is non-porous and heat-resistant, according to Janet Hall at remodelista.com.

Soapstone is less brittle than granite, “… so it won’t crack unexpectedly from stress or weight,” according to the editors at CountertopGuides.com. Other advantages of soapstone countertops include:

  • No sealing required.
  • Less likely to absorb materials that stain slate, granite and sandstone.
  • Naturally resists bacteria.

Learn more about soapstone countertops online at Forbes.com.

First-time home seller? Take these 3 critical steps first

Those first tentative thoughts about selling your home will invariably bring on a rush of questions: What should I do? Where do I start?

Many homeowners are under the misconception that the call to the real estate company comes first. While that’s an important part of the process, there are three baby steps you need to take before hiring an agent.

These steps arm you with the information both you and your agent need to intelligently set a price for your home.

1. Find your loan documents

If you’ve lived in the home for a long time you may not remember the conditions under which you took out the original loan. Take a look at the papers to determine:

  • Who is on the title other than yourself?
  • Is there a loan pre-payment penalty?
  • Is the loan assumable?
  • What is the loan balance? You may need to contact the mortgage company to get the payoff amount.
  • Is there a second mortgage or a line of credit that also needs to be paid off? If so, what is the balance?

All of these items are important for different reasons. If someone else is on title with you, that person will need to sign all the documents involved in the sale of the home.

If the person is deceased, you’ll need to take steps to have him or her removed from the title before you sell. The best way to do this is through a lawyer.

It’s important to understand as well if there is a pre-payment penalty on your mortgage and the terms of the penalty. Some lenders don’t require payment of the penalty if you sell your home, others require its payment regardless of why you are paying the loan off early.

Finally, figure out how much you still owe on the home, including any second mortgage.

This helps you determine the amount you need to realize from the sale to pay off the lender and to move on with your life, whatever your plans may be.

2. Take stock of the condition of the home

Take a critical look at the home’s current condition. Will you try to sell it as-is or are there items that you will repair or replace?

Consider as well that the more run-down the home appears, the less likely it is you’ll get top dollar for it and the longer it will remain on the market.

Finally, be aware that some repairs are mandatory, either by the lender or the buyers’ homeowners insurance company. These typically include anything that impacts the inhabitants health and safety. These include (but aren’t limited to):

  • Leaky roof
  • Pest infestations
  • Exposed wiring
  • Major plumbing issues
  • Kitchen appliances in need of repair or replacement
  • Inoperable HVAC system
  • Defective (wobbly, etc.) stairway bannisters
  • Rotting wood

3. Get a ballpark figure on a sale price

Yes, this is something your real estate agent will help you with, but having a ballpark figure helps you determine if you’ll need to perform a short sale or a traditional sale and how much money you can expect to walk away with at the end of the deal.

If you’re planning on purchasing another home, knowing the latter is crucial.

We are happy to offer a no-cost, no-obligation assessment of the current market value of your home.

Armed with this information, it’s time to interview real estate agents and get on the road to the sale of your home.


Dear Baby Boomer: Aging in your current place may not be such a great idea

I love my home. But, when it comes time for me to bring in the shingle and I contemplate what life will be like as I age (even more than I have, that is), like many Americans, I’m not sure that I will be able to remain in my home.

As much as we’d love to, as comfortable as we are, it may not be practical.

There are around 78 million baby boomers and, according to the AARP, most of them want to age in place. Whether it’s because the kids and grandkids are nearby, because they’re so solidly entrenched in their current communities, or because the thought of leaving a home they are deeply in love with breaks their hearts.

There are those who do want to move

Thirty million boomers left the workforce “… at the height of the pandemic,” according to Pew Research Center.

With retirement comes many decisions, chief among them is whether or not to stay in the current home.

The majority of the cohort, 66%, say that they plan to age in place, according to a Freddie Mac Consumer Research survey.

When we reach a certain age, however, we’ve had more than enough time to learn that sometimes what we want doesn’t mesh with reality. Mick Jagger warned us about this nearly 50 years ago but he also promised that “… if you try sometimes, you just might find, you get what you need.” (Mick Jagger and Keith Richards, composers)

Thus, the results of a National Association of REALTORS survey that shows us that baby boomers compose the largest group of home sellers, at 42 percent. That is nearly twice as many as the nearest cohort, Gen X.

When asked what they want in a new home, they’re all over the map. Some want larger homes while others want to downsize.

Then there are the aforementioned who want to remain right where they are. All well and good until you consider that who you are today, with all your pep and energy, may not be who you are a decade from now.

Thinking of a remodel to allow yourself to age in place?

This could get quite expensive. If you are or will be in a wheelchair, you’ll need to widen the hallways in your current home. Average cost? To widen a home’s hallways with structural changes will cost between $30,000 and $40,000, according to the pros at fixr.com. If you’ll need to widen an entry door, expect to pay between $200 to $7,000.

“Falls are a leading cause of death and injury for older Americans. Many of those injuries — about one-third — take place in the bathroom,” according to retirementliving.com. The author goes on to suggest that a homeowner can reduce the chances of slipping or falling by replacing “… the floor with a nonslip surface.”

Dig deep for this one: between $6,400 and $11,000

Again, if the home has more than one floor of living space, it becomes even more expensive to make it a safe and comfortable living space as you age.

Consider taking all that remodeling money and buying a home that meets your needs

“Average Home Equity in the U.S. Just Hit a Record High of $300,000,” blasts s September 2022 headline at money.com. Keep in mind that the figure represents the average.

Older Americans have typically lived in their homes for far longer than younger Americans, often up to 30 years or more. Their equity is, naturally, much higher.

If you’re among that group, consider taking all that money tied up in your current home and do something SMART with it: shop for a home that already has the features you think you’ll need in the future.

It’s time to stop thinking that a home with your bedroom located up a flight of stairs and a laundry room on the ground floor is going to work for you in the future, that narrow hallways will accommodate a wheelchair and that yard work is something your body will always tolerate.

We’re happy to help you find that just-right home where you can truly age-in-place.

Energy efficient windows can help sell your home

Regardless of who or what is to blame, the hard truth is that Americans are paying dearly for energy this winter.

In fact, “… residential gas prices are expected to be 22 percent higher this winter compared to last year’s, and residential electricity prices are expected to be 6 percent higher on average, according to energy analyst Paul Arbaje.

This and other predictions have so far missed the mark. Anecdotal evidence across the country from everyday Americans shows that, in some parts of the country, energy prices have doubled.

That said, it’s hard to imagine anyone looking forward to receiving their monthly energy bills. But, if you have a home ready to go on the market, and that home happens to be energy efficient, you’ll want those power bills included in open house and other marketing materials.

The folks at Energy.gov claim that 25 to 30 percent of the air in our homes, whether cool or warm, escapes through the windows. This, in turn, forces the HVAC system to kick on, creating high energy bills.

If you’re just now toying with selling your home or you’re a homeowner who wants to save money on your energy bills, consider replacing your windows.

Need another great reason to consider swapping out those old windows?

Homebuyers are willing to pay more now to save money later

The National Association of Homebuilders’ (NAHB) most recent release of their annual study “What Homebuyers Really Want” shows that ENERGY STAR® windows are in high demand.

Out of 200 features from which to choose, ENERGY STAR windows came in at number four among the homebuyers surveyed. Thirty-nine percent of homebuyers rated them as “Essential, must-have.”

Windows showed up twice when homebuyers were asked for their top 5 green features. ENERGY STAR® windows came in at number one, while triple-pane insulating glass windows came in at number five.

“… significantly more buyers are willing to pay extra for a home if they understand it will lead to annual savings in utility costs,” claims the study’s authors. In fact, 57% are willing to pay $5,000 or more, on top of the price of the home, in order to save $1,000 a year in utilities.

How to choose new windows

From the choice between vinyl, aluminum, wood and wood clad frames to comparing the ratings, shopping for new windows can be overwhelming.

The folks at Consumer Reports have put various window types to the test and come up with a few tips for consumers.

First, don’t assume that the higher the price, the better the window. When it came to keeping rain and cold air out of the home, their tests found that a $260 window vastly outperformed the much pricier ones. They offer a brilliant guide what to look for when choosing new windows for your home at ConsumerReports.org.

Finally, when comparing windows, these experts recommend that you check “… the overall scores in our window Ratings, then zero in on test results that apply to where you live. If your home is exposed to high winds and cold temperatures, look for windows that were excellent at low-temperature wind resistance.”

Share with your real estate agent any improvement you make to your home that improves energy efficiency. It’s an incredible marketing tool he or she will use when marketing your home.

Hey Veterans: Learn all about the VA Construction Loan

World War II defined the 1940s in the U.S. With the return of our soldiers came the Boom – the Baby Boom generation. Our men required homes to house all those kids and President Roosevelt came through for them by creating The Servicemen’s Readjustment Act, more commonly called the GI Bill.

The bill generated college tuition and home loans for the men who served this country on the battlefields. In fact, $33 billion in home loans were issued to veterans.

The United States Department of Veterans Affairs is one of only two government entities that provide guarantees for no-down payment home mortgages (the other is the United States Department of Agriculture).

The VA doesn’t directly loan money; it guarantees conventional lenders that a portion of the loan will be repaid in the event the borrower defaults. This assurance allows lenders the ability to offer our veterans more attractive mortgage rates and terms.

November is when we celebrate both National Veterans and Military Families Month and Veterans Day (November 11).

What better time to dive into the housing benefits provided to our nation’s heroes?  And, although the VA has a number of loan programs, one of the more difficult to obtain is the construction loan.

The Challenge

Although they are allowed by law, many lenders hesitate to make construction loans for VA loans because of the risks involved, such as construction disputes.

If you want to act as your own contractor you’ll most likely need to find construction financing outside of the VA and, when construction is complete, obtain a VA loan to refinance the construction loan.

This is not to say it’s impossible to find a lender willing to underwrite a construction loan, but it may be challenging.


Like all government programs, the VA home construction loan has specific requirements about who can receive the guarantee. The program also has specific builder tasks.

To qualify for the VA construction loan program, an applicant must be any of the following:

  • A United States veteran
  • Active duty service man or woman
  • Current Reserve member with at least six years of service
  • Current Guard member with at least six years of service
  • Surviving spouse
  • A current or former Commissioned Officer of the Public Health Service and National Oceanic and Atmospheric Administration

Additionally, the applicant must have:

  • Separated from the service under other than dishonorable conditions
  • Decent credit
  • Sufficient income to make the mortgage payments
  • A valid Certificate of Eligibility (COE)

Finally, the veteran or surviving spouse must intend on living in the home.

The Construction Loan

There are two types of VA construction loans:

  • One-time close (or single close) loans which is “… used to close both the construction loan and permanent financing at the same time, according to the VA’s Circular 26-18-7. “The permanent financing is

established prior to construction, and the final terms are modified to the permanent terms at the conclusion of construction,” they conclude.

  • Two-time close construction loans. As the name implies, this loan includes two closings, one before the start of construction of the home and “… a second closing where permanent financing is used to take out, or replace the initial loan.”

The beauty of the loan, other than the fact that it doesn’t require a down payment, is that the veteran doesn’t begin making payments until the home’s construction is completed.

Builder Responsibilities

The builder of your new dream home has certain VA-mandated fees to pay during the home’s construction. These include:

  • Paying the interest while the home is being built
  • Commitment fees
  • Inspection fees
  • Title fees
  • Insurance

Application Process

Just as veterans who apply for an existing home mortgage, those planning on building need to get their Certificate of Eligibility (COE). Many lenders can obtain the COE for you, so check with your lender first. You can also get a COE through the VA website by clicking here.

You’ll also need proof of military service. DD/214 separation documents are the best way to provide this proof and you can submit your request for the records online or by fax or mail.

The process is a little different for surviving spouses. They need to use VA Form 26-1817, Request for Determination of Loan Guaranty Eligibility – Unmarried Surviving Spouses which can also be found at the VA website.

If you have questions about the VA construction loan, contact the VA Regional Loan Center nearest you.

How to choose a buyer’s agent

Although Americans continue to be smitten with the DIY craze, buying real estate is not a do-it-yourself project. Sure, it’s fine to surf the Internet to search for your dream home, but when it comes time to actually view the homes, make sure you are fully represented by your own real estate agent.

Many new homebuyers don’t understand that although it may be perfectly legal in your state for the seller’s agent to also represent the buyer, it isn’t wise. This situation is known as “dual agency,” a type of transaction that at one time was outlawed in all 50 states, and here’s why:

The seller’s real estate agent has a duty to his or her client to act in the client’s best interests.

Now, how can this happen in a dual agency situation when the seller’s interests and the buyer’s interests are the exact opposite? Although agents feel they can offer the same ethical treatment to both parties, it doesn’t always happen.

To protect your interests during the purchase process, secure your own representation. It costs you, as the buyer, nothing. The seller pays the buyer’s agent’s commission out of the proceeds of the sale.

Do I Need a “Buyer’s” Agent?

Some real estate agents specialize in working only with buyers. That said, most agents have experience working on the buyer’s side of the transaction.

When looking for an agent to represent you in your home purchase, don’t feel that you need to restrict yourself to an agent who professes to work solely with buyers.

That said, there are several situations in which you should seriously consider working with an agent who not necessarily works strictly with buyers, but who is a bona fide specialist in the following:

  • The mobile home purchase
  • Buying a short sale
  • The purchase of ranch property
  • The purchase of a farm

Aside from these situations, pursue the best agent for your needs. Read on to find out how to go about finding this needle in a haystack.

Get Referrals

Whether you need a real estate agent to list your home for sale or to assist you with buying a home, a referral is the best way to find one. Ask everyone you know, including family members, co-workers, neighbors, friends and local business people.

The checkout lady at the grocery store may have just purchased a home and adores her agent. So don’t neglect to ask everyone you come into contact with and start compiling a list of names.

What if you’re relocating to an area and don’t have a network of contacts there? There are several other ways to find the perfect real estate agent for your needs:

  • Online: Check reviews at Yelp.com and Google.com.
  • Relocation Representative: If you work for a large company and find yourself relocating as a result of this employment, consult the employee relocation representative for a list of agents to interview.
  • Chamber of Commerce: Call the Chamber of Commerce located in the area where you are moving. The folks there typically have a directory of members and will be happy to refer you to several agents in the area.

Ask the Right Questions

Most guides to choosing the right real estate agent will counsel you to find out if the agent is full-time or part-time and suggest that you go with the full-time agent. The thinking behind this suggestion is that the full-time agent will have more time for you.

Not so fast. Ask a follow-up question: How big is your staff? The superstar agent with a staff of 15 is the agent you will probably never speak with or see until closing, if then. That’s not to say this person isn’t a good agent, but to remind you that if you’re looking for personal, one-on-one interaction with the agent you hire, don’t hire the superstar with a huge staff.

Ask the agent how many other clients he or she is currently working with. The more clients the agent has, the thinner his or her attention is spread. If you find a house online that you absolutely love, time is of the essence in a fast-moving market. Will the agent have time to accommodate your last-minute showing needs?

If it’s important to you that the agent has a certain amount of experience, by all means ask how long he or she has been in the business. Keep in mind, however, that new agents typically work securely under the wing of their brokers, so you are actually getting the wisdom and benefit of a highly experienced real estate pro, although second-hand.

As important as it is to ask the right questions, listening to the agent is equally as important. What types of questions does the agent ask? One of the most important is whether or not you have loan pre-approval.

The savvy real estate agent understands that until you have seen a lender, looking at available homes is a waste of time, both yours and hers. Reject any agent who doesn’t pose this question.

Should I Sign an Agreement?

Many agents who consider themselves buyer specialists will ask that you sign a broker’s agreement.

This document commits you to working exclusively with the agent for a pre-determined amount of time. Broker’s agreements typically state that the agent will be compensated in the event the buyer switches to another agent and ends up purchasing a home shown by the original agent.

If the agent insists that you sign an agreement, ask for a short-term commitment. This way, should you decide the relationship between the two of you isn’t working out; you’re only locked into working with her for a short time. Agents typically ask for a 90-day commitment but the terms are negotiable, so choose a time period that you are comfortable with.

You are also within your rights to ask for a guarantee. Request that a clause be inserted into the agreement stating that if either party decides the business relationship isn’t a good fit, they will be released from the agreement.

Getting your finances in order and securing funding for the purchase of your home should always be the first steps in your home buying process. Finding the right real estate agent, while second on the to-do list, is no less important.