By Ilyce Glink and Samuel J. Tamkin
Saturday, April 12, 2008
Another year, another Earth Day. Looking back, is there anything you did in the past year to shrink your carbon footprint?
In our house, we've continued to replace incandescent bulbs with compact fluorescent bulbs. We've turned down the heat at night and piled on the fleece during the day.
We recycle batteries, paper, metals, glass and plastics. We scrape our plates instead of washing them before we put them in the dishwasher, and we turn off the water while brushing our teeth.
We've also taken a stand against bottled water. Instead, we fill reusable bottles, especially when we're around the house.
It's a start, but there's definitely room for improvement. The amazing thing about saving energy is that it's not only good for the Earth, but it's also good for your wallet -- a classic win-win scenario.
"Green means different things to different people," said Herb Hauser, president of Midtown Technologies, an engineering firm in Manhattan. Hauser said that for some consumers, being green means being thoughtful about the environment when designing kitchens, baths and entire homes.
But for others, being green "has nothing to do with the environment, but it has to do with money," he said. This group of consumers wants to know how long it will take for an environmental improvement to begin paying off in lower costs.
If you're looking to save as much money as you can, the Environmental Protection Agency has suggestions at http://epa.gov. The high-level concept: Reduce what you use, reuse what you can, and then recycle the rest.
You can reduce what you use by buying permanent items instead of disposables and by buying products with less packaging and that use fewer toxic chemicals.
If you repair items instead of replacing them, you'll use less energy. But maybe not a lot less. Using cloth napkins or towels instead of paper means you'll contribute less waste to a local landfill, but you'll need to wash them.
Finally, recycling paper, plastic, glass bottles, cardboard and aluminum cans is easy. You can recycle electronics (see http://www.epa.gov/e-Cycling/basic.htm) and motor oil, and compost food scraps, yard clippings and dead plants.
One of the easiest ways to green up your life is to green up your finances. According to a study commissioned by the nonprofit PayItGreen Alliance, the average U.S. household receives about 19 bills and statements each month and sends about seven payments in paper form each month.
By switching to electronic bills, statements and payments, the study found, the average U.S. household would save 6.6 pounds of paper and 171 pounds of greenhouse gases per year.
If just 2 percent of U.S. households (about 2.2 million people) switched to electronic bills, statements and payments, it would save more than 15 million pounds of paper and 181,000 trees annually, avoid creating nearly 144 million gallons of wastewater, and avoid using 10 million gallons of gasoline.
We'd avoid pumping 196,000 tons of greenhouse gases into the atmosphere every year, the same as taking 32,572 cars off the road.
How much money would you put into your pocket? According to the PayItGreen Alliance, you could save up to $100 on postage, $50 on checks and whatever you would have spent on late fees.
Plus, with electronic statements and direct deposit, you would never have to worry that your credit card statement or payment has been stolen out of your mailbox.
Q: My husband and I just had twins, and the house we bought two years ago is way too small now. We tried selling it privately, but with the market today, the offers were very low, about $35,000 less than is owed on our mortgage.
I know that walking away from our home would be irresponsible, but we are not able to sell for what the house is worth. What are the legal and monetary consequences of walking away? We have done a lot of research on this, and we are confused. We do not want to walk away and then get hit with a $25,000 judgment against us two years down the line. We have also looked into selling our home through private investors, and they wouldn't even offer us $200,000 for our house. We have $235,000 left on our mortgage.
A: Congratulations on growing your family. It's unfortunate that you feel your house is too small for your family, but like many Americans, you're stuck in a position with no easy way out.
If you can't sell your home for the amount on your mortgage, you have to be willing to come to the table with the missing money. In your case, that would be $35,000, plus the expenses of selling your home, including the broker's commission, transfer stamps, moving costs and other fees.
You'll be in the hole maybe $40,000 to $45,000. Your loan agreements require you to make the lender whole, which means reaching into your pocket for those costs. If you can't do that, you'd have to ask the lender to do a short sale, in which the lender accepts whatever amount you get in the sale as full payment of the loan. The missing money could be forgiven if the lender doesn't believe you have cash available or can raise it somehow, such as by liquidating your 401(k) accounts or IRAs.
In times past, you'd also have to pay tax on that missing money, which the IRS saw as income, and which would push you into a higher tax bracket. A recent change in the tax code means the forgiven amount is no longer taxed.
I don't know how small your house is, but even if it is just two bedrooms, it's foolish to try to leave now. You're just going to dig yourself into a serious financial hole from which you might never emerge. If you sold your home in a short sale, you'd be broke and your credit would have taken a big hit. You wouldn't be able to afford a bigger home because you wouldn't have any cash for a down payment and your credit might still be tarnished.
You have two choices: You can stay put and live cheaply, hoping that prices in your neighborhood come back in the next couple of years. Or you can rent out your home and find a larger house to rent until the market stabilizes.
It's irresponsible to think you can dump your house and move on without having any serious financial repercussions. Trust me, this move may haunt you for the next 10 years.
I'm a graduate student and will be graduating in May. I'll be starting a full-time job and looking to buy a home for the first time. Because of some stupid choices with credit cards in college, my credit score is pretty low. I'm working hard to pay off all of my debt, but this may take some time. I also have lots of student loans on my report. I'm a little concerned about qualifying for a home loan. Will I automatically be turned down because of my poor credit history, or will I be stuck with a high-interest loan?
Congratulations on your graduation. However, this isn't the best time to be looking for a house if you have poor credit and no money for a down payment. These days, lenders want buyers to put down at least 3 percent of the purchase price as a down payment, plus have at least a month's worth of expenses in reserve. You'll also need cash for some of the closing costs. Many lenders want to see borrowers put down at least 5 percent to buy a home.
Will you be automatically turned down because of poor credit? It depends on how bad your credit score is. If it is below 625, you might have a difficult time getting any sort of loan.
Even if you are approved, your credit score means you'd pay a much higher interest rate than someone with a good credit history and score. How much more? According to the numbers provided by MyFico.com at the end of last month, if your credit score is 760 to 850 (the top tier), you'd pay 5.682 percent on a 30-year $300,000 loan. But if your credit score is 500 to 579 (the bottom tier quoted), you'd pay 10.242 percent for the same loan, or nearly an extra $1,000 per month.
Your best bet is to focus on improving your credit score and paying down your outstanding loans. Housing prices will still be low in a year, but you'll be in a much better position to take on that kind of debt.
I bought a new home and am having problems with a leaky roof, along with other problems. The builder refuses to take care of the problems. Whom should I contact?
Your contract or some of the other documents you received at the closing should tell you exactly how you're supposed to deliver notice of any issues you have with the house. Did the builder give you a warranty? Typically, you'll need to put notice of any issues you have with the home in writing and deliver it to the builder by certified mail, return receipt requested, or by some other means to ensure that you have a record that you sent the notice and that the builder received the notice.
But if the builder refuses to live up to the terms of the warranty or did not give you a warranty but still refuses to fix your problems, you'll need to explore other options.
One option is to determine whether there are any other warranties provided by the manufacturers of the products used in your home. See whether you can find out the brand of the roof shingle manufacturer and the name of the company that installed the roof. Frequently, the manufacturer of the roof will stand behind its product if it was installed properly, and the installer may also back its own work for a certain time after the installation. If you have that information, you can see whether they will be willing to make the repairs.
For other items, such as appliances, that may have a manufacturer's warranty, you can call the manufacturer of that product to see what options are available.
If you can't find any information on the products or the companies involved in the installation, you might try to find a contractor in your area to give you an estimate of what it will cost to make the repairs.
If the cost is minimal, you might make the repairs yourself. If the costs are large, you will have to decide what to do next.
Your options include complaining about the builder to your local building department with the hope that it can pressure the builder to fix your issues. You can also file a complaint with the Better Business Bureau. If you do that, at the very least, other buyers will be put on notice that this builder has unresolved complaints against his or her company.
In addition, you can sue the builder. Litigation is expensive, though, and at times it is cheaper to make the repairs than to undertake the cost of litigating a problem. In some states, you may be able to sue the builder in small-claims court.
We bought a home about three weeks ago and did an inspection with my stepfather, who is a contractor. We failed to go into the attic. Two days after closing, I went into the attic. To my surprise, almost all of the rafters and the wood that holds the shingles are severely burned. I have a disclosure statement signed by the seller stating that there was no fire damage. I got another contractor to come out and estimate the cost of the repairs, which he said will probably be about $50,000. What are my options? Who is at fault? What if the sellers don't have the money?
It would be hard for the sellers to deny that they knew the home had a large fire and to say they never went into their own attic. You can probably find evidence that they stored items in the attic and were aware of the problem.
Most states require a seller to disclose to buyers material problems with the home. If your state has a specific reference to the home having been involved in a fire and the sellers failed to disclose it, you have a pretty good case if you sue the sellers for not disclosing this issue.
Seller disclosure laws were designed to give buyers an opportunity to know more about the home, particularly information that is known to the seller but may not be readily known to the buyer.
If your seller disclosure form specifically mentions whether the home was affected by a fire and the sellers failed to disclose it to you, the sellers may be in deep trouble.
However, shame on you for not inspecting the house properly before you closed. Your stepfather may be a contractor, but it doesn't sound like he is a professional or licensed home inspector. A competent home inspector would have easily found this issue and alerted you.
The whole reason to hire a professional home inspector is to avoid the big pitfalls in buying real estate. It's nice to know that seller disclosure laws are out there to protect buyers, but it's much better to have this kind of information ahead of the closing so you can avoid the issues you now face. You may have saved a few hundred bucks by not hiring a professional home inspector, but now you're facing a $50,000 problem.
You should get a second, and maybe even a third, contractor to give you another estimate of what it will take to fix the problem. Prices may vary, and some contractors (especially those whose business is slow) may want to do more work to the home than just fix the problem from the fire.
Finally, when you know what it will cost to make the repairs, you can sit down with a lawyer and decide how to approach the sellers. If the sellers don't have the money to pay for the fix, you'll be left with the bill.
But the sellers may have the money, and your lawyer can advise you of your options. If the sellers have assets, your state laws may let you recover your attorney's fees in connection with suing the sellers for their failure to disclose the problem.
Ilyce R. Glink is an author and nationally syndicated columnist. Her latest book is "100 Questions Every First-Time Home Buyer Should Ask." Samuel J. Tamkin is a real estate lawyer in Chicago. If you have questions for them, write Real Estate Matters Syndicate, P.O. Box 366, Glencoe, Ill. 60022, or contact them through Glink's Web sites, http://www.thinkglink.comandhttp://www.expertrealestatetips.net.
© 2008 Ilyce R. Glink and Samuel J. Tamkin
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