It's that time again... Property Tax Tips for Filing in 2014

Here are 5 property tax tips for a successful filing in 2014 First off, make sure all your current property taxes are paid. The tax code is very clear in placing the burden of making sure taxes are paid squarely on the taxpayer, not the tax assessor / collector. Failure to receive a tax statement does not relieve you from responsibility that prior year taxes are paid on or before January 31 of each year. Second, take pictures of your property on January 1 each year. The effective date of all tax appraisals is January 1 each year. You are taxed on your property as it existed on the first day of the year. If it burns to the ground on January 3, you still get to pay taxes on it for the entire year. On the other hand, if something is seriously wrong with your property (flooded, torn up for remodel, etc.) and the market value is significantly diminished at the beginning of the year, you will need evidence of this later in the spring when you file your protest. Pictures are the best evidence of property condition on January 1. Next, make home improvements or additions in the winter. If you add that pool or new bathroom in November, it becomes taxable in just two months and you will pay the extra taxes that year. Make the same improvements in February and they don’t become taxable until the next year and you won’t pay the higher taxes until the year after that! Also, it is not “too late” to fix big problems with your tax appraisal. Even if you did not file a protest by May 31, all is not necessarily lost. If you can prove the tax appraisal is at least 25% too high you can still file a “Substantial Error” motion until January 31 of the following year and get the value reduced. Also, if you can prove that the Appraisal District failed to send you a required notice you can file a “Failure to Receive” motion by January 31 and be entitled to an appeal hearing. Lastly, under section 25.25(h) of the Property Tax Code, you can beg the Chief Appraiser to fix just about anything and he has the authority to do it with a signature. Finally, you would be surprised how many people don't do the following: Make sure you have filed your Homestead Exemption. Carefully check your property tax statement to verify that part of the value of your homestead is exempted from taxation. The amount varies by taxing entity, but you should see some discounts off of the total appraised value for the school district and county We hope you find these tips helpful and perhaps save you some money!

The Train has left the Station!

According to Industry reporting, home prices are going up, up, up, but it’s not a bubble just yet. The surge in home prices over the past year may have some home buyers wondering if the market has gotten ahead of itself. Rising interest rates aside, housing prices in most parts of the country appear to have plenty of room to move higher if the wider economic recovery remains intact. The latest data on price gains show home prices advanced 7.7 percent in the year through June, a rise that has fed on itself as fence-sitting home buyers move to buy before prices rise further. West coast housing markets have seen the biggest gains. The Federal Housing Finance Agency report showed prices in June were 17 percent higher than a year earlier in the Pacific area, which includes California and Washington. House prices jumped 11 percent in the Mountain region, which included Nevada and Arizona. The Middle Atlantic region -- New York, New Jersey and Pennsylvania -- had the smallest increase, at 2.5 percent. The government data echoes other reports of healthy gains in home sales and prices. The National Association of Realtors said Wednesday that the median price of a previously owned home jumped 13.7 percent for the year ended in July to $213,500. A recent rise in mortgage rates is also spurring buyers to lock in rates before they climb further. "When start you see interest rates rise, people are going to want to jump in," said Beth Ann Bovino, deputy chief economist at Standard & Poor's. "All those people on the fence come back into the market. But that's a good thing." Higher borrowing costs could eventually price some buyers out of the market and slow the pace of home sales. Sales of new single-family homes dropped sharply in July to their lowest level in nine months, the Commerce Department reported Friday. Sales dropped 13.4 percent to an annual rate of 394,000 units, and the government also revised sharply lower its estimate for home sales in June. Sales of previously owned homes, a much larger share of the overall market, picked up by 6.5 percent last month to the fastest pace since November 2009, according to the Realtors report. The inventory of homes for sale remains tight – just 5.1 months' worth at the current sales pace – which has help sellers and homebuilders boost their asking prices. After a long drought in new home construction, that tight supply is expected to continue to support prices. "We have a number of locations where the next home sold may take as much as one year to deliver, because our backlogs are so big at individual communities," said Douglas Yearly, CEO of luxury home builder Toll Brothers. "That's when we raise price." There are early signs that the rise in prices and borrowing costs may be cooling demand. Mortgage applications for both home purchases and refinancings dropped for a second straight week as rates rose, according to the Mortgage Bankers Association. Demand fell 4.6 percent in the week ended Aug. 16, as the rate on a 30-year fixed mortgage rate rose to 4.68 percent, matching this year's high mark. Rates have been rising since May, when the Federal Reserve first signaled it may begin tapering off its $85 billion in monthly bond purchases. That easy-money policy has been a critical stimulus in reviving the housing market from its historic 2007 collapse. The continued pickup in the pace of home sales and prices will depend heavily on whether the job market continues its slow recovery and incomes continue to rise. That disposable income represents the buying power required to fuel the housing market’s continued recovery. And despite the recent jump in prices, homes in most local markets remain affordable by historical standards. One of the most widely used measures – the Realtors affordability index – stood at 178 in June – down from a peak of 200 during the depths of the housing bust – but well higher than average levels. (The index, which factors in prices, incomes, borrowing costs and other variables, shows that a family with the median national income has 178 percent of the income needed to qualify for a mortgage that covers 80 percent of a median-priced house.) Other measures indicate that, despite rapid gains, homes are reasonably valued, according to a research note from Capital Economics. After the sharp declines following the housing bust, home prices have yet to reach levels in line with the long-term trend since 1975, according to the report. Prices are some 15 percent below that trend as measured by the Case-Shiller price index and 11 percent lower based on the FHFA's data. And the cost of buying a house is still cheap in relation to the cost of renting, suggesting prices haven't yet reached a point where they will cool demand, according housing Capital Economics housing economist Paul Diggle , who prepared the report. "The most reliable measure still suggests that housing is undervalued," he said. Even if rising prices and rates don't scare away potential home buyers, the continued housing recovery will depend on the availability of credit, which tightened considerably following the wave of rogue lending that fueled the mid-2000s housing bubble. Lenders are much choosier than they were six years ago, but there are signs they've begun to ease up a bit on credit standards as they compete for new borrowers. And after paring down a large pile of debt accumulated during the credit boom, those potential buyers are better able to take on a new mortgage payment. That will help the housing market better weather the ongoing rise in interest rates, according to Bovino. "We've had four years of cleaning up our balance sheets, getting our fiscal homes in order," she said. "I think we do have the capabilities to cushion that blow (from higher rates)."

The Fiscal Cliff

Following numerous requests from our clients, we thought we would put some effort on summarizing the tax related measures which resulted from the eleventh hour Fiscal Cliff agreement. These new laws are detailed in Senate Amendment to H.R. 8 and are collectively called The American Taxpayer Relief Act of 2012. For those unfamiliar with the Fiscal Cliff, hopefully this may provide valuable background information. We now await the political brinkmanship associated with the negotiations to raise the U.S. Debt Ceiling. Two New Taxes for 2013 Two new taxes go into effect starting January 1, 2013: 1. A 3.8% Net Investment Income Tax (NIIT) applies to individuals, estates and trusts that have unearned investment income above certain threshold amounts. Net Investment Income for the purpose of calculating this tax includes interest, dividends, capital gains, rental and royalty income, non-qualified annuities, income from businesses involved in trading of financial instruments or commodities and pass-through income from a passive business. The NIIT does not apply to municipal bond income. For an individual, the NIIT is equal to 3.8% of the lesser of two amounts: i. An individual’s net investment income or ii. The excess of the individual’s modified adjusted gross income (MAGI) over the threshold amount ($200,000 for individual taxpayers and $250,000 for married couples filing jointly). 2. A 0.9% additional Medicare Tax applies to individual’s wages and self-employment income that exceeds the threshold amount based on the individual’s filing status. Ordinary Income Tax There will be no change in Federal income tax rates for taxpayers earning less than $400,000 ($450,000 for joint filers). Individuals earning above this threshold, will now pay 39.6% on marginal income above $400,000 ($450,000 for joint filers). Capital Gains and Qualified Dividends Tax Effective January 1, 2013, the top tax rate on long term capital gains and qualified dividends reverts back to 20% on gains for taxpayers above the $400,000 ($450,000 joint) income threshold. For taxpayers below these thresholds, the 15% rate remains. This tax rate increase, along with the Medicare tax, will result in a top effective tax rate of 23.8% for long term capital gains and dividends. Similarly, short term capital gains will be taxed at ordinary rates plus the 3.8% NIIT, for an effective top rate of 43.4%. Estate, Gift and Generation Skipping Transfer Tax The credit amount remains at $5 million per individual donor and continues to be inflation-indexed from 2010 (rounded in $10,000 increments). The inflation adjusted credit was $5.12 million in 2012 and is expected to be $5.25 million in 2013. An important component of the new legislation is the reunification of the gift and estate tax credit amount. In other words, the $5.25 million credit is available for use with lifetime gifts or estate transfers at death. The top transfer tax rate on gifts exceeding the credit amount has increased from 35% to 40%. Phase Limitation on Itemized Deductions Before 2010 itemized deductions for taxpayers above a certain income level were partially phased out, thus increasing income taxes as a consequence of reduced deductions. In 2013, if a taxpayer’s Adjusted Gross Income (“AGI”) is above a threshold amount ($250,000 for individual taxpayers, $275,000 for head of households and $300,000 for joint filers), itemized deductions will be reduced by an amount equal to the lesser of 3% of the excess over the threshold or 80% of allowable deductions. Taxpayers apply 80% to the total of their itemized deductions other than the deductions for medical expenses, investment interest, casualty losses and thefts, and gambling losses. As a result of the phase-out of deduction for high income taxpayers, marginal effective tax rates are higher than marginal statutory rates for such taxpayers. Roughly speaking, the 3% reduction of a deduction against income taxed at 43.4% raises the tax rate on marginal income by 1.3 percentage points. Alternative Minimum Tax (AMT) The new bill increases the AMT exemption amounts from $33,750 to $50,500 for individual filers and from $45,000 to $78,750 for joint filers, indexed for inflation from 2013. IRAs The Pension Protection Act of 2006 allowed a taxpayer to exclude from income, distributions of up to $100,000 to a qualified tax-exempt organization (i.e., a public charity but not a supporting organization or a donor advised fund) from a traditional IRA. This provision has been extended for 2012 through December 31, 2013. The distribution must be made directly to the public charity and the IRA owner must have attained age 70½. The distribution will be counted for purposes of the required minimum distributions from an IRA but will be ignored for purposes of computing the limitations on charitable deductions in the year of the gift. Notably, the $100,000 exclusion is per taxpayer so married taxpayers (with their own IRAs) may each take advantage of the provision. Moreover, this provision contains a transition rule, which allows a distribution made in January 2013 to qualify as a 2012 distribution and allows an IRA distribution made December 2012 to qualify if subsequently paid to a qualifying charity in January 2013 (and meeting all other requirements). Roth Conversions In 2012, only the distributable amount (i.e. IRA balances or 401(k) s where the owner has either separated from employment or is over 59½) in pre-tax retirement plans could be converted to Roth accounts. The new bill allows any amount in a non-Roth account to be converted to a Roth account in the same plan, whether or not the amount is distributable. The conversion from a pre-tax retirement plan to a Roth plan results in the recognition of taxable income on all the gains and income in the plan. Retroactive Extension of 100% Exclusion of Small Business Capital Gains Generally, non-corporate taxpayers may exclude 50% of the gain from the sale of small business stock acquired at original issue and held for more than five years. For stock acquired after February 17, 2009 but by September 27, 2010, the exclusion was increased to 75 percent. For stock acquired after September 27, 2010 and before January 1, 2011, the excluded amount was increased to 100%. The 2010 Tax Relief Act further extended the 100% exclusion through December 31, 2011. The new legislation retroactively extends the exclusion of 100% of the gain from Qualified Small Business Stock to stock acquired after September 27, 2010 and before January 1, 2014. Qualifying Small Business Stock is from a C-corporation whose gross assets do not exceed $50 million (including the proceeds received from the issuance of the stock) and who meets a specific active business requirement. The amount of gain eligible for the exclusion is limited to the greater of ten times the taxpayer’s basis in the stock or $10 million of gain from stock in that corporation. Other The personal exemption phase-out has been reinstated, which means that high income taxpayers will have to reduce the total of their personal exemptions by 2% for every $2,500 by which their annual gross income exceeds the threshold amount for their filing status ($250,000 for individual filers, $275,000 for head of households and $300,000 for joint filers), indexed for inflation from 2013.

Financial planning: What it's not and what it is

Recently one of our staff member within the Efinity Mortgage team asked what we felt was a fairly brave question during a meeting involving cross-platform personal (Insurance - Financial Services - Mortgage Lending). In short, she asked what our Licensed Financial Professionals did and was there a difference between financial "Planning" and "Advising". The answer was of course was clearly yes; there is a difference however the explanations which followed were a bit less clear. We felt this would be an excellent talking point within our firm. We set out to obtain Efinity's own definition of not only both terms "financial planning" and "financial advising" but offer some additional color on the subject. We found a commentary piece which largely outlined what we were interested in sharing. So in giving credit where credit is due, the below commentary is thanks to a Ryan Fox and Tim Maurer found at eveningsun.com back on 10/14/2012. Financial planning: What it's not and what it is Two of the terms in the financial services industry that are so often misused are "financial planning" and "financial advising." What is the first thing that comes to your mind when I ask, "What is a financial planning/advising?" My guess is that 65 percent of people assume the term is synonymous with the sales or management of investments with a stock broker. The other 30 percent probably think that it is the pursuit of finding the right insurance policy or policies. It may be generous to assume that 5 percent of people have been painted an accurate picture of what true financial planning or advising really is. One thing that makes accurate discernment so difficult regarding this terminology is that financial planning does, indeed, include investment planning and insurance planning. But if the advice stops there, it's not genuine financial planning. The primary reason that financial planning has been viewed in such a modular fashion is that the behemoth financial industry realized before financial planning even became a thing that couching product sales in the appearance of sound planning and advice was good business. But, at the end of the day, financial planning with a brokerage firm inevitably leads almost solely to the sale of brokerage products; with banks, banking products; and with insurance companies, insurance products. Below you'll find a glossary with more complete definitions of the fundamental tenets of true financial planning and advice; what it's NOT and what it IS: Investment planning - Is NOT merely the sales of stocks, bonds and mutual funds; it IS determining how all of the assets in your life-including stocks, bonds and mutual funds, but also real estate, commodities and entrepreneurial ventures-intersect with life and move you closer to your goals and objectives. Insurance planning - Is NOT just about buying prescribed insurance products; it IS learning how to manage risk first through risk avoidance, risk reduction and risk assumption before transferring risk through insurance products. Cash flow/budget planning - is NOT just for the under-resourced living paycheck-to-paycheck; it IS the engine of every household's sound financial plan, just as it is for every successful business. Tax planning - Is NOT having your tax return prepared or jamming your numbers through Geitner's Achilles heel, Turbo Tax; it IS planning for the present, but also the mid-term and the long-term regarding payroll taxes, income tax, capital gains tax, tax deferral, gift tax, inheritance tax and estate tax. Education planning - Is NOT sloughing a random chunk of money every month into an education savings plan to assuage your guilt that you're too busy keeping your own financial house in order to apply much thought to the cost of your children's education; it IS first developing a Family Education Policy (here's how much mom and dad are willing to pay and the terms you need to meet to receive that help) and then establishing a deliberate plan to meet those goals, some of which should be saved in a 529 education savings plan. Retirement planning - Is NOT slaving away at a job you don't love so that you can shelve as much of your income as humanly possible in a 401k and IRAs to which you'll look for financial salvation in a retirement that can't come soon enough; it IS, first and foremost, finding a career that you can enjoy indefinitely so that you are always employable (the BEST insurance against running out of income in retirement), saving effectively for financial independence while also allocating dollars to enjoying life today and in the mid-term. Estate planning - Is NOT sleeping through an expensive meeting with an attorney to have documents drafted that you don't understand; it IS examining the impact that you'd like to leave on this earth and implementing tangible plans - yes, through wills, powers of attorney, advance directives and occasionally other trusts, but also - designed to create a legacy, no matter what your age. One of the reasons it's especially difficult to get complete answers about financial planning is because the purveyors of financial products - banks, brokerage firms and insurance companies - are working very hard to convince the public that they are to be trusted both as the advisor and the salesperson. Unfortunately, their economic bias - their financial conflict of interest - is so overpowering that the best advice is often tainted or watered down. If Efinity Financial can bring some clarity to your financial goals, aspirations & questions we encourage you to reach out to one of our Licensed Financial Professionals - www.efinityfinancial.com

What Makes a Good Agent

As many of you know, within Efinity Group there exists a full service Insurance firm, Efinity Insurance. One of the questions we are often asked is; "What makes a good insurance agent?" It's an interesting question. We pulled the following information from the Independent Insurance Agents & Brokers of America website and believe it best represents both the expectations and professionalism one should expect from his/her personal insurance agent. http://www.independentagent.com When it comes to financial security and insurance protection, most people want a long-term relationship with a trusted adviser they can turn to many years into the future. In fact, a survey by the Independent Insurance Agents & Brokers of America (IIABA) found that: Three out of four insurance consumers use an agent when purchasing personal insurance. More than half the respondents over age 55 have purchased insurance from the same agent for at least 20 years. More than 60 percent say they value the opportunity to discuss insurance with a real person. If you’re like most people, you want to develop a long-term relationship with an agent, too. So, how do you make sure the agent is professional and reputable? Here’s what to look for: 1. Independence. Independent agents represent an average of eight different companies-not just one. They can evaluate and compare the products of several insurance companies to find the right combination of coverage and value. 2. Licensing by the state. 3. Number and names of companies the agent represents. 4. Number of years the agent and agency have been in business. 5. The agent’s professional designations. For example, CPCU (Chartered Property and Casualty Underwriter) and CLU (Chartered Life Underwriter) are among the industry's most rigorous and prestigious designations. 6. Areas of specialization. Some agents and agencies have experience in specialized products, such as insurance for a farm, a classic car, or a home business. 7. Recommendations and referrals. How did you hear about the agent and the agency? Did someone you trust refer you? Ask the person for specific details about the experience. 8. Full-service capability. Is this a full-service agency for auto, home, health, and disability products? 9. Service representatives. Ask who will handle your account for routine updates and transactions. 10. Hours. Emergency numbers. Claims service. Ask if you can contact the agency after- hours for claims or other emergency needs. 11. Claims help. Ask if the agent plays a role in handling and tracking claims. Will the agent help resolve disputes that might arise with an insurance company, for example? 12. Policy review. Does the agency occasionally review and update policies to make sure your insurance is keeping pace with changes in your situation? 13. Community involvement. Does your agent participate in any local organizations, boards, volunteer activities, or other civic endeavors? 14. Industry associations. Does your agent participate in any local, state, or national trade associations? These activities often signify professionalism and a commitment to continuing education in the insurance field. We hope you found some of this information valuable.

Welcome to Spring - Home Buying Time!!

With Spring upon us, and new buyers out looking for houses, we thought today might be a good time to review the basics of what lenders look for as they decide to approve (or deny) mortgage applications. For at least the last two decades we have heard them called “The 4 C’s of Underwriting”- Capacity, Credit, Cash, and Collateral. Guidelines and risk tolerances change, but the core criteria do not.

CAPACITY
CAPACITY is the analysis of comparing a borrower’s income to their proposed debt. It considers the borrower’s ability to repay the mortgage. Lenders look at two calculations (we call ratios). The first is your Housing Ratio. It simply is the percentage of your proposed total mortgage payment (principal & interest, real estate taxes, homeowner’s insurance and, if applicable, flood insurance and mortgage insurance – like PMI or the FHA MIP) divided by your monthly, pre-tax income. A solid Housing Ratio (often called the front end ratio) would be 28% or less; although, at times loans are approved at a significantly higher number. That’s because your front end ratio is looked at in conjunction with your back end ratio.
The back end ratio (referred to as your Debt Ratio) starts with that mortgage payment calculation from the Housing Ratio and adds to it your recurring debts that would show up on your credit report (auto loans, student loans, minimum credit card payments, etc.) without taking into consideration some other debts (phone bills, utility bills, cable TV). A good back ratio would be 40% or less. However, loans sometimes are granted with higher debt ratios. Understand that every application is different. Income can be impacted by overtime, night differential, bonuses, job history, unreimbursed expenses, commission, as well as other factors. Similarly, how your debts are considered can vary. Consult an experienced loan officer to determine how the underwriter will calculate your numbers.

CREDIT
CREDIT is the statistical prediction of a borrower’s future payment likelihood. By reviewing the past factors (payment history, total debt compared to total available debt, the types of monies: revolving credit vs. installment debt outstanding) a credit score is assigned each borrower which reflects the anticipated repayment. The higher your score, the lower the risk to the lender which usually results in better loan terms for the borrower. Your loan officer will look to run your credit early on to see what challenges may (or may not) present themselves.

CASH
CASH is a review of your asset picture after you close. There are really two components – cash in the deal and cash in reserves. Simply put, the bigger your down payment (the more of your own money at risk) the stronger the loan application. At the same time, the more money you have in reserve after closing the less likely you are to default. Two borrowers with the same profile as far as income ratios and credit scores have different risk levels if one has $50,000 in the bank after closing and the other has $50. There is logic here. The source of your assets will be examined. Is it savings? Was it a gift? Was it a one-time settlement/lottery victory/bonus? Discuss how much money you have and its origins with your loan officer.

COLLATERAL
COLLATERAL refers to the appraisal of your home. It considers many factors – sales of comparable homes, location of the home, size of the home, condition of the home, cost to rebuild the home, and even rental income options. Understand the lender does not want to foreclose (they aren’t in the real estate business), but they do need to have something to secure the loan against, in case of default. In today’s market, appraisers tend to be conservative in their evaluations. Appraisals are really the only one of the 4 C’s that can’t be determined ahead of time in most cases.

Now, each of the 4 C’s are important, but it’s really the combination of them that is key. Strong income ratios and a large down payment with strong reserves can offset some credit issues. Similarly, long and strong credit histories help higher ratios….and good credit and income can overcome lesser down payments. Talk openly and freely with your loan officer. They are on your side, advocating for you and looking to structure your file as favorably as possible. We hope you find some value in this information as you elect to move up, move down or accross this great country of ours!

How to ensure your home isn't under-insured

For many of our clients, the following information is view similarly to going to the dentist. That said, it's mission critical that your family review the following and please get with one of our agents for a policy review.

Fact is, most homeowners have insurance. All homeowners who have a mortgage must have insurance. The question is: do you have enough insurance? Will your policy cover you if the worst happens – if your house is totally destroyed and you need to rebuild?

According to the Insurance Information Institute’s 2011 Insurance Pulse Survey, nearly half (48 percent) of all homeowners in the U.S. believe the insured value of their home is linked to its market value.

“They are two different things,” says Michael Barry, the institute’s vice president of media relations. “When it comes to buying homeowners insurance, you have to look at the insured value – what would it cost to rebuild my home in its current location with comparable construction materials if I were to have a total loss? And that number does not represent the market value.”

With home prices in the flat, it’s easy to assume that you can save money by lowering the insurance coverage. Unfortunately, it doesn’t work that way. The cost of building materials – copper, lumber, steel, concrete – have all gone up dramatically the last few years.

“It’s truly unfortunate that people don’t understand market value versus replacement cost,” says Ned, the vice president of claims for a regional insurance company. He agreed to talk to me as long as I did not use his real name.

Ned told me about a recent claim for a house that burned to the ground and the homeowner was grossly under-insured. He had coverage for up to $350,000, but the estimated construction cost came in at $500,000. Ned says this customer was “one of the rare individuals who accepted responsibility” for the situation.

The insurance company did its best to help, but the new house did not have the quality of the original. The homeowner had to downgrade the kitchen appliances. Instead of granite countertops, he went with composite. He also had to settle for a lower-quality roof; one that was guaranteed for 30 years instead of 40.

Getting the right coverage is your responsibility. We advise reviewing your insurance coverage each year with our agents. Despite our reminders and email notifications, most people don’t do this.

Angie’s List recently polled its members and found that nearly one-third of those who responded hadn’t checked their home insurance policies for two years or more.

“This is your responsibility,” says Angie Hicks, the website’s founder. “Your insurance agent doesn’t know what you’ve done to your house. They don’t know if you added a deck or bought an expensive piece of jewelry. Only you know that information.”

So put this on your calendar to make sure you’re reviewing your policy at renewal time.

At the very least, you want to know what you have. Then you can tweak the policy or comparison shop. Make sure you don’t buy too much insurance. You don’t need to insure for the value of the land your house sits on.

According to the Insurance Information Institute, there are four elements that help you decide how much coverage to get:

- The cost to rebuild the structure.

- The cost to replace the contents.

- Additional living expenses if you have to move out during repairs.

- Your liability to others who might get hurt on your property.

If you’re looking to save money raise the deductible, don’t cut back on coverage. The Insurance Information Institute says increasing the deductible from $500 to $1,000 could reduce premiums by up to 25 percent.

Remember: the amount of money the policy will pay for contents and additional living expenses is typically based on the coverage of the structure.

It’s important to have a home inventory to show the insurance company if there is a loss. The free app MyHOME Scr.APP.book (available for iPhones and Android phones) from the National Association of Insurance Commissioners lets you quickly photograph, grab bar codes and serial numbers and store them digitally. There is also free software for your computer at knowyourstuff.org, a site run by the insurance industry.

We encourage you to spend time on both. It'll be time well spent.