A nationwide database keeps track of nearly every insurance claim that homeowners and car owners have filed in the past seven years. Consumers are entitled to a free copy of each one every year.
QUESTION: We are selling our home. Our real estate agent wants us to obtain something called a “C.L.U.E.” report to show that our house has never been involved in a major insurance claim. Is this really necessary?
ANSWER: It’s not necessary, but the report could help your marketing efforts and perhaps even boost your eventual sale price.
“C.L.U.E.” is the acronym for the Atlanta-based Comprehensive Loss Underwriting Exchange. The exchange is basically an insurance-industry warehouse that’s full of reports of the claims filed by homeowners and car owners in the past seven years.
Federal law allows consumers to get a free copy of their C.L.U.E. report once each year, just as it allows a free annual report from each of the three major credit bureaus.
If I were selling my home today and had not filed a big claim in the past seven years, I certainly would include a C.L.U.E. report as part of my marketing efforts. A “clean” report can make a buyer feel more confident that the property has been free of major problems, like flood damage or mold, which in turn may prompt them to raise their offering price.
In fact, many savvy buyers today make their offers contingent upon receiving a satisfactory C.L.U.E. report from the seller before they’ll move forward with a transaction.
The C.L.U.E. system is operated by information-gathering giant Lexis Nexis. You can get a free online report at https://personalreports.lexisnexis.com or by calling the company toll-free, 1-866-312-8076.
REAL ESTATE TRIVIA: Midway through this year’s hurricane season, 2005’s Katrina remains the most expensive storm in history. The National Flood Insurance Program has paid 168,000 claims to Katrina victims, totaling more than $16.3 billion, with the payout to each policyholder averaging $97,134.
Q: We are refinancing our mortgage, and our broker is offering to set us up on a money-saving biweekly repayment plan if we pay a one-time fee of $350 for the additional paperwork. Would this be a good idea?
A: A biweekly repayment program can save you thousands of dollars in finance charges over the life of a loan and let you own your home mortgage-free several years earlier than a 30-year loan with a traditional once-a-month repayment schedule. That’s because, since you’d make about one-half the normal monthly payment every two weeks instead of once a month, you’d make the equivalent of 13 monthly payments each year instead of the usual 12.
On a $200,000 mortgage, choosing a biweekly plan would save you about $24,000 in interest charges and let you pay off the loan about four years earlier than making monthly payments on a standard 30-year loan would.
Still, biweeklies have their drawbacks, too. For starters, if you run into a sudden “cash crunch” — like having to pay for major auto repairs or medical bills — you might not be able to keep to the rigid once-every-two-weeks schedule and then get stuck with big late fees every 14 days instead of once a month. Many lenders and mortgage brokers also charge hundreds of dollars to set up a biweekly repayment schedule.
You can avoid such risks by choosing a traditional monthly plan, and then adding a simple “principal-only” payment to your monthly check when you can afford it. If money gets tight, you simply can pay the minimum that’s required. But if you get a financial windfall, like a handsome pay raise, a fat holiday bonus or big tax refund, you can use some or all of the money to apply it to the outstanding balance of your loan.
Choosing this alternative over the more rigid biweekly schedule would give you extra flexibility, and perhaps save you even more money and trim more time off the loan.
David W. Myers’ column is distributed by Cowles Syndicate Inc.