5 Ways to Keep Your House During A Market Crash
Anyone paying attention to the housing market in the Los Angeles area knows that home prices have been at record highs. National Mortgage News suggests that this could be a housing bubble about to burst, and a decline in home prices and an increase in mortgage defaults may be on the horizon. Here are five ways that you can protect your investments and keep your home during a market crash.
Pay Off Your Mortgage ASAP | Market Crash
If you default on your secured home loan, your house will be foreclosed upon and seized by the mortgage lender. If you have the cash flow to be able to pay it off as fast as possible, you will have a better likelihood of getting through the market crash with your house still in your possession. This can be a tall order, but there are ways to strategize and achieve this when you have it as your ultimate and prioritized goal.
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Rental Properties | Market Crash
If you can pay off your mortgage before the crash, or find another way to free up some cash, you can take advantage of the post-crash real estate prices to buy relatively inexpensive property. Since rental prices are not always impacted by a housing crash, renting this property can help provide a cash flow to keep you afloat.
Refinance Your ARM Into a Fixed Rate Mortgage | Market Crash
Adjustable-rate mortgages, or ARMs, have monthly payments that can move up and down as interest rates fluctuate. The market has been ideal for adjustable rate mortgages in recent years, but interest rates could skyrocket following the crash. In this case, your monthly payment could increase significantly, making it harder to pay your mortgage. According to NerdWallet, refinancing into a fixed rate mortgage might be a good fit for you based on your personal circumstances.
Put 20 Percent Down on Your Home Purchase | Market Crash
There are perks to making a sizeable down payment on a new house. When you chip in at least 20 percent of the cost upfront, you are exempt from paying a monthly PMI. This leads to not only paying less interest over time, but also lower monthly payments. This can be vital to maintaining payments during a market crash.
Downsize | Market Crash
Buying a home that is larger than your needs require may also mean a bigger price tag than you can afford. Purchasing a smaller house that better fits your needs can keep your monthly costs lower and will help you to better ride out a housing market crash.
While the future of the housing market in Los Angeles remains uncertain, following these tips can help you stay in possession of your home no matter what happens.
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