Recession Proof Your Housing

In my last post, we looked at the consequences of higher interest rates upon the renewal of your mortgage.  Here are 10 tips designed to protect you from becoming overextended financially in this event.

1.  Don't buy too much home.  Avoid the temptation to overspend based on what you qualify for.  Downsize your expectations and upgrade when you have more equity.  Remember you need to furnish a home as well.  

2.  Buy with resale in mind.  The location of your home makes a huge difference in its' liquidity.  Homes in good locations will sell relatively quickly in good real estate markets or bad.  Think transit and walking distance to amenities.

3.  If you're able, qualify your mortgage based on one income only.  Job security is rare and using 2 incomes to qualify for a mortgage leaves you fewer options in the event of job loss. 

4.  Make certain your mortgage is assumable.  With rates on the rise, your 3.75% mortgage with 4 years left to run becomes a selling feature.  Note the lender will reserve the right to make sure the buyer will qualify. 

5.  Avoid debt other than your mortgage.  Commit to pay off the balance on your credit card(s) and line(s) of credit monthly.  At the least, make your minimum monthly payments on time to protect your credit rating.

6.  Shorten your amortization.  This is the time it will take to pay off your mortgage.  Use no more than a 25 year amortization.

7.  Take advantage of the prepayment options on your mortgage.  If you're fortunate enough to earn a bonus or have a tax refund, put it towards your mortgage.  Commit to be mortgage-free as soon as possible.

8.  Rent out part of your home to generate income.  Having this option is an excellent "rainy day" feature.

9.  Always, always, always have a professional home inspection completed on the home you purchase.  Unanticipated expensive repairs will cause you unwanted and unnecessary stress.

10.  Drive what you can really afford.  For some, this may mean cutting back from 3 vehicles to 2 and for others, it may mean take the bus.

As always, feel free to contact me for sound advice based on your situation:  jeff.gingerich@century21.ca or direct 519-505-4488.

 

          

Jeff Gingerich

Jeff Gingerich

Sales Representative
CENTURY 21 Home Realty Inc., Brokerage*
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