What to do as a homeowner during market turbulence
It’s a stressful time for finances. We’ve dealt with gas price spikes, interest rate spikes, inflation, mortgage rate spikes and now high-profile bank failures.
If anything, humans love stability. And things don’t feel particularly stable right now.
But if you’re a homeowner, then you already have some built-in stability. You aren’t subject to rent increases nor a landlord’s whims.
A lot of homeowners are digging in and staying put, as evidenced by the very low housing inventory, which is keeping home prices up despite the high mortgage interest rates.
Still, there are some things you can do to shore up your position and finances while staying put. Here are a few smart ideas (feel free to weigh in with other ideas in the comments!).
Take stock of where you are today
Even with mortgage interest rates high and refinancing off the table as a result, it’s good to know where you stand with your mortgage. If you’re aware of your mortgage, interest rate, how many years you have left, then you can keep it top of mind to consider options such as recasting, making extra payments or other ways to hedge market turbulence.
After all, your home is an asset that, for the moment, doesn’t seem to be depreciating in an environment of inflation.
This guide I made is designed for making sure that the home you own is a good an investment as possible, even when your other investments aren’t doing so hot: “Your Home As An Investment.”
Get to know your home equity
Most people aren’t aware of how much home equity they have. I’m a big believer in the sentiment behind the phrase “Measure what you treasure.” It’s often used in cringe-y management or corporate-speak to select metrics you care most deeply about, like customer satisfaction, etc.
But I feel it also applies to home equity, as it’s sort of the silent, powerful and growing net worth that you have. Like an oak tree, if you take good care of it and tend to it, it will pay off in a beautiful bounty. Measure your home equity because you value it, and that will pay off in making smart decisions that help it grow even more.
Discover your home equity in my newly redesigned, free instant equity report that tells you everything you need to know in under a minute: “Instant Home Equity Report.”
A lot of times as homeowners we just go along with our service providers and don’t second guess them. For example, I get my boiler serviced every year by a company that charges me $320, but also gives me a discount on any other maintenance or repair for the year. I recently got a mailing for $147 boiler servicing. While I guess I won’t really know if one service is better than the other, they both seem competent. I often pay higher prices for more skilled service providers and prefer quality work, like we all do.
But there are many commodity things that you can certainly examine for savings. Take for example, your homeowners insurance. Homeowners insurance has risen even faster than inflation. Many policies have increased over 20%, due to hikes in property replacement costs, etc.
Energy is another one. If you can heat or cool your house for less money, or strategically upgrade your systems, that results in money savings and in many cases a better quality of life (fewer drafts!).
Since homeowner costs, like insurance and maintenance are so very expensive, cutting them just a little bit can make a big difference in turbulent times. Here’s a piece on cutting expenses for homeowners with lots of handy tips: “How to mitigate against the rising costs of homeownership.”
Get unstuck if you’re avoiding making a needed change
Are you one of the many people feeling stuck in a holding pattern during this period of higher interest rates? Whether you are buying, selling, trying to refinance out of an adjustable rate mortgage, or evaluate the options for a home equity line, you might feel stuck.
I’ve heard from many people for whom higher mortgage interest rates have put a major wrench in their plans.
But, when it comes down to it, it’s just a matter of math. Any challenge can be overcome once you know what your goals are and your options are. The best way to tackle your own issue is not by inertia but by evaluation.
Lay out the following:
1. Your top goal or main goals
2. Identify your best three options
3. Analyze the financial details of each
Things can become a lot clearer when you follow a simple process to get unstuck. Higher rates are not ideal, but don’t let opportunities pass you by, either.
Sometimes all you need to do is get going. If you need expert help, I have a service for little evaluations as well as big ones: “Real Estate Asset Financial Evaluation.”