As the real estate markets continue to drop around the country, several homeowners are questioning what they can do to defend themselves and the investment they have made in their home. There are really numerous different ways you can take to take to ensure you stay ahead of the softening real estate market.
One of the very first steps that should be taken is to check with if your city or county property tax office to study your current tax assessment. This will tell you what the county or city-states your home is actually worth. You should then compare this rate to what your home is currently worth based on current market conditions. It is not rare for homeowners in many states, like California, to find out that they are paying more money in property taxes than they should be paying based on the worth of their home in the present market.
Homeowners in some states are really paying up to 40% over what they should pay. If you are not sure of your home’s current value in the existing market, it is also a good idea to have your home appraised to determine its current value. Taking both of these steps will give you a realistic idea of the value of your home in the current market and ensure that you are not paying more money in taxes than you should be.
If you do have an adjustable rate mortgage it is certainly worth it to consider refinancing your mortgage to a fixed rate mortgage. Before you actually refinance; however, there are several steps which you should take first. Start by checking your existing mortgage documents to determine if you will be punished for paying off the existing loan quick. While you will be taking on a new loan, your current loan will be paid off when you refinance it and this could lead you to penalties if such a clause exists in your mortgage documents.
In some cases, you may discover that you actually owe more on your home than it is worth. This is actually not rare among homeowners who took out exotic mortgage loans a few years ago when prices were increasing rapidly and the market was a hot cake. However, today, this can result in a bit of shock among homeowners who are facing big mortgage payments on homes that have fallen rapidly in value. While it is expected that the market will start to stabilize sometime next year, you will need to give some careful thinking to whether it would be in your best financial interest to just walk away from such a situation and try to start fresh.
Additionally, you need to consider how long you plan to remain in the home and balance out that time in comparison to the number of closing costs you will need to pay when you refinance your home. While several mortgage companies promote ‘no cost’ refinance loans you should know if such loans rarely, if ever, exist. The costs for refinancing your loan are usually financed in with the loan under this type of plan. This means that instead of paying the costs for the loan up front you will be paying interest on them throughout the duration of the loan. In addition, it is important to research any mortgage company you consider to ensure there have been no complaints filed against them before you refinance your mortgage.
If you plan to remain in your home, it is also a good idea to check your homeowner’s insurance policy to be certain that it is up to date. This can prove to be critical in the event you suffer any type of loss on your home in the future. If you live in an area that is susceptible to hurricane or storm damage it is especially important to make sure that your policy accurately reflects your home in its current state.