How You Can Prepare for A Market Crash
Over the last year, many of our clients have come to us asking for what strategy they should follow when buying a home that could help them prepare for another collapse of the Real Estate market.
This is something that every home buyer should be concerned about right now because, many home buyers before the last collapse of the Real Estate market were unprepared for a crash and purchased homes they couldn’t afford.
In today’s article, we will share with you a simple 4-point strategy that you can use to safely purchase a home and have confidence regardless what direction the Real Estate market takes in the next 12 months.
#1 – Don’t Pay More for A Home Than You Can Afford
The first way to survive a collapse of the Real Estate market is to not purchase a home that you cannot afford because, even though you may be approved for X, it doesn’t make sense to use the entire mortgage loan amount and have a house payment that you will not be comfortable paying each month.
#2 – Put Down as Much as Possible, If You Can
When buying a home one of the first pieces of home buying advice that just about every Realtor® or economist will tell you is to put down as much money as possible (ideally a down payment of 20%) because this will lower your debt obligation to the bank.
If you’re not able to put down 20% and have chosen a VA, FHA, or HUD mortgage loan, you must make sure that you’re going to be comfortable making that house payment each month, especially with the added cost of paying mortgage insurance and all of your other financial responsibilities which come with being a homeowner.
#3 – You Must Have a Steady Job
Another important thing to do before buying a home, right now, is to verify that you have a steady job and you feel confident that your employment will remain steady for the foreseeable future in spite of a collapse of the Real Estate or Stock Market.
#4 – Verify That You Can Always Rent Out the Home (If Needed)
Last of all, but most important, another important thing you should do before buying a home is to verify that you will be able to rent that home out (if needed) because, this will help you to avoid foreclosure, short sale or selling your home at a loss in the event of a collapse of the Real Estate market.
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