With all the hype about how well the real estate industry is recovering the fact that millions of homeowners are still under their upside-down mortgages has gotten for the most part swept under the rug.
However, not all is gloom Corelogic recently reported, as the number of homeowners underwater is in fact down by nearly 2 million since last year with nearly another 2 million more being within 5% of being back in the black.
There are a number of factors these stats, while not great, are still worth a sigh of relief. These conditions give us strong indicators of a greater market recovery as supply has decreased, lending has loosened up slightly, and interest rates continue to be very, very, very low.
If you are a homeowner who has recently finally surfaced and gotten out from under your upside-down mortgage the future it doubtlessly looking a lot more bright. Maybe even so much so that you’ve been thinking about putting this new found freedom to work, but there are things to consider first to avoid a potential return to the depths.
Sell for the sake of selling.
A lot of homeowners who were underwater have the cabin fever, bad. They’ve felt stuck in their location, held prisoner by the hits to their credit or crom coming up with the shortfall from their own accounts. Just because your home value is finally headed the other direction is NOT the time to be hasty.
One of the most important things we’ve hopefully learned during this time of recession is that we actually need much less than we thought before. Enjoy the simple things, nurture patience, and use this time to save and invest in order to find better financial integrity down the road.
Don’t do it. Just don’t. Using your home as an ATM at this point means putting your home itself at risk.
Everyone’s situation is different but borrowing cash against your home likely isn’t a very wise gamble at this moment. You’ve worked hard to finally level things out; while instant gratification always feels great at first you could literally be putting your home on the line. One exception might be if the borrowed funds were to be reinvested into the home itself in the form of smart improvements – which ultimate would increase the value of the home.
Some smart home improvements will generally be things that make the home more comfortable or efficient, like built-in shelving, dual paned windows, or other green energy improvements. Avoid over the top items like a pool, tennis court, or big garage additions which may not appeal to all buyers.
As a rough and tumble veteran of the real estate battlefield you may be feeling gutsy, like maybe using some of that new found equity to become the next Trump is a sure win. While flipping homes can be a viable business model for the small investor you do need to be careful as the easiest mistake is biting off more than you can chew – and it can get you into trouble fast.
In many cities the bottom of the market has already passed; there is no guarantee that you’ll be able to flip even a bargain priced home for a profit if the market stays turbulent. It’s likely unwise to risk your just recovered mortgage status in today’s volatile and uncertain investor market — especially if you’re just getting back on your own feet.
Do you have questions about investing in Idaho real estate? Maybe you are a homeowner still underwater and not sure where to turn. Le Bois Realty can help you either way! We’re glad to help investors find great properties here in the Treasure Valley and we are especially adept at helping homeowners understand mortgage, foreclosure, and short sale processes. Contact us today to find out how we can help!