Friday, March 24, 2006


That is advice #1 of the top Do's & Dont's in this Yahoo story titled "On the bubble? Heed these dos and don'ts".

"The real estate bubble: It sounds like something out of a second-rate horror movie. And it's some homeowners' worst nightmare. "

"You buy the biggest home you can afford and use every dime to do it. Now, instead of increasing in value, the worth of your home, sweet home takes a nose dive. The bubble has burst, leaving you in a financial mess."

Here are the TOP TEN THINGS ( hit it Paul) to do now that the bubble has burst:

1. DON'T PANIC- "One of the biggest fears with a bubble is that the homeowner will owe more than the house is actually worth. But that's usually only a factor if you're selling, need to tap your home equity, or have an adjustable-rate mortgage (or some funky option where you're skipping or delaying paying the equity) and interest rates start to rise"

2. STAY PUT-"This could be a good time to trade your current adjustable-rate (or interest-only or a negative-amortization) loan for a fixed-rate version."

Are long-term interest rates going up?
Are existing houses sitting on the market longer? And how does that trend compare to months and years past?
Is it much cheaper to rent?"

4. ELIMINATE UNCERTAINTY- " If you suspect rates are going to rise and values are going down, and you have an adjustable-rate home equity line of credit or home equity loan, this might be a good time to step up the payments"

5. DON'T BORROW MORE MONEY ( I found this one particularly amusing, isn't that how they got this way in the first place?)- " The temptation often is to tap it now with an equity loan. Bad idea. Depending on the drop, you could end up owing more than the home is actually worth, or close to it (Figure an extra 10 percent for closing and moving cost.) So if you have less than 15 percent equity in your house, you're in the danger zone. "

6. REANALYZE YOUR INVESTMENT PROPERTIES- "It's one thing to hang onto a house because rent will cost you just as much each month and you know that your house will (eventually) appreciate. But if you're talking about an investment property and you see signs of home depreciation in the area, then you may want to take another look at the numbers."

7. DON'T GET CARRIED AWAY WITH UNNECESSARY IMPROVEMENTS-"If you're making improvements, make improvements that will sustain its value," says Retsinas. "Nothing frivolous"


At 11:23 AM, Blogger diogenes said...

It's way too early to panic....

Most "investors" are still in denial mode.

They still have to get to acceptance, anxious, then desperate......


Give it another 6 to 12 months.


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