You procrastinated again. More
than a week into the New Year and you
still haven't made up your mind what
you'll resolve to improve, change, or
accomplish. A home owner advocacy group
is here to help. The American Homeowners
Foundation (AHF), a consumer research
and education group and its lobbying
arm, the American Homeowners Grassroots
Alliance, have some pretty good ideas.
They think you should get your financial
house in order.
Considering the housing boom has
taken a turn and the economy isn't
certain which way is up, making sure
your home economy isn't headed for a
recession is a good idea. "We think you
should look at things from the point of
your economic best interests," said
Bruce Hahn, president of the dual
efforts. Here's how. Resolve to:
Get your home finances in order.
Adjustable rate mortgages are adjusting.
Home prices are flat and falling. Review
your finances. Look for ways to save
money, reduce risks, and lock in long
term financial planning.
The AHF says if your mortgage is
more than a few years old there's a
pretty good chance you can get a lower
mortgage interest rate, lower your
monthly mortgage payments and, over the
long haul, reduce your interest costs.
Because most of your mortgage payments
in the early years consist of interest,
you may also end up with a larger tax
deduction.
A recent Harris Poll found that
the majority of home owners don't put
their equity to work. An equity loan, by
nature, is an equity depleting loan, but
if you use the cash for necessary
capital improvements or investments that
provide a decent return (education,
business start-up, home improvements,
etc.), you can earn back the equity
spent, with interest. Professional
financing planning can help you
visualize the possibilities.
Stop lending interest-free money to
Uncle Sam. He's loaded -- if only on
paper. Refunds feel good but only
because it's like stuffing cash into the
mattress and making it softer. Your tax
withholding should be designed, as much
as possible, so that come tax return
time, you owe the feds nothing and they
owe you zip. other wise you are simply
loaning your money to the government
interest free or borrowing it at
exorbitantly high rates. Get a tax
professional to help you set your tax
withholding levels to the zero
refund/taxes-due level and use your
money during the year to pay off high
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interest rate credit cards, pay some
principal on your interest-only or
option-payment loan, to pull deferred
maintenance on your home or other wise
invest the cash, say, in a retirement
fund with employer-matched
contributions.
Increase your savings and reduce or
eliminate high interest rate credit.
Keep the resolutions mentioned above and
this one is easy. Shop around for the
best interest rates both to consolidate
loans and for savings, especially those
federally insured Internet banks and
other institutions that offer the best
rates on both ends.
Review your homeowners and other
insurance to maintain adequate coverage,
raise deductibles and other wise adjust
your coverage to optimal levels -- not
too much, not too little.
Save money and the planet by
reducing home energy costs. Get a home
energy audit to determine where you need
to batten the hatches or install new,
more energy efficient appliances and
materials.
Be a smart home buyer or seller.
Virtually every real estate cost (except
taxes) is negotiable. Negotiate tough.
Use discount or rebate services when
they supply the level of service you
need. In softer markets, sell before you
buy so you are not left holding the bag.
By moving into a short term rental until
you find your new home, you'll maintain
some leverage on the selling end and be
able to concentrate on negotiating when
it's time to buy. The strategy can
easily offset the cost of a few months
of renting.
If you've decided to stay put
through the softer real estate market,
it's a good time to pump up your home's
value with home improvements, energy
improvements and even cosmetic
improvements. Building material costs
have dropped and in some markets
refugees from the home building industry
are looking for work and are willing to
deal. Just make sure you pick a licensed
contractor skilled in the work you want
performed and not just a down on his or
her luck home building laborer.
Get involved in the political
process to influence issues including:
retaining and increasing the tax
benefits of home ownership; new home
defects; mortgage fraud; questionable
title industry practices; kick-backs;
anti-competition practices; global
warming that hits home and other issues
that affect your bottom line at home.
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