5 Ways to Avoid the Pain of a Housing Market Crash

Whatever the current state of affairs for house sellers may appear to be, a look back in history warns us that a housing market crash often follows significant price rises.

Homeowners who had taken out adjustable-rate mortgages had seen their payments rise by 60% by 2006.

These are just a few examples of property prices reaching historic highs before plummeting to more reasonable levels. It's notable that stock investors frequently experience stock price falls or even crashes.

However, unlike stock market investors who might use swing trading to protect themselves against stock price drops, hedging against a housing market fall is more difficult.

While my swing trading course might be of interest to stock investors, this story will give some of the best ways real estate investors can protect themselves against a housing market crash.

Five Ways to Protect Against a Housing Market Crash

1. Build an Emergency Fund Examine your financial situation. Are you having trouble sticking to a budget because you are overextended with debt obligations?

To be prepared for emergencies, save enough money to cover three to six months of exer emergency fund. However, this dpenses. You may aim for a largepends on your comfort level. While trying to be positive, prepare for the worst-case situation.

Steps to take: – Save three to six months of your expenses in an emergency fund. – Stop paying off your debts and start saving. – Refrain from taking on new debt. – Consider selling high-priced assets (in case you can no longer afford them). – Get rid of unnecessary expenses.

2. Consider Refinancing If you already own a property, consider whether now is the best time to sell. Consider refinancing your current mortgage and take advantage of the present low rates. 

Even if you have no plans to sell, you should refinance now to take advantage of the current low rates, which will allow you to sit tight and weather any market storms. Home values reflect different factors, including the overall economy, geopolitical events, and, as we have seen, a global epidemic.

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