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With all the talk about plateaus or bubbles in the real estate market, many homeowners are getting nervous. It’s understandable. According to Money magazine, middle-class Americans have on average 60 percent of their net worth tied to the value of their home.
If you already have a diversified portfolio and plan to stay where you are for the long term, you should have little to worry about if the housing market hiccups—though you should always check with your financial professional just in case. And many real estate analysts only expect bubbles to burst in already rampantly over-priced areas.
If you are still uneasy, or can’t afford to move, consider small remodeling projects to increase your home’s resale price. Be aware of what kinds of improvements lead to increased value. Pools don’t add value; outdoor living space, such as backyard decks, does.
If you find yourself in one of the following situations, it may be worth your financial security to put the For Sale sign out and to look for less expensive living quarters:
- You have little in savings but plan to retire in five years.
- You may need the cash proceeds from a home sale within the next five years.
- You’re having trouble meeting your current mortgage payments.
You may also want to take the following steps:
- Pay down as much of your mortgage as you can as early as possible.
- Check with your accountant or financial professional about the tax implications of a sale; find out if the down payment on a new home will jeopardize your nest egg.
- Consider your housing needs and lifestyle preferences.
Only then, after these assessments, should you call your realtor.
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