Ways Your Home Can Help You Ride Out a Recession
A recession can be a scary time for everyone. Whether you’re a new homeowner or you’ve had your home for many years, you might be wondering how you’ll be affected. Here are some tips for homeowners navigating a recession.
It May Be Worth Considering a Sales Leaseback
Sale leasebacks are becoming increasingly more utilized. If you’ve ever wondered: what is a sale leaseback in real estate, we have the answer. It’s when a homeowner sells their home but continues to live in the home as a tenant by leasing it back for a pre-agreed-upon amount each month.
For the seller, this can be a great way to get out of debt and avoid the high cost of property payments while gaining access to your equity. You won’t have to worry about making any home upgrades; that’s up to the buyer. This can all be advantageous during a recession, especially with inflation and the overall cost of living increasing. It can be a good solution for retirees.
As for the seller? A sales leaseback can be a great way to take advantage of lower interest rates without having to commit to moving just yet.
It’s a win-win for everyone involved, and it can be a great option during a recession.
It Can Be a Good Time to Buy a Home
Have you been wanting to buy a home? A recession can be a great time to become a new homeowner. There are a couple of reasons for this.
During a recession, the Feds will generally lower interest rates. This means that mortgage rates tend to be lower during this time. If you’re looking to take advantage of a lower mortgage payment, then there’s no better time to buy than a recession.
In some cases, home prices may also drop since there’s less competition for homes due to less qualified buyers. But even if the cost of homes remains high, the low interest rates can be the balance you need to be able to afford your dream. Regardless of home prices, a recession can be the perfect time to buy a home.
It’s a Good Time to Refinance Your Mortgage
Is your mortgage rate higher than you would like it to be? Since interest rates are lower during a recession, this could be the perfect time to refinance your mortgage. Your best bet to locking in a lower mortgage payment is having a credit score of at least 620, but certain government programs don’t have this requirement.
Variable Mortgage Rates Will Drop
If you have a variable mortgage rate, you won’t need to refinance your mortgage. Your interest rate will drop as the Fed lowers rates during a recession.
When interest rates are low, it can be a good time to refinance your mortgage to a fixed-rate mortgage. This way, you won’t have to ever worry about getting trapped in a mortgage with a high interest rate again.
It’s Not a Seller’s Market
The downside to selling a home during a recession? It’s generally not a seller’s market. This means that it’s unlikely you’ll actually see any major profit when you sell your home. If you want to make money when you sell your home, it’s ideal to sell before or after a recession hits.
Sometimes, selling your home is unavoidable. If you must sell your home during a recession, it’s important to have realistic expectations. Understand that your home might not sell right away — and not for the amount that you might hope to get for it.
These are just some tips for homeowners navigating a recession. There’s no doubt that this can be a scary time to own or buy a home. That being said, these tips can help you determine what to do during an economic slowdown.