Don’t Panic: Experts Advise Owners to Ride Out Real Estate Slowdown

Marshall Loeb feels your pain. The former editor of Fortune, Money, and The Columbia Journalism Review, understands the panic that many home owners may be experiencing these days. They fear the worst: that the value of their home is dropping below the amount owed on it.

As Florida home loan rates rise and the housing market continuing to soften, this concern is common. Loeb and others advise you not to panic, however.

“A lot of people turn to their retirement funds,” says Marc Minker, a certified public accountant with Mahoney Cohen in New York City. “It’s not the best answer,” he warns, but it may be your only way out from a Florida home loan that’s costing you money.

If you’re facing the real estate crunch and don’t absolutely have to sell, a better option is to wait out the market downturn. Whatever your situation, Minker recommends a few basic steps to make sure you’re prepared for the worst, should the Florida housing market take a serious turn for the worse:

• Refinance your adjustable-rate Florida home loan into a fixed-rate one. Interest rates have risen sharply - 30-year fixed-rate Florida home loans are averaging 6.58%, compared with 5.77% a year ago, according to Freddie Mac - but they’re still historically low and the pennies you spend now will pay dollars later on.

• Set aside an emergency fund to make sure your mortgage payments are covered in case of catastrophe or if rates on your ARM rise sharply. You don’t want to be forced to sell in a down market.

• Consider taking out a Florida home equity line of credit, which you can tap when you want. Payments may be tax-deductible but rates are often variable so don’t get carried away and spend your “emergency” credit line on a new sports car.

• If your situation warrants it, consider downsizing or otherwise changing your housing situation - like moving from a seller’s market to a buyer’s market - to take advantage of the downturn.

The Florida mortgage loan market is squeezing all parties at the moment. Many owners actually are enjoying increasing prices on their homes, making the above steps unnecessary to take.