The Real Deal

Take care of home in good times and bad

By John King

For many people the talk about a softer economy, stock market woes, and "dot-gone" layoffs, is more than just talk. It is a reality that affects pocketbooks and savings accounts for homeowners who might be facing huge house payments every month. When the numbers aren't adding up and the bottom line isn't looking as well as it could, what can homeowners do to ensure the investment in their home maintains its value through the tough times?

The tendency might be to tap into your home to get through an economic downturn by reducing insurance or taking out an equity loan. It is important to remember that your home is still usually your largest asset and it's important to treat it accordingly.

For one thing, it is a good idea to continue to maintain the maximum insurance possible on the property, in case of any damage or liability that might arise from earthquake, flood, fire, theft or injury. That way the home is always covered to replace your lost asset. Insurance is still a reasonably small price to pay for security. Lenders require homeowners to maintain their insurance, otherwise they will force homeowners to pay for insurance through them, which is usually more expensive.

Equity borrowing may be an appropriate way to gain some extra cash, but it is important to obtain a number of quotes from banks and mortgage lenders and know the terms of the loan and pay back schedule. The best suggestion is to never respond to offers that come in the mail. Get a couple of lender referrals from local real estate agents or title/escrow companies. They know who are reputable lenders in the business and also have current knowledge of lending rates.

There are positive steps homeowners can take to make their investment keep pace during an uncertain economy. Keeping your home in good shape by making repairs and maintaining its condition is one way to increase or preserve the value of your asset. When maintaining a home, have regular structural pest inspections once a year and correct any conditions right away. If homeowners don't take care of things on a routine basis, it could turn into a big expense later on.

Remodeling is another way to add value. When improving a home or maintaining it during soft economic times, homeowners should improve only what is necessary. Don't remodel a kitchen or bath thinking a potential buyer is going to pay many times more than the amount spent for the remodel. Buyers may have less resources to pay for big improvements and it may not be possible for the seller to get reimbursed during the sale. When improving a home for sale, be sure to stay within 2 percent of the value of the home, as costs for improvements.

Taking care of your home through good times and bad protects your biggest asset and ensures the best value in the years to come.

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John W. King, CBR, is a broker with Alhouse King Realty Inc. in Palo Alto. Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors. Send questions on any topic to: Real Deal, c/o SILVAR, 345 San Antonio Road, Los Altos, CA 94022; call 650-949-9115; or email to ppompei@siliconvalley-realtors.org.

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