Since the middle of May we have seen our economy and our lives turned sideways. Most people were financially comfortable making things work; however, few were prepared for our town being “closed for business.” The strain this has placed on families has been enormous. The financial world refers to this as a “liquidity” issue. Simply this means more is going out than is coming into our households and businesses. This is the fourth crisis I have worked through in my career as a real estate broker and one difference is the level of help available to our community. Along with leaders in the world of finance, real estate, and law I have created a few steps if you are struggling with payments, if you can see problems that may be on the horizon, or are in a “real estate emergency.”
1) Determine what your monthly expenses are and how much money you are receiving. Do your best to reduce any unnecessary expenses, to stop the bleeding and renegotiate any revolving bills. (ie: Internet or cell phones). Look into any mortgage deferral options your lender offers making sure you pay attention to the long-term costs. This would be time to contact a real estate broker to determine where you stand with regards to the value of your property and the equity you have built up. You want to have a complete picture of your situation.
2) Look at any government programs available: municipal, provincial and federal. There are property tax programs to stall paying your taxes, federal assistance such as CERB, employee assistance/ loans if you are an employer and assistance available for seniors. It might be worth viewing this as a family challenge. Funds may have to be pooled together to deal with the ongoing expenses.
3) Look at your options of removing equity out of your assets. This can mean selling items to raise cash, depleting some investments, securing a line of credit or even cashing in RRSP’s. Another way is to look at the mortgage you have on your property. There are a few options including increasing your mortgage to obtain cash to use for expenses or discharging your mortgage, replacing it with a lower interest rate mortgage. The rates are incredibly low. It may be prudent to take advantage of what is available.
4) Call a realtor. If you find that selling your property makes sense it is critical to determine what the options and costs to discharge your mortgage and to move are.
The last time I was in a market similar the one today was in 1990/1991. I observed home owners fell into several groups. There were those who quickly became realistic with their personal financial situations and where the market was and possibly where it might be headed. They gathered as much information as possible allowing themselves to create a plan, and a plan B if the economy worsened. The other group reacted to the market, many times when it was too late and many ended up in forced situations having to make fast, costly decisions.
My memories of the early 1990’s are that many of the people I consulted with at the beginning of the crisis stayed in their homes. Ultimately, we worked together, sometimes years later when they were ready to sell on their terms.
If you see the horizon a bit cloudy, reach out to a trusted realtor and a mortgage broker. It costs nothing to start a conversation and it might just save you stress and equity.
If you have any questions about this information or if you have other questions I can be reached at email@example.com
Lindsay Smith Broker
Buy Sell Love Durham
Keller Williams Energy Real Estate Brokerage