However, if you look at the country from a broader perspective, it is clear that there is upheaval and uncertainty. Even the markets which are doing well are trying to prepare for potential collapse. We just don’t know how things will pan out over the coming months and years.
As a homeowner in Yonkers or throughout New York, there are particular problems you may face in a financial crisis. How well you are prepared for them could determine whether you manage to stay afloat.
Here are some of the particular concerns for New York homeowners in case of a financial crisis.
Mortgage Payments
One of the immediate concerns for most homeowners in a financial crisis is how they are going to make mortgage payments. If your home is fully paid-off, you are in the best possible position – you own an asset and don’t have to pay rent. However, if you’re still making payments, loss of income can leave you scrambling to find the money just so that you can hang onto your home.
This is just one reason it is crucial for homeowners to have money in savings. In a financial crisis, having the wherewithal to pay your mortgage for a few months gives you the chance to pick up the pieces. At the very least, it gives you time to make alternative arrangements.
NY Home Values
New York homes are more expensive than homes in most other parts of the world. But if the housing market crashes, you may find yourself stuck with a home that has lost a large proportion of its value. If you then need to sell your home to make ends meet, you may struggle to find someone willing to pay enough to cover the remaining value of your mortgage.
There is no easy way to prepare for this possibility. The reality of owning a home is that value is never static. The best approach is to avoid buying homes when prices are high, but that’s something much easier seen in hindsight. When you need somewhere to live, waiting for housing prices to crash is not realistic or even desirable.
Homeowners Insurance in New York
Financial crises come with infinite variations. In some cases, prices of goods plummet while sellers struggle to make ends meet. In others, prices skyrocket. Lately, we’ve been seeing the latter happening. Thanksgiving groceries were famously at an all-time high. Housing prices have risen at an unprecedented rate. This can lead to problems you may never have considered.
One such issue has to do with homeowners insurance. Homeowners insurance is a necessary expense for any homeowners. How much does homeowners insurance cost in New York? In NYC it usually costs over $1,000 a year, while in Yonkers you may pay less than $700. However, regular homeowners cover can fall short in a crisis.
The reason is that, as has happened over the past year, the price of construction materials can rise at a rate that is higher than inflation. The amount that your homeowners insurance pays out may not be enough to cover the costs of rebuilding. For this reason, extended replacement cost coverage, which will pay the extra costs, may be a good idea.
Owning Your Home
The ideal scenario is that you own your home completely. For homeowners who no longer need to make mortgage payments, the best course of action in a financial crisis is often to stay put. You have somewhere to live regardless of what happens, and don’t have to worry about the changing value of your home for now.
It remains to be seen whether we will face a major financial crisis on a national level. However, it is good to be prepared as a homeowner, as you will have specific needs.
For prospective homeowners, it’s best to use a mortgage repayment calculator first to see how much loan you can borrow without leaving a hole in your pockets.
