Money Moves for 2006, Part 1: Your Home

In preparation for the New Year, Money Magazine has published a series of money moves that you should consider making in 2006. First up: five moves designed to ‘bubbleproof your biggest asset… and control your biggest debt.’ Read on to find out what they suggest…

(1) “Lock in a fixed rate mortgage.” Analysts are predicting that 30-year fixed mortgage rates will rise to at least 6.7% by the end of 2006. In contrast, 30-year mortgages are currently almost as cheap as 5/1 ARM rates. Thus, you can get the safety of a fixed payment for little more than the cost of an adjustable rate mortgage.

(2) “Don’t buy too much home.” This is always good advice, but with housing affordability at a 14 year low, you could end up breaking the bank if you resort to some sort of ‘creative’ financing to get into that McMansion that you’ve been dreaming of.

(3) “Go easy on the flipping.” The housing market is tightening up, and the inventory of unsold properties is growing in many areas. Thus, you may end up getting stuck with what you buy, or even take a loss, if you jump in the market hoping to make a quick buck.

(4) “Second homes are still in.” The market for vacation homes is apparently still strong so, if you own a vacation home, there’s no need to bail out (then again, perhaps it’s best to sell when the market is still strong). If you’re currently in the market for a vacation home, patience is a virtue. If the market for primary residences continues to weaken, then vacation homes may soon follow.

(5) “Beat the heating bill.” With heating oil and natural gas on the rise, with projected price increases of 33% and 50%, respectively, it’s more important than ever to conserve energy. So make sure you’re doing the little things… Open your drapes when it’s sunny, and close them at night, replace your furnace filter regularly, and close the flue on your fire place when it’s not in use (assuming that you have one). I would add to this that you should check/repair your caulk, make sure your doors are weather stripped, seal your windows if necessary, and insulate your garage.

So there you have it. Look for more tips in the coming days.

You’re reading Part 1, Your Home
Read Part 2, Your Portfolio
Read Part 3, Your Job
Read Part 4, Your Health
Read Part 5, Your Family
Read Part 6, Your Spending

[Source: CNN/Money]

3 Responses to “Money Moves for 2006, Part 1: Your Home”

  1. Anonymous

    I am one year into an ARM with 4.5% rate now and guaranteed not to go up for another 28 months. And then no more than 1% a year based on the government T-bill or something like that(sorry). Should I move to a fixed rate now? Thanks.

  2. Anonymous

    Good advice all! I would also suggest that if you’re older you might also look into a 15 year fixed. My wife and I are in our early 50’s and locked in a 4.75% fixed at 15 years which will having us owning our home by the time we retire (Holy 1950’s Batman!). The advantage for younger homeowners who might be moving is that you do build equity faster and get lower rates.

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