Every day for the past three years, I've looked across the street at a vacant home that remains on a bank owned property list.
According to an article by CNNMoney, homeownership has fallen to its lowest rate in 15 years. It's unfortunate because interest rates are so incredibly low.
Many people are forced to rent as they lose their homes to foreclosure. It's never fun to be a renter, especially when you are used to the freedom of being a homeowner. It costs more to rent now than it does to make a mortgage payment. In fact, the going rate for rent in my neighborhood is so high, I question whether even I could afford to rent my own home.
The median rent in the country is up 5.6 percent from a year ago to $721, although homes similar to mine in Florida are renting for $1,300.
We bought our home for $183,000 at the top of the housing bubble, but it's now valued at only $110,000. I came up with a strategy for how we can keep our home even in the case of a job loss. My plan helped me get right-side-up on our mortgage.
Keeping an eye on mortgage rates
I have been keeping an eye on interest rates so that I can refinance at a lower rate if we have to go to one income due to illness or job loss. If we had one income instead of two, I'd switch to a 30 year fixed-rate mortgage at a lower rate. Refinance experts tell me my mortgage payments would drop from $1,222 to about $500 a month with the current amount we owe.
Paying extra on our mortgage
We have been making extra payments on our mortgage while we have the ability to do so. Every time I make an extra payment to our mortgage company, I set aside money in a savings account. If we have a major catastrophic event in our lives, we can pay off the house. In the meantime, we are taking advantage of a low interest rate mortgage. I like to save money in a Roth IRA since I can take out the amount I've put in for emergencies without penalties.We now owe what our home is worth, which will help if we ever have to sell due to job relocation.
Staying out of debt
Another way I make sure I'll never be a delinquent borrower is by paying off our credit card bills each month. My sons are not taking out student loans, but paying cash for college as they work their way through school. By staying out of debt, we have a better cash flow. If the going gets tough, we can still make the mortgage payment.
Looking at the unkempt home across the street, with an overgrown oak tree, reminds me that it pays to stay current on my mortgage. I don't ever want to be on the bank owned property list.
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