Despite the lack of hurricanes this year, Floridians should start preparing for the upcoming hurricane season. You receive many announcements and preparation lists to help you in your planning. But what about protecting the equity in your home?
“Whether we’re facing an active hurricane season, like this year, or a below-normal season, the crucial message for everyone is the same: get ready, get ready, get ready,” said Max Mayfield, director of the National Hurricane Center. NOAA Hurricanes. “One hurricane hitting where you live is enough to make it a bad season.”
Today, many Floridians are learning from families who lost most of their money last year because it was “stored” in their homes. However, only a few Floridians have taken the necessary steps to prepare their home equity for a potential disaster. They have taken out a new mortgage that allows them to increase their liquidity and keep the money in a safe investment in case another disaster strikes like Katrina, Rita and Wilma last year.
Senator Trent Lott of Mississippi is a good example of what happens to your home equity in a disaster. Senator Lott lost his home during Katrina last year and stated that he lost $400,000 due to the storm, which is half of his retirement savings. He is still fighting with the insurance company to receive the necessary funds to rebuild the house, after it is settled; he has to stand in line to have his house rebuilt, a process that could take years, before he can get the capital out of him in the form of a mortgage. If he had taken out a loan before the storm, he would have cash in the bank to continue paying his family’s living expenses and could get back on his feet faster.
After Rita moved to Port Arthur, TX, Mayor Oscar Ortiz had her house burned to the ground. Do you think she said that she was happy to have paid for her house? Well, she actually she said, “the sad thing is that we just paid off the house.” Will Floridians say something similar if another hurricane hits this great state?
Floridians must decide if they prefer to have $100,000 in home equity or $100,000 in the bank. If they choose the latter, they will probably be better off. They will have cash on hand to get them through any financial crisis that may arise and will be able to live with less stress knowing that they can pay bills for a long period of time, even without any income.
Remember, if you have all your money in home equity, you won’t be able to get a loan if disaster strikes. A mortgage is a loan against your ability to pay, and the home must be in resaleable condition for the lender to accept it as collateral. Many Americans have lost their wealth after disasters because they were unable to make their mortgage payments and defaulted on the loan. Floridians must prevent this from happening by acting now, before the next storm hits.
For more information on home equity that is not a safe investment, contact Robert D. Ashby, Certified Mortgage Planning Specialist, at (954) 432-3450 or visit http://www.solidrockmortgage.com. Proper capital and debt management makes all the difference.
