Hurricane Season Begins June 1st - Is Your Home Equity Safe?
Floridians need to add home equity to their list of preparations for the hurricane season.
Pembroke Pines, FL (PRWEB) May 29, 2006 -- At this time of year, Florida residents begin to prepare for the hurricane season. We receive many advertisements and preparation lists to help us in our planning. But what about protecting the equity in our homes?
Dr. William Gray from Colorado State University and The National Hurricane Center agree that the 2006 season is predicted to be worse than normal. Their predictions are for 17 named storms this season, of which up to 10 are expected to become hurricanes. Of these hurricanes, up to 6 are expected to become major hurricanes (Category 3 or stronger). They are also stating there is a 55% higher than average probability of landfall within the United States.
"Whether we face an active hurricane season, like this year, or a below-normal season, the crucial message for every person is the same: prepare, prepare, prepare," said Max Mayfield, director of the NOAA National Hurricane Center. "One hurricane hitting where you live is enough to make it a bad season."
Today, many Floridians are learning from the families that lost most of their money last year because it was “stored” in their homes. However, there are only a few Floridians who have taken the necessary steps to prepare their homes’ 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 just in case another disaster happens like Katrina, Rita, and Wilma last year.
Senator Trent Lott, of Mississippi, is one of them. Senator Lott lost his home during Katrina last year and stated he lost $400,000 due to the storm, representing half of his retirement “nest egg”. He is still fighting with the insurance company to receive the funds necessary to rebuild the house, after he settles; he has to wait in line to have his house rebuilt, a process that could take years, before he can take out his equity in the shape of a mortgage. If he had taken out a loan prior to the storm, he would have cash in the bank to keep paying his families’ living expenses and would be able to recover quicker.
After Rita moved through Port Arthur, TX, Mayor Oscar Ortiz had his house burn to the ground. Do you think he said that he was happy he just paid off his house? Well, he actually said, “the sad thing is, we just paid off the house”. Will Floridians be saying something similar if another hurricane hits this great state?
Floridians must decide if they would rather have $100,000 in home equity or $100,000 in the bank. If they choose the latter, they are probably going to be better off. They will have cash on hand to get them through any financial crisis that may arise and can live with less stress knowing that they can pay the bills for a long period of time, even without any income.
Remember, if you have all of your money in home equity, you will not be able to obtain a loan if a disaster hits. A mortgage is a loan against your ability to repay and the house must be in saleable condition for the lender to accept it as collateral. Many Americans have lost their equity after disasters because they were unable to make their mortgage payments and defaulted on the loan. Floridians need to prevent this from happening by acting now, before the next storm hits.
For more information on home equity not being a safe investment, contact Robert D. Ashby, Certified Mortgage Planning Specialist, at (954) 432-3450 or visit www.solidrockmortgage.com. Properly managing equity and debt makes all the difference.
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