Lots of people are of the opinion that the real estate market is coming out of the crisis. But experts have opined that a large number of homeowners may find themselves in worse situation within the next two years.

It’s very important to know if your home is underwater or not. Check out 4 important signs to know whether or not your property has lost value.

• Rising unemployment:

Homes have lost value is those cities where the unemployment rates have been higher. It has been found that in California, properties have lost around 40% home values (according to Zillow). According to the labor department, California also has the worst unemployment rate – 27.5%. People who live in areas which have high unemployment rates can find their home values to drop further.

• Homes lingering on the market:

If a house in your area is not selling for a long time and the “For Sale” sign lingers for three or more months, then there are chances that buyer and seller are not agreeing on the same price of the property. Thus, the seller will have to lower the price of the property in order to sell it off. If this trend continues, the other properties in your area would also lose value.

• Foreclosures in your neighborhood:

Your property can end up losing value if you live in a neighborhood where foreclosures have become quite common. It is said that when one property in your neighborhood goes into foreclosure, your property’s value will drop by 1%. But again, if 2 properties in your neighborhood goes into foreclosure, then your home’s value may drop by more than 2%.

• Poor condition of homes in your neighborhood:

Take care of your home or else it may lose value. If your neighbors are not taking care of their property, it may affect the value of your property. Broken porches or dented siding can inevitably lead to a lower value of your home. If your neighbors are not investing in their property to keep it in a good shape, be ready to lose your property’s value.

After years of overbuilding, over-investing, quick-flipping, and credit over-extension, we are now facing the real estate crisis - a crisis which has been created due to our own faults. As a result, the real estate market has been re-priced. Now, it’s high time that we go back to the fundamentals of mortgage and follow them to save ourselves from further crisis.

Here are 5 tips which you may consider before you take a mortgage for your dream home:

Down-payment: If you are planning to buy a property, it would be a smart move if you start saving from today. A large down-payment of around 20% will help you in getting better interest rates and lower payments. You will also be able to build some quick equity in your property and thus can refinance the loan at a lower rate in the future.

Long term loans: This is not a good time for buying a property for quick flipping. No one knows when the real estate market would be revived. Venture into the real estate market only if you want to stay in that property for a longer period of time.

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