3 Ways to Recession-Proof Your Home, According to Experts

Experts say a recession is on the horizon for the U.S. What that will look like this time around is anyone’s guess (at least we don’t have to worry about the subprime mortgage market anymore), but it is safe to assume that corporations across the country are going to start tightening their purse strings at the first sign of a financial downturn. 

Fortunately, you don’t have to wait for that to happen in order to start preparing. In fact, the experts we talked to suggested three things you could do right now to protect your home—and your wallet—ahead of an economic slowdown. 

Sure, home warranties are often bundled in as a purchasing perk when sellers list their homes, but you can actually purchase one for yourself long after you’ve closed on a place. Benjamin Joseph, cofounder of Liberty Home Guard, says that most homeowners will see an 80 percent return on their investment when they purchase a home warranty, making it a great way to invest in your home before the market starts to struggle. “The last thing a person needs is to have huge repair bills when they’re looking for work, or are just worried about their income,” he says. The average warranty package costs about $55 per month, or $530 per year. 

For less than you pay for internet service, your home warranty company will find service providers to fix home appliances and systems when they malfunction, and cover the bulk of the repair costs. There is usually a service fee (approximately $100), but that is a comparatively small price to pay for peace of mind when it comes to expensive appliances you can’t afford to live without. 

If you know you’re going to be late on a payment, call your lender, landlord, or creditor ASAP so that they can help you figure something out before you do any damage to your credit. For example, Sherida Farr, a mortgage loan originator and VP with Motto Mortgage Makers, says you have 30 days before your lender will report your missed payment to the credit bureau. “If a borrower is struggling to make their monthly mortgage payment, they should alert the mortgage servicer as soon as possible so they can help devise a plan to get them caught up and on the right track,” she says. 

And, if you have a lease agreement, check it now to find out when your landlord considers your payment late, and what steps they will take when you reach that point. As soon as you know you’re going to struggle to make your rent payment, pick up the phone and see if they are willing to make any exceptions to their policy so that you can remain in your home. The process to foreclose or evict is expensive, and lenders and landlords want to avoid it when at all possible. Knowing ahead of time what their policies are can help you when it comes time to negotiate new terms or an extension.  

If you own your own home and your credit is good, Jason Kraus, a broker with RE/MAX Advanced Realty, says now may be the time to refinance. “Rates are at historic lows,” he says. “If you reduce your monthly costs with a refinance, you’ll be ready if any changes in the market occur.” Of course, there’s a catch: In order to reduce your rate, many banks will require you to have owned your home for at least a year. Otherwise, Kraus says it’s always a good idea to have at least six months’ worth of expenses saved up to act as a buffer if you lose your job or can’t make your payments.