Amid a credit crunch that has shaken the mortgage market, consumers need to consider several wealth-management strategies to protect their worth, financial advisers warn.
Consumers should limit their exposure to the stock market, evaluate any investments in money-market funds and avoid running up too much debt, said Drew Tignanelli, president of The Financial Consulate in Lutherville.
“If the credit crunch gets worse, it?s going to wallop the market for a while,” Tignanelli said. “By about October or November, you should be able to better assess where you can go in the market.”
Consumers need to think about being short-term and medium-term investors, rather than simply sitting back, Tignanelli said.
“You want to be a risk-manager,” Tignanelli said. “In a bull market, it?s fine to bea long-term investor, but right now, we?re not in a bull market.”
For prospective homebuyers, a new Web site, launched this week, aims to educate and inform consumers about the home-purchasing process. The Better Mortgage Bureau, based in Baltimore and modeled after the Better Business Bureau, was established to elevate consumer awareness, said Lance Cassell, BMB?s managing director.
“You?re talking about the biggest investment in people?s lives,” Cassell said. “Our goals are to protect the customer and defend the mortgage industry.”
Prospective buyers should do some market research, make sure their mortgage broker is educated and trained and know they can afford their loan, Cassell said.
While economists have predicted the crunch could lead to job losses and tougher credit standards, consumers should work to minimize their debt and improve their credit, said Todd Cook, president of Debt.com.
“You need to have a budget and spend accordingly, because if you don?t follow a budget you can easily accumulate more debt and wind up in trouble,” Cook said.
“Homeowners should consider opting to refinance their variable or adjustable rate mortgages into a more stable fixed-rate loan, if that option is available,” Cook said. “By choosing a fixed-rate loan it can take away the pain of climbing interest rates and monthly payments.”
