How You Can Fix the Housing Crisis—At Least in Your Own Home

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You could wait for the government to fix the housing crisis, or you could simply wait for the housing market to rebound. In either case, though, you might be waiting a long time for anything to happen. Instead of just hoping for a solution to magically appear, why not actually do something about it?

After the Great Recession‘s spectacular real estate collapse, and subsequent years of continued sinking home values, it’s understandable why so many homeowners and would-be owners are scared to make the wrong move. But, given the current market conditions, doing nothing could very well prove to be the worst move of all.

Here are three possible ways to take action and address your own personal housing crisis:

Refinance & Save Big
On average, Americans are overpaying their mortgage by $471 each month, according to a new study by Credit Sesame, which drew from data by the Mortgage Brokers Association. While refinancing is up and 6 million homeowners initiated a refinancing application in 2011, the study found that as many as 14 million Americans could benefit from refinancing, thanks to mortgage rates that are near record lows.

Only about one-third of homeowners who apply for refinancing ultimately qualify. But the study estimates that seven out of 10 who would qualify are not applying for refinancing. “Many homeowners simply aren’t aware that there are better options available to them—options that could potentially save them thousands of dollars on their mortgage,” said Adrian Nazari, CEO of Credit Sesame. Owners who do refinance can expect to save an average of $56,520 over 10 years.

(MORE: Struggling to Stay Afloat: Number of Underwater Homeowners Keeps Rising)

Fix Your Place Up
As home values slide and more owners find themselves underwater, it’s hard to think about making improvements or remodeling one’s home. Why keep pouring money into an investment that doesn’t look like it’s going to pay off?

The key is to approach home-improvement projects strategically, so that the money isn’t wasted—and hopefully gives your home value a boost. Rebuilding magazine’s annual Cost vs. Value survey breaks down by geographic area which home improvement projects will get you the biggest return when the time comes to sell the property. In general, the study suggests that if you replace such things as garage doors and windows, you could see over a 100% return. Many high-yielding improvement projects don’t cost much money, perhaps a few hundred or few thousand dollars. Some pricier improvements also tend to pay off well: A roof replacement and a minor kitchen remodel (new cabinet doors, countertops, appliances), both estimated to run in the neighborhood of $20,000 apiece, are regularly among the best investments for homeowners.

(LIST: 15 Financial Moves to Make Now: Renovate Wisely)

If, like so many other owners out there, you’ve been struggling to sell your home, a couple of smart, cost-effective improvements could help grab the attention of buyers. The construction industry has fared poorly over the past few years, so many contractors will be eager for work and open to negotiation in terms of how much they’ll charge for the job.

Stop Renting & Buy Already
An estimated 12 million renters in America are planning to buy in the next two years if conditions are right, according to a Hanley Wood Housing 360 Survey conducted last fall. Over half of those up for becoming owners, however, said that now is not the right time. If not now, though, when? It’s impossible to tell when the housing market will hit bottom. What we do know is that home prices are at their lowest levels since 2006, mortgage rates are at record lows, and the market is flooded with homes for sale. Also, rents are at all-time high prices and are only expected to go up more in the next five years, making it a less attractive alternative to buying. All told, a would-be buyer couldn’t ask for more ideal conditions for pulling the trigger and purchasing a home.

(MORE: Underwater: Will the Foreclosure Deal Fix the Depressed Housing Market?)

Legendary investor Warren Buffett essentially made just this argument last week on CNBC, saying that if it were practical, he’d buy a couple hundred thousand single-family American homes right now. “If I knew where I was going to want to live for the next five or ten years, I would buy a home and finance it with a 30-year mortgage,” Buffett said, when asked whether the stock market or a home was the better option for the young investor. “It’s as attractive an investment as you can make.”

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