Underwater Home Owners Owe More Than $1.2 Trillion…Is There Reason to Panic?
What is an underwater home? It is when a homeowner owes more than the house is worth. For example, suppose you have a house where you owe the bank $150,000 on your mortgage. Now suppose you want to sell this house and you find out it’s only worth $125,000, giving you $25,000 in negative equity. The situation of having negative equity is known as being underwater, and the combined total of negative equity of all the homeowners in the U.S. is over $1.2 Trillion!
Underwater Home Owner Statistics
Here are some other alarming statistics, according to Zillow.com:
- Nearly 16 million homeowners were underwater on their mortgages in the first quarter of 2012, owing a collective $1.2 trillion more than their homes were worth. That is nearly one-third (31.4 percent) of U.S. homeowners with mortgages, compared to 31.1 percent in the fourth quarter of 2011.
- Foreclosure is not imminent for most underwater homeowners. Nine out of 10 continue to make their mortgage and home loan payments on time, with only 10.1 percent more than 90 days delinquent.
- Many homeowners in negative equity are not deeply underwater. Nearly 40 percent of underwater homeowners owe between 1 and 20 percent more than their home is worth. However, 15 percent of underwater homeowners – approximately 2.4 million – owe more than double what their home is worth.
- In some markets, however, the magnitude of negative equity is much greater. In the Las Vegas metro area, more than one-quarter of all homeowners with mortgages owes more than double what their home is worth. http://www.kttc.com/story/18613101/despite-home-value-gains-underwater-homeowners-owe-12-trillion-more-than-homes-worth
What Do These Statistics Mean?
Being underwater in your mortgage isn’t necessarily a bad thing. The only time it really matters is if you’re trying to refinance your home or trying to sell your home. If you’re trying to sell a house that has negative equity, it gets a little worse. Suppose you have a house where you owe $110,000 and it’s only worth $100,000. Not only will you have to pay the deficiency, or difference in equity between sales price and the amount owed, but you will then have to come out of pocket to pay the closing & Realtors’ costs, which in this case is $7,500. Who wants to pay $17,500 to sell their home? These financial realities are a big reason why many people in the Austin, Texas real estate market are having a tough time selling their houses.
The good news? If you have little, no, or even negative equity, you can still sell your house fast in Austin, Texas. At Hippie Hollow Homes, we have participated in over 1,200 real estate transactions since 2003 using over 12 different methods to buy and sell a home. No matter what the situation, we can help you sell your house, in many cases, without you having to come out of pocket or negatively impact your credit score.
The only thing that we cannot do is assist you if you do not call us! So contact us today if you need to sell your house fast.
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