Do You Owe More on your Home than What It's Worth?
Owing more than a home is worth may not be a problem for homeowners who can afford the monthly payment or who plan to stay in the home for an extended period. Those most affected are people who have lost a job or obtained a mortgage they couldn’t afford, those seeking to refinance into a lower or fixed interest rate, or those whose circumstances require them to sell now.
I bought my home in 1989. Right after that the market went down for a few years. I was in the position of owing more on my home than what it was worth during that time. But in the third year the market started to turn around and the situation reversed.
The most recent Zillow.com report states that despite the year-over-year decline, certain California markets cited as having the greatest decline such as the Los Angeles area, experienced gains when home prices are annualized over five years. Home prices experienced a net gain of 4.7 percent nationally over five years, 6.2 percent in Los Angeles.
What does this say? Homeownership is a long-term investment. It is the American Dream. Over the long haul equity will be earned and in the interim you have a place to call home.