One in Five Mortgages Upside Down

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By Don Dunning | March 4, 2009

“One in Five U.S. Mortgage Borrowers Are Underwater,” is the headline in an online Reuters article today. This amounts to over 8.3 million homes and represents a nine per cent increase since September.

California is mentioned as one of three states (the others are Florida and Nevada) that are “particularly stressed.” According to the article, other parts of the country are showing “signs of deterioration.”

What does this mean to you?

As a homeowner with negative equity, consider talking to your lender if you fit into the new federal guidelines for a reduced mortgage rate, a longer term, or both. If you have missed even one payment, or are in danger of doing so, contact your mortgage holder immediately and see what they might offer as assistance. (See “Mortgage Help: Do You Qualify?”)

If you are not in distress, but plan on selling:

Analyze the potential lower price of your property vs. your need to make a move at this time. If you are also a buyer, especially of a higher priced house, you could come out ahead.

As a homeowner not thinking of selling:

Relax, enjoy your casa and don’t ponder too much about current events. Real estate goes through cycles and prices will rise again.

As a buyer:

Over time, real estate has proven itself as the world’s greatest investment. Between very low interest rates and soft selling prices, you are in a sweet spot. Do not take it for granted; it will not last forever.