Terry Mitchell

Why an Upside Down Mortgage Isn't Necessarily Bad



Posted: Monday, February 23, 2009

by Terry Mitchell
http://commenterry.blogs.com

Because of falling home values, many homeowners are finding themselves in an upside down situation with their mortgage, i.e., they owe more on their mortgage than their house is worth on the open market. People tend to look at this as a dire situation. But as the old song goes, "it ain't necessarily so."

Having an home with an "underwater" mortgage is a lot like owning a stock that has lost value – the problem exists just on paper until one gets ready to sell. As long as the person does not need to sell or refinance the home and he or she is able to make the mortgage payments, the so-called predicament is only imaginary. As is the case with most stocks selling at depressed prices, a house with a beaten down value will probably begin to increase in price – eventually.

Just as bear markets, in due course, give way to bull markets, the housing market will recover in the long run and home prices will again be on the rise. Homeowners just have to be patient and wait things out. There is no need to panic.

Terry Mitchell is a software engineer, freelance writer, amateur political analyst, and blogger from Virginia, USA. He posts a least one article a day to his blog - http://commenterry.blogs.com - on subjects such as current events, politics, technology, society and culture, religion, health and well-being, self improvement, personal finance, trivia, and sports. He is also the owner of a new privacy-enhanced search engine - http://www.SearchMost.com.

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Top-level comments on this article: (1 total)
» left by straight talk
 3 years 77 days ago.
112 fans. Follow straight talk on twitter!
Terry, good job but here is something for those who find it easy to call others irresponsible. Our older home needed work so we took out a mortgage because our friendly banker told us it was worth an appraised retail market value of $265,000. The bank now says my home is worth no more then $120,000 and we would be lucky to get that. So at 64 how long do you think I have in this economy before I can recover and start growing equity again. 3 years, 5 years, 10 years, 20 years? Rhetorically, just how can the market recover when there are not enough with credit or the means to buy much less rent?  That 20% who have it all can't do it all. No, that will go to foreigners who get the good jobs.  Look I hope you are right but I don't see it at all for average Americans, that is. The rest go flip a house once again. Hey that is what got us here right?   Best wishes,
» left by Terry Mitchell 3 years 77 days ago.
92 fans.
Robert, you make a very valid point here.
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