When does negative equity matter?

April 11, 2023
2
min read
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Negative equity and when it matters.

Negative equity matters when a homeowner wants to sell their home or refinance their mortgage. If a homeowner owes more on their mortgage than their home is worth, it can make it difficult or even impossible to sell their home without coming up with additional cash to pay off the difference between the mortgage balance and the sale price.

Refinancing can also be challenging for homeowners with negative equity, as many lenders require a certain level of equity to approve a refinance. Homeowners with negative equity may have trouble finding a lender who will refinance their loan, or they may have to pay higher interest rates or fees.

Negative equity can also impact a homeowner's credit score and financial stability, as the homeowner may struggle to make their mortgage payments and may be at risk of falling behind or even facing foreclosure.

In short, negative equity matters when a homeowner wants to sell their home, refinance their mortgage, or improve their financial situation. It's important for homeowners to understand the potential consequences of negative equity and to work with a financial advisor, real estate agent, or housing counselor to find the best solution for their situation.

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