U.S News & World Report recently reported on the top ten places in the United States that had the most “underwater” mortgages.
Understanding Negative Equity or Underwater Mortgage. Negative equity or “underwater” mortgage is when a home owner owes more on their home than it’s worth. Therefore, home owners who sell their home will still owe their lender to pay off their mortgage loan because they will not be able to sell their home for enough money to pay it off.
What this means for the housing market is that it stalls it. People aren’t able to move and buy a new home, because they can’t afford to pay off their mortgage loan after selling their own home. If these home owners are unable to pay their monthly mortgage payment, they may end up in foreclosure, which means banks lose money and the housing market deals with another decline in home prices due to the influx of foreclosures.
The Most Underwater Locations in the United States. It’s interesting to see where home values took a hit around the country because it helps us see where the housing market has taken the hardest hit and is in the most state of recovery. All the following locations are from the report by U.S. News & World Report and the percentages are how much single-family homes are underwater for that city and are from a report by Zillow.
1.Las Vegas, NV – 81 percent
2.Merced, CA – 64 percent
3.Phoenix, AZ – 62 percent
4.Orlando, FL – 58 percent
5.Greeley, CO – 45 percent
6.Bend, OR – 41 percent
7.Minneapolis – St. Paul, MN – 39 percent
8.Memphis, TN – One third
9.Cleveland, OH – 32 percent
10.Grand Rapids, MI – 29th percent
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