Negative Equity: But What If You Just Simply Live In It?
Fasten your seatbelts: it’s going to be a rough ride. Merrill Lynch is bullish on the fact that housing prices will decline further. In reading all the negative about the NATIONAL housing market, I have a question:
“If you put 10% down on a $500,000 house and the house’s value drops 10%, you have zero equity. If the market drops 15%, you owe more than the house is worth.”
True. But what if you aren’t going anywhere for 5 years? Is the mortgage company ever going to “call” your loan in when you are in a negative equity mode? No, you just feel poor, hold off on the home improvements, and sit tight but you pay the mortgage and then in five years, you have positive equity.
Or am I missing something here? Â Â
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We live in a new era where people have been taught to use real estate as an ATM machine. When they can’t pull any more money out of it they freak and scream, “The sky is falling!”