The old real estate adage says owning a home is probably the best investment a person can make. In many ways, this is an accurate assessment. As long as a home is properly maintained, the value of the property should increase. Most people derive their overall net worth from property values. Increased equity does put them on solid financial footing.

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No Guarantees in Real Estate

Unfortunately, no investment is 100% guaranteed. While a home “should” increase in value, the potential exists that a home ends up decreasing in equity. While this is very bad for those who paid off their homes, buyers who still are paying off a mortgage are in an even more precarious situation. The “underwater” property is stuck with loan payments that total more than a homes value.

The Mitigating Factors of Equity Loss

Homeowners who care for their property might suffer from things outside of their control. No matter how well a home owner takes care of a beloved house, if others in the neighborhood are not doing the same, the value of the house is going to drop. Location and weather hazards count for a lot, too. Areas prone for flooding damage houses. New buyers may be very worried about dealing with floods. Current homeowners may simply put their properties up for sale to avoid dealing with more weather-related costs. A glut of houses for sale on the market brings down values. This is doubly true when no one is buying.

Property values have crashed. A homeowner appears stuck. He or she has to think carefully about the next move to make.

Don’t Walk Away

The song “Walk Away” is not one with lyrics that should be taken as positive advice. Yet, many people choice to simply walk away from their underwater properties. They allow foreclosure proceedings to occur. Taking the attitude “It is the bank’s problem now” is a really short-sighted one. Walking out on a property and allowing the residence to go into foreclosure is surely going to make owning a home extremely difficult in the future. What financier is going to approve a mortgage to an applicant with this type of history? Deliberately ruining one’s financial history does not make sense. Business reviews of Intercap Lending should prove there are better options to explore.

Refinancing at a Lower Rate

Refinancing a mortgage at a lower interest rate could greatly help those whose homes have lost value. Money is surely going to be saved with a lower annual percentage rate. Hopefully, real estate values will increase again in the future. The refinanced loan can cost-effectively buy time until real estate conditions change. Intercap Lending helps with these types of loans. Check out Intercap Lending on LinkedIn for more information about the company.