COST OF NEGATIVE EQUITY IN REAL ESTATE
We have 11 million American households underwater when it comes to what they owe on their mortgage vs. the value of the home. Many people are walking away from their home because they become frustrated with the whole system and just want it to be over. So, they take matters into their own hands. Statistics show us 7 out of 10 homeowners who have faced foreclosed did not contact a professional Realtor to assist them. The Real Estate and Beyond Teamhas create a web site dedicated to assist people who wish to learn more about their options before being foreclosed upon by the bank.
Have you ever thought what it is costing someone to have negative equity in their home? When considering a short sale many homeowners overlook the very expensive cost of carrying negative equity over a long term. What many people don't take into consideration is that at the national average appreciation rate of 6%, it can take homeowners several years to recoup their loss just to break even! Here is an example of the cost of negative equity to the average homeowner:
Jane Seller purchased her home in 2005 for $200,000. Because of the market crash, her home is now worth $100,000. Jane put no money down on her home and owes just under $200,000 now. At the average national appreciation rate of 6% it would take Jane approximately 12 years for her home to be worth $200,000 again or 9 years before she could sell her home and break even, making $0 profit and paying her own commissions and closing costs.
If Jane sold her property in a short sale, she could rent a home for the next 2 years and then purchase her exact same home for nearly half the monthly payment. If she was paying $1,250 per month for her old home, her new home would be closer to $700 per month! That is $550 a month that she can put back in her pocket! If Jane stayed in her home for the 9 year period it would take her to break even she would spend nearly $60,000 in higher mortgage payments and a total of $135,000 on mortgage payments just to break even!
The Real Estate and Beyond Team is here to assist all homeowners located in Arizona to define their options in a more detail manner in order to make a better informed decision.
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