You can be “underwater” on your mortgage without having bought more home than you can afford. Many that are “underwater” are still able to make their payments, it just means their houses (due to falling prices) are now worth less than they paid for them.
This has happened to quite a few young couples I know. They bought a home a few years ago (during the boom) put 20 percent down, but prices have fallen around 25-30 percent in our area, so they now owe more than their house is worth.
They’re still making their payments and intend to do so, yet they’re still “underwater” on their mortgage.
“...so they now owe more than their house is worth.”
Yep. It happens. There’s a lot to be said for living in the Boring Old Midwest, where the housing market has been stable, as well as the job market...up until now.
I’m glad I’m not selling in this market. Buying? That’s another situation altogether. You can get some real steals around here if you’ve got the cash and credit to do so.
This is the 5th house I’ve owned. I always had a farm in mind, and that’s what I was working toward when I was painting, wallpapering, sanding floors, laying tile, etc. I never would’ve been able to fix them up and flip them to my advantage in any other housing market than here in the Midwest.