Negative equity occurs when the value is less than the mortgage owed. According to CoreLogic, 91% of all mortgaged properties have equity and only 4.4 million properties remain in negative equity at the end of the second quarter in 2015.
A homeowner, who qualifies, can release part of their equity by refinancing the existing loan and taking out additional cash or by getting a home equity loan. The benefits include:
- To get a lower rate on your current mortgage
- To finance capital improvements on your home
- To payoff higher interest rate debt such as credit cards or student loans
- To purchase items that would not have deductible interest like personal cars, boats, etc.
It could be as simple as waiting for positive home equity so owners can move to another home without having to pay out-of-pocket expenses to sell their home.