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Learn How This Hot Property Market is Reducing Underwater Mortgages

The housing market continues to stabilize as the number of underwater mortgages was reported to be less than 5 percent.

A mortgage becomes ‘underwater’ when the amount of your loan exceeds the value of your home.

Let’s say that you owe $350,000 on your home, but it’s now valued at $325,000. The difference of $25,000 is what makes your mortgage underwater.

The good news is that this phenomenon seems to be decreasing. The positive news comes as homeowners across Massachusetts and the nation adjust to rising home values spurred by low-interest rates coupled with a decreased home inventory.

All this got us thinking—what if you’re someone whose home was underwater but now isn’t because of rising home prices? What does a situation like that mean for current homeowners and would-be buyers alike?

Well, it means loads of opportunities waiting to be realized. Let’s dive in and find out more.

Rising home values are to thank

Buyers and their real estate agents are now facing a decrease in the number of available homes as supply and demand continue evading each other. The result is higher home prices in a tighter market.

Fewer homes available means that home values across the board are rising. Let’s use the previously mentioned example as a handy way to think about this:

  • Let’s say you owe $350,000 on a home that was worth $325,000.
  • Now imagine that the lack of available inventory rose your home’s value to $355,000 (also known as appreciation).
  • Your home is no longer ‘underwater,’ leaving you with options to refinance or sell your home for a profit. That’s a huge load off your back, especially if your financial situation is precarious.

Are you finally above water? Here’s what you can do.

If the market has graced you with increased property values large enough to get your mortgage above water, you’re in a good position to make thoughtful financial decisions.

Here are some things to consider if the current market has blessed you with additional equity.


This decision is not always an easy one. Perhaps sentimental value makes it tough to address the idea of selling your home. Yet, if you suddenly find yourself able to sell at a profit or at least break even, this could be the break you were looking for.

Letting go of a previously burdensome mortgage could be the fresh start you need. Better still, choosing to sell in the black can give you space to gather yourself for a stronger financial future.


It’s normal for those with underwater mortgages to experience other financial issues. With the real estate market booming, newfound home equity could be the key to regaining stability.

If you find yourself with a bit more equity, a home refinance could help you get ahead:

  • Pay off credit card debt
  • Get current on taxes
  • Replenish savings
  • Create an emergency fund

If you can maintain your monthly mortgage payments, why not use any surplus equity from this market and refinance to get ahead.

Bottom line

With less than 5 percent of homeowners now carrying underwater mortgages, those previously upside down are now finding themselves empowered with more equity. Now is a good time to discuss leveraging increased home values to secure your financial future.

Explore our Refinance resources to learn more about available loan programs to help you reach your financial goals.

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