FraudulentCharges.com

Twenty percent of all U.S. mortgages are underwater, and seventy percent of Nevada mortgages have no equity. Home owners with negative equity usually can’t sell their homes unless thay have a rich uncle or can qualify for a short sale. This percentage of homes with negative equity is hard to believe. Nevada’s real estate market was out of control and they are now suffering the consequences. The way real estate trends are headed, we will likely see real estate declines for Herriman UT Homes and Real Estate in Tooele Utah . We probably won’t be seeing any significant price appreciation anytime in the next decade.

Is there way we can prevent any more decline in real estate values? How do we keep from having negative equity in a declining market?

Nope. Not really. There is nothing we can do about the external factors associated with the real estate market , the federal government has tried to , but we can control the amount we owe on our home loans . Only a very small percentage of the mortgage payment actually goes towards principle during the first few years of thirty year mortgages.

An easy way to reduce principle owed is by having a fifteen year amortization period. Right now, the average interest rate for 15 year mortgage loans are the lowest they have ever been. Refinancing to a fifteen year loan will result in a higher monthly payment, but a lot more of the payment will go towards equity. In just the first year of a 15 year fixed mortgage loan, principle is decreased by nearly 5%. As long as real estate values didn’t increase by more than 5%, you would have increased in real equity.

But, this was the first year reduction. The amazing thing about amortization is that the amount, and rate, of principle payed off increases every year.  During year 5, the loan amount will be reduced 7.5%, during the tenth year equity is reduced 15%, and during year 14 it is reduced 50.6% and at the end of the fifteen year, is completely paid off. At this point, you will actually OWN the property. With 30 year mortgages, the owner still owes 70% of the original loan value after making payments for fifteen years. 50% equity isn’t acheived until after the home owner has made payments for more than twenty years.

Over the last few years attitudes towards home purchases have distinctly changed. The so called real estate investment guru’s used to recommend buying with no money down because home values always increase and savings could be used for better investments. The smart thing to do is pay off a mortgage so you can own a home free and clear. By having more equity than market value, sellers aren’t chained to their current house and are free to move at any time.