Worried About Being Upside Down on Your Home? You’re Not Alone

If you’re concerned about being “upside down” or “underwater” on your home—meaning you owe more on your mortgage than your house is worth—you’re not alone. Many homeowners face this challenge, especially when market conditions change. Even if you’re not fully underwater, having limited equity can make selling your home feel daunting.

The good news? There are options to help you navigate this tricky situation.

What Does It Mean to Be Upside Down or Underwater?

Being “underwater” happens when your mortgage balance is greater than the current value of your home. Here’s an example:

In this situation, the homeowner owes $20,000 more than their home is worth.

But even if you’re not technically underwater, selling can still be challenging. For example, if your home is valued slightly higher than your mortgage, closing costs and agent commissions can wipe out your small equity, leaving little or no profit.

2024 and 2025 Equity Trends

The real estate market is always changing, but recent trends offer hope for many homeowners:

1. Equity Gains:
   In the first quarter of 2024, U.S. homeowners gained a total of $1.5 trillion in equity, a 9.6% increase compared to the previous year (CoreLogic). This growth has helped many homeowners who were previously underwater.
2. Fewer Homes in Negative Equity:
   The number of homes in negative equity dropped by 15% year-over-year in early 2024 (Norada Real Estate Investments).
3. Forecasted Home Price Growth:
   Home prices are expected to rise by about 2.3% through 2025 (Mortgage Bankers Association). This could bring relief to homeowners near the break-even point, allowing them to sell without taking a financial hit.

What If I’m On the Edge?

If you’re close to breaking even—where your home’s value is just slightly higher than your mortgage—you still have options.

1. Stay and Wait for Appreciation:
   If possible, consider staying in your home and paying down your debt while waiting for home values to rise. Even small annual price increases can help you build equity over time.
2. Boost Your Home’s Value:
   Strategic renovations or repairs can increase your home’s appeal and value. Focus on cost-effective updates, like improving curb appeal or upgrading kitchens and bathrooms.
3. Tip: Use tools like Remodeling’s Cost vs. Value Report to prioritize projects with the best return on investment.
4. Explore Alternative Sales Options:
   If you’re looking for a faster solution, companies like Frontdoor can provide cash offers for homes, even those with little equity. This approach skips traditional listing hassles, allowing you to close quickly and avoid additional costs.

Final Thoughts

Being upside down or on the edge with your home equity can feel overwhelming, but it doesn’t have to stop you from exploring your options. The real estate market is dynamic, and with rising home prices forecasted through 2025, relief may be just around the corner.

If you’re unsure whether you have enough equity to sell, it’s worth consulting an expert who can evaluate your situation and help you make the best decision. At Frontdoor, we offer cash offers within 24 hours and can close sales in as little as seven days, giving you a straightforward way to move forward, even in challenging situations.

For more insights and detailed data on equity trends, check out reports by CoreLogic and ATTOM Data Solutions.

Let us help you find the right path—whether that’s staying in your home, boosting its value, or selling on your terms.