What is Negative Equity?

You have probably read about Negative Equity: 22% of Residential Properties ‘Underwater’ at End of 3Q. This is because of the fact that negative equity is something that is affecting a wide variety of people, all of whom are struggling to deal with the consequences of something that they might not fully understand. The fact of the matter is that people don’t really know what negative equity is, which is dangerous since they are going to be affected by it at some point if they are not careful about what they are doing on a day to day basis and are instead just letting money come and go in whatever way they feel is best.

Negative equity is basically a term used to describe what happens when the value of a property that you have purchased by using a mortgage or a loan ends up falling in value until a point comes where its overall value is not nearly what the mortgage is worth. The main problem with this is that you now have a property that you will have to pay off even though it’s no longer worth the amount that you are paying off all in all.

If you learn about negative equity, there is a good chance that you won’t have to let it affect you at any point. You will instead be able to move forward with whatever it is that you are trying to do and relax a little in the process as well. It’s important to note that negative equity is not the end of the world, it just means that you are going to have to move some things around until the money starts making sense again, and this can be done by using professional help.