Our Florida home is now officially above water thanks to the rising home prices in our area. But that doesn't mean we plan to move.
In fact, we are pretty much stuck in our current home with what real estate experts call "near negative equity." We owe less money on our mortgage than what we owe, but just barely.
According to a recent article by CNBC, 1.3 million homes that were under water made it to the surface or positive territory in the first half of this year. We currently owe $105,000 on our home, which is worth $117,000, according to Zillow.
During the housing crisis, the value of our home dipped down to $109,000, but we owed more than that amount.
Selling our home with near negative equity doesn't make any financial sense to us.
Coming up with a down payment
My husband and I have no interest in buying a new home because we don't want to save up money for a down payment. A more expensive home would require a bigger down payment, especially with the tougher lending requirements. With very little home equity, we'd have to look elsewhere for money to put down on a step-up house. And we already did the saving and scrimping thing when we saved up the 20 percent down payment for our current home.
Paying the closing costs
In addition to a down payment, we would have to pay the real estate agent fees as well as and other closing fees. I have no desire to spend money on movers. Moving into a new home also means re-decorating, which can be an expensive endeavor.
Taking a major loss
Without a doubt, we would be taking a major loss if we sell our home. Unless we sold our home for $183,000, we wouldn't break even on our real estate purchase during the housing bubble. And, reality is, our home would never appraise for $183,000 in the current Florida housing market.
Striving for no debt
Instead of striving to be a move-up home buyer, my husband and I are more interested in achieving a debt-free life. We are working to pay off our mortgage as quickly as possible. According to the CNB article, 2.3 million borrowers had less than 5 percent equity in their homes in the second quarter of this year. Because we have been aggressively paying down our mortgage, my husband and I have closer to 10 percent equity in our home. That's still not the 20 percent we need to re-finance without paying private mortgage insurance (PMI).
Even if we had 50 percent equity in our home, I'm not sure that would entice us to sell our home and buy a new one.
I know move-up buyers help create a robust housing recovery, but the Great Recession changed our attitudes. We aren't striving to live in a better neighborhood. We are just happy to have a home we can afford to pay off so our lives are easier.
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