Homes rising up above underwater status promise new light for a housing market hopeful for a turning point in the ongoing inventory crisis!
What’s Your Home LTV (Loan-to-value) Ratio ?
2016 U.S. Home Equity & Underwater Report declared at year-end that the amount of seriously underwater properties across the nation decreased by over one million in the year 2016. Properties categorized in underwater status have a principal balance that exceeds the appraised value. The higher the loan-to-value percentage, the riskier the loan is for the lender. “Put simply, the loan-to-value ratio, or “LTV ratio” as it’s more commonly known in the industry, is the mortgage loan amount (or balance) divided by the purchase price or current appraised value of the property. When calculating it, you will wind up with a percentage.” (thetruthaboutmortgage.com) Reversely, properties considered equity rich have an LTV ratio of 50 percent or less.
Regarding the shift, Matthew Gardner, chief economist at Windermere Real Estate/Seattle says, “As this trend continues to improve, it may well allow some homeowners to sell as they come out from being underwater.” That’s great news for a housing market in a statistical housing shortage.
In the wake of a housing crisis that resulted in a massive loss of equity, homeowners were forced to stay in their homes longer before selling. There were few options for homeowners but to ride out the storm.
“As equity has continued to increase during Q1 2016, we are experiencing a process of mortgage servicers calling mortgage notes in default in a much quicker fashion than what we have noticed in recent years,” said Michael Mahon, president at HER Realtors in Ohio. “Should homeowners find themselves in the unfortunate circumstance of falling behind in mortgage payments, they should immediately reach out to their local REALTOR® (SAN LUIS OBISPO REALTY) in determining options of taking advantage of this increased equity, as many homeowners are still under the perceptions of past home pricing from the previous economic decline. As homeowners’ equity position continues to improve, options for defaulted homeowners to avoid potential foreclosure equally improve.”
San Luis Obispo Realty, the leaders in San Luis Obispo Real Estate are always happy to help provide an opinion of valuation on your home. Call us today and let us provide you with a FREE Comparable Market Analysis!