If the value goes down, you are still responsible for the mortgage amount. If your financial situation changes and you cannot afford the mortgage, you might qualify for a short sale which would allow you to sell the property for less that the mortgage amount.
Keith Jean-Pierre
Managing Principal
The Dapper Agents
Operations In: NY, NJ, FL & CA
When your mortgage balance exceeds your homes current market value, you are in a negative equity or underwater position. This limits but does not eliminate your options.
In Hernando County and throughout Florida, underwater homeowners typically have three realistic paths: continue paying and wait for values to recover, pursue a short sale with lender approval, or in the worst case face foreclosure. A short sale allows you to sell the home for less than what is owed, but it requires the lender to agree to accept the sale proceeds as full or partial satisfaction of the debt. The lenders willingness to approve depends on your hardship documentation, the loan type, and the lenders current policies.
A short sale in Florida can take 90 days to several months to close once a buyer is under contract, primarily because the lender review process adds time. The impact on your credit is significant but generally less severe than a foreclosure. Before pursuing either path, consult with a HUD-approved housing counselor and a Florida real estate attorney. Some lenders also offer loan modification or forbearance programs for homeowners experiencing hardship that may allow you to stay in the home while working toward a sustainable payment. The worst move is to stop paying without a clear plan, because that accelerates the foreclosure timeline without preserving any of your remaining options.
Kevin Neely & Kaitlynd Robbins | K2 Sells
This is called being "underwater" or "upside down." If you stay, nothing happens; you just keep making payments until the market recovers. If you need to sell, you have a problem. You either have to bring cash to the closing table to pay off the difference, or ask your lender to accept less than what is owed—a process called a Short Sale, which significantly damages your credit.
Being underwater, where you owe more than the home is worth, only becomes a problem if you need to sell. As long as you stay in the home and keep making payments the situation is uncomfortable on paper but it does not directly affect your ability to live there or your loan terms.
The real risk is if life forces you to sell before the value recovers. In that scenario you would need to bring cash to closing to cover the gap between the sale price and what you owe, or pursue a short sale where the lender agrees to accept less than the full balance. Both are painful outcomes.
The best protection is time. Most underwater homeowners who stayed put through the 2008 crash recovered their equity within five to seven years as the market rebounded. If you can afford the payment and are not planning to move soon, staying the course is usually the right call. Focus on what you can control, keeping the home well maintained and not adding to the debt through a cash out refinance.
Hi Ryan! Stop worrying. Enjoy your house and take care of it. Property values may fluctuate in the short term, but generally increase over time, unless neglected or poorly located. Nothing "happens", except your equity grows.
Mortgage is worth or you owe more than the house is worth? A Realtor can send you clarification on this as well as a CMA (market analysis) to confirm this. Most of the homes in Memphis purchased 2023 or earlier are not upside down.
