If your mortgage balance is more than your house is worth, you’re underwater.
This can happen due to missed payments or a general decline in property values.
Not having equity can make it hard to pay for home improvements or sell your house.
Refinancing can help you pay down your principal faster and build equity, but that might only be possible if you have an FHA or USDA loan.
If you want to move, your lender might approve a short sale. You’ll be able to sell your home for less than what you owe, but you might have to pay the difference.
If you’re underwater because property values have fallen and you don’t plan to move or use equity for bills, you can just wait for home prices to go back up.
