eli5 What does it mean to be “upside down” on your home loan and how does it happen?
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It’s about to happen to A LOT of people, but basically you decide to buy a home. That house costs $500K. You cannot pay that much, so you put down 25K. Then as soon as you close on the deal, the market DROPs. Now if you wanted to sell your house, which you now owe $475K on, you couldnt find a single buyer willing to pay more than 300K. This is when you see a lot of people ‘walk away’ from their home. Because why bother paying for something so over priced? Of course if this home is your ‘forever home’ it matters less. But can still be frustrating knowing you owe far more than it is worth.
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