Will I Lose My Home if The Housing Market Crashes?

by | May 26, 2022 | Housing Market, Housing Market 2022

Experts are not predicting a housing market crash. Nevertheless, no one can predict the future and the housing market is susceptible to events, circumstances, and influences outside of anyone’s control. The fear of a housing market crash has raised a lot of questions and a lot of anxiety. Prospective homeowners are hesitant to purchase a home for fear of it being devalued shortly after. Current homeowners are anxious about losing their own homes in the event of a housing market crash. This raises the question:

Will I Lose My Home if the Housing Market Crashes?

It is highly unlikely that you will lose your home if the housing market does in fact crash. Foreclosures do not happen because homes lose value. Foreclosures happen when homeowners can no longer afford their mortgage payments.

The most common mortgage today is the 30-year-fixed-rate mortgage. The payments on this type of mortgage remain virtually the same over the lifetime of the loan. As long as you can still afford to make your mortgage payments, there is little to no risk of your home going into foreclosure.

What Can I Expect if the Housing Market Crashes?

In the event of a housing market crash, you can anticipate that your home will lose value and your mortgage will most likely go underwater. This simply means that you owe more on the home than the home is currently valued. This means you will not be able to sell your home or refinance it until the housing market begins to turn around again without losing money. In the meantime, you still need a roof over your head and if you are making your payments on time, you don’t need to worry about going into foreclosure.

What if I Have to Move But Can’t Sell My Home?

In the event that you absolutely have to move but can’t sell your home, you can rent out your home to pay for the mortgage and then sell your home when the market turns around or when you have paid off enough of your mortgage to no longer be underwater.

What if The Housing Market Crashes the Week After I Purchase a Home?

If the housing market crashes immediately after you close on a home, you don’t have to worry about your home going into foreclosure. Honestly, this is the best time for the housing market to crash since you are already probably planning to live in the house you just purchased for several years. As long as you can make your payments and other life circumstances, like the loss of a job, do not drastically alter your income and budget, you should simply continue to make your payments until the housing market turns around.

Just Getting Started?

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