The Andres Lopez Law Firm

Florida homeowners floating but face choppy seas

A few years ago, half of Florida home mortgages were underwater with homeowners owing more than their home's worth. However, many Florida cities still have a high number of underwater mortgages. Many homeowners with little equity may have to seek foreclosure defense when they struggle paying their mortgage.

After the last recession, Florida homeowners faced negative equity and dropping resale prices. Almost half of Florida homes were underwater and it was not uncommon for homeowners to owe twice their home's worth. Foreclosures rose with personal bankruptcies and plunging credit scores.

Now, only 6.7 percent of mortgages in the state are underwater according to an analysis from a financial services company. This is still higher than the national 4.7 percent average, but many Florida cities showed major improvements.

Seven of the top 10 metropolitan cites in this country are in Florida. These are Lakeland, Orlando, Ocala, Tampa Bay, Pensacola, Fort Lauderdale and Jacksonville. Three other cities in the state were in the top 20. Almost every other state had a large drop with underwater mortgages.

This trend comes from steadily-increasing home prices and a strong job market that allows homeowners to keep current with their mortgage payments. More lenders also require larger down payments which increases homeowner equity.

Homeowners are also carrying less debt. The national average was $131,463 for the third quarter in 2018 which was the lowest average in 14 years. The lowest average was recorded earlier in 2018.

Higher home equity and lower individual mortgage debt will help homeowners stay above water if there is another recession. Fewer homeowners will risk default and walk away from their mortgages.

These seas are not totally tranquil, however. Some Florida cities still have many homeowners with underwater mortgages. For example, 11 percent of Miami, 10 percent of Ocala and eight percent of Lakeland homeowners have underwater mortgages.

Homeowners with negative equity struggle with selling their homes during their financial problems. These homeowners are more likely to stop mortgage payments and face foreclosure.

Homeowners facing mortgage problems should seek legal advice to consider their options and a way to keep their homes. An attorney can help pursue a legal solution.

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