Everything You Need to Know About Low or Negative Home Equity
Buying a home in Wisconsin is often one of the biggest investments you’ll ever make. Ideally, your home increases in value over time, and when you sell, you walk away with a profit. The key to tracking this financial growth is understanding home equity — the difference between what you owe on your mortgage and what your home is worth.
But what happens if your equity is low or even negative? In this guide, we’ll explain how home equity works, the most common causes of negative equity in Wisconsin, and what options you have if you’re struggling with your mortgage.
What Is Home Equity?
Home equity is the portion of your property you truly own. It’s calculated by subtracting the amount you still owe on your mortgage from your home’s current market value.
Example:
Current home value: $220,000
Mortgage balance: $190,000
Home equity = $30,000
If the calculation results in a negative number, it means you owe more than your home is worth — often called being “underwater” on your mortgage.
Why Home Equity Matters
Equity is more than just a number — it represents financial flexibility and security. When you have equity, you may be able to:
Access funds through a home equity loan or line of credit
Refinance your mortgage for a lower rate
Sell your home and walk away with profit
With negative equity, however, your options shrink. You may not be able to refinance, and selling can become complicated.
Causes of Low or Negative Equity in Wisconsin
Several factors can lead to negative equity, including:
1. Market Decline
If home values drop, your loan balance may exceed your property’s value. This can happen during regional market slowdowns.
2. Small Down Payment
Low down payments mean you start with little equity. Even small value dips can push your mortgage underwater.
3. High-Interest Loans
Mortgages with high interest rates slow down principal reduction, making it harder to build equity.
4. Property Condition
Homes needing major repairs or updates lose value compared to similar updated properties.
5. Additional Liens or Equity Loans
Borrowing against your home can increase debt, reducing or eliminating equity.
Signs You Might Have Negative Equity
Your neighborhood’s homes are selling for less than what you owe
Refinancing attempts have been denied
You purchased with little or no money down and values have stayed flat or dropped
Your mortgage balance is close to or greater than your home’s estimated value
What to Do If You Have Low or Negative Equity
Negative equity can feel overwhelming, but there are solutions:
Keep making payments: Every month reduces your loan balance.
Boost your home’s value: Repairs and updates can increase appraisal value.
Refinance (if eligible): Some government-backed programs allow refinancing with low equity.
Short sale: Sell for less than you owe, with lender approval.
Sell to a cash buyer: If you need to sell quickly and without repairs, this is often the fastest option.
At Easy Home Sale, we buy homes in Wisconsin as-is, for cash — no repairs, no fees, and no commissions.
Key Takeaways
Home equity is the difference between your mortgage balance and your home’s value.
Negative equity means you owe more than your home is worth.
Common causes in Wisconsin include market decline, small down payments, high-interest loans, and poor property condition.
Solutions range from paying down the loan and making upgrades to selling through a short sale or cash buyer.
Easy Home Sale helps Wisconsin homeowners sell quickly for cash — even with negative equity.
Frequently Asked Questions (FAQ)
1. Can I sell my Wisconsin home if I have negative equity?
Yes. You may need lender approval for a short sale, or you can sell to a cash buyer like Easy Home Sale who can close fast.
2. Does negative equity mean foreclosure?
Not necessarily. Many homeowners continue paying their mortgage until equity improves, or they sell through alternative solutions.
3. How do I know if I’m underwater on my mortgage?
Get an appraisal or CMA and compare it to your loan balance. If you owe more, you have negative equity.
4. Is renting out my home an option if I have low equity?
Yes, renting can cover mortgage payments while waiting for values to rise, but it depends on rental demand and costs.
5. How fast can I sell with Easy Home Sale?
We can make a fair cash offer within 24 hours and close in as little as 7 days, no repairs or cleaning needed.
So What is The Best Option?
Low or negative home equity doesn’t have to mean financial disaster. With the right strategy, you can improve your situation or sell your home fast without stress.
Call us today at 920-600-9259 or request your offer online at Easy Home Sale. We can have a fair cash offer in your hands within 24 hours and close in as little as seven days.
