What Should I do When My House is Worth More than My Mortgage?


The economic times may be ruffled with a hint of uncertainty but that hasn’t stopped the homeowners from investing in the real estate market. Buying a property is always considered a smart investment & mortgages have been the guiding hand for most in such decisions.

Knowing the value of your home, how much it costs, the equity loan, and your ability to refinance can go a long way. But what happens when the house value rises during a mortgage term? Let me share a personal experience on what happens when my house is worth more than my mortgage?

Why my house is worth more than my mortgage?

my house is worth more than my mortgage
My house is worth more than my mortgage

A good while back (pre-pandemic), I was browsing some documents, calculating costs, thinking about my monthly mortgage payments, my credit score, and whatnot. As such, I came to realize, during the mortgage term, the value of my house increased. The reasons were in light of factors like local development like proper schools, recreational facilities, and employability.

There are many economic indicators that factor into the value of your home asset. But like me, if you have a mortgage taken out, & in that period your house becomes worth more than it was, what can you do?   

Besides, If you trade your house for another house then check this article!

What I did when my house value was high?

Quite simply, I found the best course of action was to:

  • Show my home appraisal value so I wouldn’t have to deal with mortgage insurance. When my home is worth more, it means the amount of equity I hold is also high. If you are in this position, you can request the lender to cancel the private mortgage insurance.
  • Take some of the equity out. Say in the current market, the interest rates are quite low. The money from the equity can be used to make renovations to your home for added value. There is an option such as a reverse mortgage, where you can borough against your home equity. Just be sure to not take out all of the equity.

Refinancing when your home is worth more than the mortgage

Depending on your location and mortgage period, refinancing is worth looking into. In short, known as a cash-out refinance, this will help you borrow slightly more on your equity (which is also high now due to a rise in your home value) than what you are owed. 

Remember, more equity from refinancing our loan means you are slowly edging towards paying off the old amount on your mortgage.

Besides, You may need to know that how to sell a house fast in a slow market!


What happens to your mortgage if your house value drops?

It will become harder to refinance your property. Before the drop in value, you had adjustable loans which were at fixed rates for refinancing. But the drop in value can make it difficult for you to qualify for equity.

What if my house is worth more than my mortgage?

The equity on your mortgage will increase along with the value of the house. As a result, you may be able to take a new, bigger mortgage out on your house.

Will the housing market crash in 2022?

The real estate property market is highly unlikely to crash in 2022. Experts claim prices will very slowly and gradually begin to rise by that time.

What brings down property value?

Factors like high mortgage rates and bad economic conditions are often the main reasons why a property sees its value fall. Other factors which devalue a property are crime, noise pollution & a bad neighborhood.

Can I remortgage my house if I own it?

Yes. As a property owner, you can remortgage your home at any time. 100% equity on your home means you are in a good financial position to remortgage.

The Verdict

At the end of the day, the best thing you can do in such situations is to make a smart, calculative decision based on the numbers available. It’s not every day your house will be worth more than the mortgage, but when it does happen, take advantage of it.

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