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You just lived through a recession in which tens of millions of homes depreciated in value during the terms of their loans. Depreciated means it lost value; the
by dangrossman 13y ago
You just lived through a recession in which tens of millions of homes depreciated in value during the terms of their loans. Depreciated means it lost value; the house is worth less than before. That, combined with a small downpayment, can result in a bank holding a foreclosed home which is worth less than the value of the mortgage on it.
- johnchristopher 13y agoAh, I see. I thought your explanation was more general, not specific to the current economic situation. And since I learned as a kid that a house normally only get more value over time (I live in western europe) that was confusing me. Thanks for the clarification.
- jdbernard 13y ago> I learned as a kid that a house normally only get more value over time I think this is one of the reasons we got into this mess. People bought more house than they could afford thinking they would be able to sell it if they needed to and at least break even. Nobody was prepared for underwater mortgages because we all assumed houses only appreciate.