Negative Equity, how does it happen?
Imagine when you bought a home for 1 million dollars and financed it with a $900000 mortgage. In this case, if the value of the property tumbles to $750000, for instance, it means that you have negative equity for the home. So, falling below the balance on the mortgage borrowed to buy a home causes negative equity. It can be calculated easily by taking the market value in the current situation and subtracting the amount remaining on the mortgage. Negative equity usually happens due to anything that causes real estate values to fall, such as the bursting of a housing bubble, a recession, or a depression. This term is also colloquially referred to as "being underwater."