Traditionally, homes will have good value if it has a good location, near offices or within proximity of renowned schools. It also helps that homes like these are usually situation in well-maintained neighborhoods with friendly communities. However, the above-mentioned factors no longer provide homeowners with the assurance that their homes will hold its value. Why? The neighbor’s mortgage.

It is estimated that around a third of all mortgage holders are holding a loan balance that is higher compared to the market value of their property right now. They are known as “underwater” borrowers and they are unlikely to many of them are unwilling to pay more for a home that actually costs less.

The finding released by the Congressional Oversight Panel on the Troubled Asset Relief Program points out that when troubled homeowners experience further financial distress, they are likely to lose their homes due to little or no incentive to keep their properly. The resulting empty properties, especially when concentrated in certain communities, will have a dramatic adverse effect on the home prices at that area.

Home Abuse: It is Not Wanted

New developments typically look fresh and finishing touches like landscaping are usually still being added. But John Sullivan of the National Associated of Exclusive Buyer Agents report that new subdivisions are experiencing home abuse. Lawns look straggly, the paint appears dirty, and the windows are dark from dirt. These are all signs that the previous owners experienced mortgage problems.

When the mortgage debt declines 20 percent below the property value, there is a high likelihood that it will be foreclosed. Evan Feldman from ZipRealty tries to inform potential home owners about this threat. Buying a home is the single biggest investment you will make. By getting all the information about the neighborhood and the community, shock and financial losses can be avoided later on.

• When to Refinance Your Mortgage
• Must-Have’s for New Homes
• Foreclosure Stories: Weekly Round-Up
• Home Buyer Credit: Is It Going to Last?
• Home Buyers Tax Credit Extended
• Assessing the Middle Class
• How the Making Homes Affordable Program Fails Consumers
• Mortgage Rates Increase to 5.2 Percent
• Free Credit Checks
• Peer to Peer lending – Where Did it Go?