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“Underwater” has been a prominent buzzword in the mortgage industry over the last several years — the kind of buzzword that leaves a nasty taste in your mouth when you use it.

Seriously underwater properties make up 17% of mortgaged homes in the U.S., according to RealtyTrac, a housing data company. That’s the lowest share of seriously underwater mortgages since RealtyTrac started reporting the statistic in the first quarter of 2012. A homeowner is seriously underwater when the loan secured by the property is at least 25% higher than the home’s estimated value. In the second quarter of 2012, seriously underwater properties represented 29% of mortgaged homes.

From 29% (12.8 million homes) to 17% (9.1 million) in less than two years — that’s quite a drop and a good sign for the housing market.

“More homeowners on the edge may now be able to secure a refinance or sell their homes and avoid default,” said Chris Birk, director of content development for Veterans United Home Loans and a contributor for Credit.com. “At the same time, rising home prices and spikes in equity will likely flush some markets with new inventory.”

Availability has been a huge obstacle for aspiring homeowners in some markets, while underwater homeowners understandably have waited for property values to increase before selling. Still, after prices spiked in 2013, many analysts expect that trend to slow down this year. That could leave a lot of those 9.1 million homes below the surface.

“The recovery as it relates to home prices varies, sometimes considerably, depending on where you live,” Birk said.

If you’re considering refinancing or selling your home — and, presumably, buying a different one — now that the market is bouncing back, make sure you’re on top of your credit standing. If 2014 ends up being the year you put your house on the market and start the search for a new home, you don’t want credit issues to slow you down. Make sure your credit reports are clear of errors and your credit score is in good shape — you can check your scores and get an overview of your credit reports for free on Credit.com. Now’s the time to make a plan and improve it.

More on Mortgages and Homebuying:

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