Underwater homeowners have been looking for solutions to their mortgage troubles and while many have asked for principal reductions, banks have been hesitant. However, a new initiative to help underwater homeowners receive a principal reduction may provide much needed relief to those looking at a mortgage principal much higher than their home’s value.
Homeowners that simply make payments on their mortgage for a specific amount of time may qualify for a mortgage principal reduction under the new programs within the home loan modification plan that was started by the Obama Administration.
While lenders are not required to participate in these programs, there are many big banks that are working with underwater homeowners to reduce the principal amount owed in the hopes that homeowners will stay with their mortgages rather than walk away.
If you are a homeowner in trouble with your underwater mortgage, before you walk away from your home, you may want to talk with your lender about getting a principal reduction. By making on-time payments on your mortgage for a while longer, you may be able to reduce or erase your mortgage completely.