Homeowners that are troubled with an underwater mortgage may have more options through principal reductions and short sales thanks to the Obama Administration’s new initiatives to help homeowners who owe more on their home than it is worth.
Underwater mortgages have been becoming a more widespread problem over the last few months and homeowners are growing aggravated. Homeowners, especially those who want to make a profit on their home in the future, have been either asking for principal reductions in the hopes they can bring what they owe on their home closer to the current market value, or a short sale, in which they can just say goodbye to a devalued home.
Principal reductions and short sales have not been unpopular with lenders, but incentives from the Making Home Affordable Program are hoped to get more lenders on board with these measures to assist underwater homeowners.
Homeowners are being advised to talk with their lenders about options. Obviously, homeowners that want to keep their home are going to benefit more from a principal reduction, but homeowners looking to short sell are cautioned to make sure they are forgiven of their remaining principal amount if they do sell short, as still owing on a mortgage after vacating a house isn’t going to benefit a homeowner.