Homeowners with an underwater mortgage have been dealing with a difficult situation in that they owe more on their home than their home is worth. Homeowners in this frustrating situation have sought mortgage principal reduction options from the Obama Making Home Affordable Program in the hopes of getting a mortgage principal that is more in line with their home’s currently value.
Some lenders have been willing to make principal reductions available for underwater homeowners, however, there are those who are unwilling to use this type of mortgage assistance even in conjunction with the Making Home Affordable Program. Lenders who are in favor of principal reductions have been working with homeowners, but reductions are still not widely used among underwater mortgages.
Those lenders that are against principal reductions on underwater mortgages believe that there are better alternatives and, in some cases, homeowners must simply accept their home’s loss of value as there is no guarantee for an increase when someone buys a home. However, in cases where a homeowner may be having trouble making their mortgage payment or their home is in an area where they are unlikely to recoup any of the loss in their home’s value, a principal reduction may be offered.
Some homeowners are simply asking for a way to keep their home as a loss in their home’s value can be troubling in that some homeowners are unable to make their mortgage payments as a result. These homeowners will likely find more options available to help them with their underwater mortgage, as homeowners who want a principal reduction for the sole purpose of lowering their mortgage principal in the hopes that they can sell their home for a profit later don’t seem to be a priority for lenders.
It’s still being advised that homeowners with an underwater mortgage should talk to their mortgage lender in order to find out what options might be available to help them make their home more affordable or deal with the loss of their home’s value.