Underwater mortgages have caused a lot of trouble for homeowners who have seen the value of their home drop significantly over the past months. However, the Home Affordable Refinance Program has given homeowners who are current on their mortgage payments but in need of a cheaper home loan payment the ability to refinance their mortgage.
Many homeowners who do not qualify for a home loan modification, but have experienced a loss in their home’s value and are struggling to make their mortgage payments as result, have not been able to take advantage of low interest rates that have been offered on mortgages as of late. This loss of value in many homes across the nation has caused a need for underwater mortgage refinancing programs, and homeowners who have a Fannie Mae or Freddie Mac mortgage or a home loan guaranteed by Fannie Mae or Freddie Mac may be eligible for an underwater refinancing plan.
Typically, the Home Affordable Refinancing Program allows homeowners who have seen the value of their home drop to refinance to a fixed rate mortgage which would allow them to avoid troubles when their home’s value increases or drops. Many homeowners would have liked to refinance their home loan but with the devaluation of so many properties throughout the country, traditional refinancing simply wasn’t an option.
While refinancing through the Home Affordable Refinancing Program can help homeowners with an underwater mortgage, if their home is owned or guaranteed by Fannie Mae or Freddie Mac, this is not a principal reduction on their mortgage. Homeowners have been able to obtain principal reductions in some cases, but options like short sales and Deed-in-Lieu of Foreclosure plans have been set in place as well.
Underwater homeowners who simply want to be rid of their home loan or cannot pay their current mortgage may be able to use one of these mortgage assistance plans. However, homeowners who simply want a more affordable mortgage payment on their underwater home may want to contact them lender about refinancing through HARP.