Homeowners with an underwater mortgage have been seeking a principal reduction in order to help make the cost of their home loan more affordable. While there have been some homeowners who simply want a lower principle due to the fact that they feel their home price was inflated when it was purchased, there are many homeowners simply struggling to pay their mortgage because their home has lost value.
The problem with principal reductions is many of the nation’s top lenders do not feel they are a good form of mortgage aid for individuals with an underwater home loan. There are some financial institutions that will offer a principal reduction as a form of assistance, but some feel that alternative programs are better.
For instance, some lenders believe that underwater mortgage refinancing is one of the best options for helping homeowners who are having a troublesome time paying their mortgage. In severe cases where an underwater mortgage is present and in an area where there is unlikely to be any value regained in that home, a principal reduction may be likely but homeowners will need to talk with their individual lender to see if principal reductions are indeed available.
The Making Home Affordable Program has helped many homeowners with an underwater mortgage but some simply want out of their underwater home loan. For these individuals, a short sale may be one way in which homeowners can avoid defaulting on their home loan.
There are also programs that can help homeowners who simply cannot stay in their home, like a deed in lieu of foreclosure program, but homeowners struggling with their underwater mortgage are often advised to talk with their home loan lender about what programs are available for assistance or what route would be the best to take for a specific mortgage situation.