Many homeowners across the nation have lost value in their home and as a result now owe more on their home then it’s actually worth. This underwater mortgage situation which has plagued many homeowners is a difficult predicament for anyone to deal with, but there have been more options made available for homeowners with an underwater mortgage who need a more affordable home loan payment.
For instance, programs from Freddie Mac and Fannie Mae have offered underwater mortgage refinancing opportunities on homes they own or guarantee. While underwater homeowners have not been able to take advantage of refinancing to the near-record low interest rates that many have seen over the past months, this underwater refinancing opportunity can make an underwater mortgage payment more affordable.
Also, there are some lenders who are offering principal reduction plans for homeowners who have seen a substantial drop in their home’s value. While not all lenders are on board with principal reductions, many believe that in areas where homes have lost value and are unlikely to regain what was lost or in the case that a homeowner is having trouble making their mortgage payment due to a loss of value on their home, a principal reduction may be warranted.
While some homeowners have simply grown so frustrated that they have just walked away from their mortgage payment, there are incentives for homeowners to avoid a strategic default and get out from their underwater mortgage obligation. Short sale options and deed in lieu of foreclosure plans have been made available for homeowners who either want to get rid of their underwater mortgage or those who can simply no longer afford their mortgage payment but want to avoid foreclosure.
These underwater mortgage assistance options will be dependent upon a homeowner’s individual lender, so underwater homeowners are being advised to talk over underwater assistance options with their mortgage lender or consult the Making Home Affordable website for more information and mortgage aid on this topic.