Homeowners who have an underwater mortgage are in a very difficult situation as no one can benefit from a home where a homeowner owes more on their mortgage than the home is actually worth. However, there are some options in dealing with an underwater mortgage that may be helpful to these underwater homeowners and can make their mortgage payment more affordable. Principal reductions have been an idea that is used to make an underwater mortgage more affordable or put the homeowner in a position where they may be able to benefit if they sell their home in the future.
Yet, not every lender is in favor of principal reductions and many feel that they are not an across-the-board solution to dealing with underwater mortgages. In fact, many lenders say only in cases where a homeowner is having trouble making their home loan payment or where they are in an area where it is unlikely that a homeowner will regain any of the value lost in their home, is a principal reduction warranted.
However, homes that are owned or guaranteed by Fannie Mae or Freddie Mac may qualify for underwater mortgage refinancing opportunities which could help homeowners with an underwater mortgage make their home loan payments more affordable. Some homeowners are simply seeking to keep a roof over their head but their underwater mortgage is making it difficult for them to do so. When a principal reduction may not be available for a homeowner, if their home is associated with Fannie Mae or Freddie Mac, underwater mortgage refinancing may be an option.
Some homeowners are seeking principal reductions simply because they view their home as an investment. Homeowners in this situation may be less likely to get a principal reduction, as many lending institutions are only using principal reductions to help homeowners who may be struggling with their mortgage payment or who have few other options. Lenders are also trying to cut down on the number of strategic defaults that they have faced over the past months by offering options like short sale plans to help homeowners get out of an underwater mortgage situation if they feel that regaining value in the home is hopeless.
Homeowners who may have an underwater mortgage are often told to talk with their lender or consult online sources about information regarding these underwater mortgage assistance programs or Fannie Mae and Freddie Mac’s underwater refinancing plan.