Underwater mortgages have caused homeowners a great deal of trouble over the past months especially for those who are current on their mortgage payments but as a result of losing value in their home are unable to take advantage of the low mortgage interest rates that have been offered over the past months. Traditional refinancing is typically unavailable for homeowners with an underwater mortgage, but homeowners whose property is owned or guaranteed by Fannie Mae or Freddie Mac may be able to use the Home Affordable Refinance Program to get a more affordable home loan payment.
Homeowners who are current on their mortgage payment but have seen a decrease in the value of their home might benefit from this Home Affordable Refinance Program as long as the amount they hope on their first mortgage does not exceed 125% of the current market value of their property.
While there may be exceptions depending on the situation, reports have stated that where a home’s value is more than 125% underwater many homeowners are said to be more likely to walk away in this instance. Obviously, this is something that lenders will want to avoid so programs like HARP have been created so that homeowners who have the ability to pay their home loan and would benefit from refinancing to a lower rate can do so.
There will be some instances where a homeowner may not benefit from refinancing their underwater mortgage, however, this program is set in place so that homeowners can see if they will be able to get a more affordable home loan if they refinanced their underwater mortgage.
Some mortgage lenders are allowing homeowners to short sell their homes in a case where their property has lost such a substantial amount of value that it will be unlikely that they can regain what was lost, but alternatives to defaulting are available for homeowners who either what to be rid of their underwater mortgage or simply need a way in which they can make their underwater home loan payment more affordable.