Underwater Mortgage Refinancing Through The Home Affordable Refinance Program–How Can Homeowners Benefit?

Many homeowners have lost value in their home over the past months as housing prices continue to drop in certain areas. These homeowners have asked for assistance through various programs like principal reductions or in cases where homeowners are having trouble making their mortgage payment due to the loss of value in their home, they have simply asked for a more affordable mortgage payment. The Home Affordable Refinance Program has been set in place to help some of these homeowners who have a home that is owned or guaranteed by Fannie Mae or Freddie Mac by allowing them to refinance their underwater mortgage.

The Making Home Affordable website says that homeowners who are in a good credit position and who are committed to paying their mortgage may have the opportunity to get better terms on their underwater home if their interest rates are much higher than the current market rate and they are struggling to stay in their home. While refinancing under the Home Affordable Refinance Program will not reduce the amount that a homeowner owes on their loan, homeowners who qualify for this refinance program can get an estimate from their lender that will include a new interest rate, mortgage payment, and the total amount the homeowner will pay over the lifetime of their mortgage if they refinance under this program.

Some homeowners, obviously, will not be able to benefit from the Home Affordable Refinance Program as they may either have a home loan that is not owned or guaranteed by Fannie Mae or Freddie Mac or they may simply be in a position where this type of refinancing will not be an improvement on the current mortgage term, interest rates, or mortgage payment. However, there are many programs from various lenders and from the Making Home Affordable Program that are set in place to help homeowners who are struggling with an underwater mortgage situation.

For instance, some mortgage lenders have offered principal reductions, despite feeling that they are not a wide scale solution, to homeowners who are in an area where they are unlikely to regain any of the value they lost in their home or if they are simply unable to meet their monthly mortgage payments. Also, homeowners with an underwater mortgage may be able to short sell their home or enter a deed in lieu of foreclosure program if their home is simply beyond their means of affordability.

While each lender’s in-house program and methods of dealing with underwater mortgage can be different, homeowners are being told to first begin seeking solutions for their underwater mortgage by talking with their mortgage lender. However, many people feel that mortgage lenders are unwilling to help homeowners and that contacting these banks is a practice in futility, so for those with this mentality, online resources are available as well as the Making Home Affordable website, which can be a valuable tool in helping someone get the mortgage assistance they need.