Many Americans who have lost value in their home have been seeking a mortgage principal reduction from their lender. The principal reduction alternatives that were offered months ago were hoped to help homeowners who have lost value in their home and were unable to pay their monthly mortgage payment. There have been numerous homeowners who strategically default, meaning they simply walked away from their home loan obligation, and it was hoped that a principal reduction program would be able to combat these troubles.
However, mortgage principal reductions are not mandatory but are typically at the discretion of the mortgage lender. This has many people wondering what they can do to get a more affordable mortgage payment or how they can deal with their underwater mortgage, but again, a mortgage lender is one of the only sources that a homeowner can consult when it comes to dealing with their home that has lost value.
While there are plans from the Making Home Affordable Program that can help homeowners who have an underwater mortgage situation, not all homeowners are able to take advantage. There are situations and cases where a homeowner may be able to refinance their underwater mortgage through the Home Affordable Refinance Program or plans like short sale programs where homeowners who have an underwater mortgage can simply sell their home at a loss and be free of their underwater mortgage obligation.
Yet again, when it comes to dealing with an underwater mortgage many homeowners must talk with their mortgage lender to get a solution that is going to fit their personal situation. While many lenders have been willing to work with homeowners who have lost a significant amount of value in their home loan or who live in an area where it’s unlikely that they will see any recovery of the value in their home that was lost, there are many homeowners who simply feel that their underwater mortgage situation is hopeless and they walk away.
Financial advisors are counseling homeowners to avoid defaulting on their home at all cost due to the fact that it can do damage to one’s credit score that may take years to repair. While someone who may short sell their home or take advantage of a deed in lieu of foreclosure program may see a drop in their score, lenders who are looking at a credit history in the future are more understandable in these cases than if a homeowner simply walks away. An underwater mortgage situation is troubling but homeowners who are struggling with this type of mortgage are being advised to talk with their lender to seek out solutions for their underwater mortgage before making any rash decisions.