Principal reduction options and underwater mortgage refinancing plans have been made available to certain homeowners who are facing a situation where they owe more on their home than their home is actually worth. Many homes have lost value across the nation and, as result, many homeowners are looking at a situation where their mortgage is more expensive than the value of their home. Negative equity is something that has hurt many homeowners, but there have been plans proposed to help homeowners deal with these situations.
Plans like principal reductions have been one form of assistance that some lenders have used to help homeowners who have lost value in their home and may be struggling to make their home loan payment as a result. Some homeowners, with specific mortgages, have suffered due to a loss in value of their home and are no longer able to afford their home loan payment. However, homeowners have not been offered principal reductions on a wide scale as many lenders believe that using principal reductions is not beneficial to combating underwater mortgages and will only offer this type of underwater assistance sparingly.
However, there have been underwater refinancing opportunities made available to certain homeowners who qualify for the Home Affordable Refinance Program. Homeowners who have a home loan that is owned or guaranteed by Fannie Mae or Freddie Mac may be able to refinance their underwater mortgage to a more affordable rate. Many homeowners who have lost value in their home were simply looking for ways to keep a roof over their head and, when traditional refinancing is unavailable, underwater refinancing plans may offer them the more affordable home loan payment they seek.
Principal reductions, typically given through lenders, may be available to some homeowners who are in areas where there may be a small chance that they will recoup the value they lost anytime soon or homeowners who are severely struggling to make their home on payments. Yet, homeowners must contact a mortgage lender to discuss principal reduction options as this these plans vary from lender to lender.
In terms of the Home Affordable Refinance Program, homeowners may be able to consult the Making Home Affordable website or contact Fannie Mae or Freddie Mac representatives to talk about underwater refinancing options for their personal mortgage situation.