Underwater home loan refinancing has been an option for some homeowners who have seen the value of their home plummet and are now in a situation where they owe more on their home than their home is actually worth. Earlier in the year many homeowners in this situation were frustrated and simply walked away from their mortgage, which did a great deal of damage to their credit. However, underwater assistance plans have been made available to homeowners who want a more affordable home loan payment or simply want to reduce the principal amount on their home loan.
Some mortgage servicers have offered principle reductions to homeowners in particular situations. Those who may have difficulty meeting their mortgage payment due to a reduction in their home’s value or homeowners who are in an area where home values have dropped and there is a small likelihood that their home value may increase might qualify for a principal reduction on their home loan as well.
There have been cases where lenders have also offered principal reduction programs for homeowners who may be able to meet their monthly mortgage payment but have seen their home’s value decrease. These types of programs were instituted when homeowners were choosing to strategically default, which means they were simply walking away from their home loan, and in order to prevent this from occurring principal reductions were offered. Homeowners who can take advantage of an earned principal forgiveness program will have to continue to make payments on their home loan but can see a reduction of their principal overtime, so that it is more in line with their home’s actual value.
Homeowners with a mortgage that is owned or guaranteed by Fannie Mae or Freddie Mac may have underwater refinancing options for those who are having difficulty making their mortgage payment. The type of home loan some homeowners have has caused trouble when the value of their home decreased and, as a result, certain refinancing opportunities are made available for these underwater individuals.
While assistance plans like the Home Affordable Refinancing Program may be widely available to homeowners who qualify, principal reduction and forgiveness plans are typically handled directly from a mortgage lender. Homeowners may find alternative options, like short sales, when looking for assistance with their underwater mortgage, but many of the nation’s top mortgage lenders have been offering assistance plans to those who are struggling with a home on which they owe more than it’s worth.