Underwater homeowners have been seeking ways to make their mortgage payment more affordable in cases where the loss of the value in their home has caused financial difficulties to arise. While there have been programs from the Obama Administration that have been set in place to help homeowners, like the Home Affordable Refinancing Program, a new FHA underwater short refinancing option may be helpful to homeowners who need assistance with their underwater home loan.
Ideally, homeowners who are current on their underwater mortgage payments may be able to qualify for a new FHA mortgage and have the option to refinance to a lower interest rate, which may be available to underwater homeowners at the present time. Also, homeowners may obtain a principal reduction on their underwater mortgage since this is one of the requirements of this program that has the FHA, homeowners, and mortgage servicers working together.
Yet, there are people who are concerned over the willingness of banks to work with homeowners in this underwater short refinancing plan. There are those who believe that investors of mortgage-backed securities and mortgage servicers may be unwilling to work with homeowners who have an underwater mortgage when it comes to reducing their principal. Homeowners argue that principle amounts should be reduced since home prices were inflated in the past, which is evident from the vast amounts of homes who have lost value over the previous months.
However, as the program is still in its infancy, it is hoped that this new FHA initiative will allow homeowners who are suffering from an underwater mortgage to refinance for a more affordable rate so that they can avoid foreclosure on their home if they’re underwater mortgage becomes too problematic. Obviously, mortgage interest rates are quite low at the present time so homeowners who are underwater have been unable to take advantage through traditional refinancing methods but the FHA underwater short refinancing plan may allow homeowners who have continued making their payments despite being underwater the opportunity to gain a more affordable home loan payment.