The new FHA short refinance program may help troubled homeowners through refinancing and principal reduction opportunities. Many homeowners who have lost value in their home are struggling to make ends meet or are simply in a difficult housing situation where they have kept their mortgage payments current but are now in a home on which they owe much more than it is actually worth.
This FHA refinancing option may help homeowners who are in an underwater mortgage situation but have remained current on their mortgage payments despite the loss of their home’s value. Under this program, homeowners may qualify for an FHA home loan, which may allow them to refinance for a lower interest rate or at least get a more affordable home loan payment, as well as, see a principal reduction in their underwater mortgage.
However, there are those who believe this program may be lackluster at best since mortgage servicers will be required to lower a homeowner’s principal before they may qualify for this short refinancing opportunity. Primary and secondary mortgage servicers have been hesitant to offer principal reductions on underwater homes despite the fact that many properties have seen a loss in value over the past months in various areas.
Homeowners have been asking for principal reductions in cases where an underwater mortgage situation is severe but, again, many banks believe that principal reductions are not the solution to the troubles that many underwater homeowners face. While there have been certain mortgage lenders who have worked with homeowners in specific cases to bring them a principal reduction, more servicers will have to get on board with lowering underwater mortgage principles before homeowners may be able to benefit from this FHA short refinancing opportunity which could bring more affordable home loan payments to underwater homeowners.