Many homeowners have seen a decrease in the value of their home over the past months and are stuck in the frustrating situation where they owe more on their home than their home is worth. Underwater mortgage difficulties have plagued numerous homeowners, but there have been some solutions offered for homeowners in the form of principal reductions and underwater refinancing opportunities.
Largely, homeowners who are stuck with an underwater mortgage have had a troubling time meeting their monthly mortgage payment as a result but have been unable to refinance their home loan through traditional means so that they may take advantage of current low mortgage interest rates.
However, there are programs like the Home Affordable Refinance Program, which is an extension of Making Home Affordable and the Federal Housing Administration’s short refinance opportunity that have given some underwater homeowners hope. While there have been those who feel these programs do little to solve the problems of underwater homeowners, some feel these refinancing opportunities could do a great deal of good for the housing market.
Homeowners who walk away from underwater home loans cause a great deal of trouble in many ways, but it’s hoped that by offering underwater refinancing plans, this practice of strategic defaulting will slow or stop. There are concerns over the requirement that principal reductions be offered from servicers in these underwater plans, but it’s hoped that primary and secondary lien holders will be willing to work with homeowners in cases where their underwater mortgage may lead to a default.
These underwater refinancing opportunities have mixed results from many in the financial world, but if homeowners are able to refinance and see a reduction in their mortgage principal, it could go a long way in preventing defaults or foreclosures in the future.