Underwater home loan refinancing opportunities and short sell options are set in place by various mortgage servicers and institutions in the hopes of preventing homeowners from strategically defaulting on their mortgage. Decreases in the value of homes across the nation have caused many homeowners to grow so frustrated that they have simply walked away from their home as a result, which causes a great deal of difficulty for servicers and the housing market as a whole.
Yet, homeowners who strategically default are also causing a great deal of financial trouble for themselves as many may be unable to reenter the housing market for quite some time when the stain of walking away is on their credit history. Understandably, homeowners are quite burdened over the fact that they owe more on their home than their home is worth, but there are programs like underwater home loan refinancing and short sales that can help homeowners in an underwater mortgage situation.
While options like principal reductions may be available through some underwater mortgage programs, like the FHA short refinance program, some mortgage servicers have been hesitant to take these types of actions. While some banks have allowed homeowners to enter earned principal forgiveness programs, where a homeowner’s mortgage principal will be forgiven in part if they continue to make payments on their home loan, there are also opportunities to short sell a home in some cases.
Situations where a homeowner simply wants a more affordable underwater home loan payment may be solved through underwater refinancing programs, but there are some homeowners who simply want to rid themselves of a home whose value has substantially dropped. Homeowners who wish to short sell must work closely with their servicer, but this other option in dealing with underwater mortgages has allowed some homeowners to escape the underwater mortgage debt which has caused them so much difficulty without facing foreclosure or doing damage to their credit history. In some cases, though, homeowners who want to choose this option will need to talk with their lender and may have to begin searching for buyers on their home before a short sale can be negotiated.