Homeowners who have seen the loss of value in their home have been seeking ways in which they can either make their mortgage payment more affordable or remove themselves from a bad underwater situation. Underwater home loan refinancing options and alternatives foreclosure assistance plans have been made available in certain cases to homeowners who owe more on their mortgage than their home is worth.
The FHA and the Making Home Affordable Program have both offered underwater refinancing plans to homeowners who may be upside down in their mortgage. There are also some instances where homeowners have been able to receive a principle reduction on their mortgage, which can either help with the affordability of their home loan or at least give peace of mind to homeowners who feel they were sold a home with an inflated price.
Yet, many feel that these mortgage refinancing plans and principal reduction options are either excessively difficult to obtain or may not benefit the vast majority of homeowners, since mortgage servicers will have to take a loss in some cases. For this reason, alternative assistance plans like short sales have been offered to homeowners who want to escape their underwater mortgage situation.
While, again, short sales may not be an easy route for all homeowners, underwater mortgages may be escaped through this option if homeowners, when working with their servicer, can find someone who will purchase their home and, if a short sale is approved, a homeowner can be free and clear of their underwater situation.
Understandably, most homeowners simply want a more affordable mortgage payment despite being underwater, and it’s hoped that these underwater refinancing plans will provide that opportunity. Yet, in cases where an underwater homeowner may face defaulting or foreclosure, many advisers often suggest looking into short sales since this option can be less detrimental to one’s credit score than the foreclosure process.