Homeowners who have had trouble with a reduction in their property value and now are facing a situation where they have negative equity in their home may have underwater mortgage refinancing opportunities in order to make their monthly mortgage payment more affordable. Depending upon the type of home loan someone has, a reduction in property value could make their mortgage payment situation difficult to meet, especially when factors like unemployment may be involved.
Yet, various programs have been implemented in the hopes of assisting homeowners who are having a troubling time with an underwater mortgage situation. As an example, the Home Affordable Refinance Program is available to homeowners who have a loan that is owned or guaranteed by Fannie Mae or Freddie Mac. In this instance, homeowners with an underwater mortgage may qualify for refinancing opportunities which could, obviously, lower their overall home loan payment on their underwater mortgage.
Also, the recent FHA short refinance program has been made available to certain homeowners who qualify for a new, FHA-insured mortgage when they refinance. This opportunity allows homeowners to refinance for a more affordable FHA loan on their home, but also, they will be able to obtain a principal reduction on their mortgage if they qualify for this type of assistance.
Homeowners who have seen a loss in their equity have become frustrated in many situations and have simply walked away. Strategically defaulting on a mortgage can have adverse affects on one’s credit score, but there are opportunities for homeowners who are in the inevitable situation where they may lose their home to short sell their property and avoid the foreclosure process.
Understandably, these underwater refinancing opportunities and various principal reduction plans may be helpful in certain cases, but not all homeowners with negative equity may benefit from these plans. Yet, homeowners are still being advised to contact their mortgage servicer or consult resources like the FHA for more information on underwater assistant which may be available in their area and for their specific mortgage situation.