Underwater home loans are becoming more problematic for many across the nation as home values have severely dropped over the past months and, in some areas either continue to drop or are staying low. One factor which is attributed to underwater mortgages, and low property values, is the fact that unemployment has remained such a major problem within the housing industry.
Many feel that the number of widespread foreclosures, which have left many houses sitting empty, is heavily contributing to the devaluation of properties in various states. Yet, homeowners who are suffering from an underwater mortgage may have various assistance options when it comes to finding a more affordable payment option on their home.
Negative equity on a mortgage typically does not allow for traditional refinancing, which can bring lower interest rates and monthly payments for struggling homeowners. However, options to refinance underwater mortgages from programs like the FHA short refinancing plan or the Home Affordable Refinance Program may offer certain homeowners the opportunity to handle their underwater mortgage difficulties in a more affordable way.
Homeowners who may be able to take advantage of these underwater refinancing plans can contact their lender or, consult counselors with the FHA, but it needs to be understood that these underwater refinancing plans are no guarantee for homeowners when it comes to making an underwater mortgage more affordable.
Yet, proposals for a Principal Reduction Alternative program are hoped to be more helpful to certain underwater homeowners who have seen substantial losses in their property’s value. While the FHA short refinance program does require that servicers reduce principles for homeowners, the HAMP Principal Reduction Alternative plan may also be helpful to homeowners whose mortgage servicer will offer them a lower mortgage principal on their underwater home loan.