Underwater home loans, for certain homeowners, may have refinancing opportunities in order to assist homeowners in finding a more affordable monthly payment on their mortgage. Obviously, homeowners who have negative equity are, in most cases, unable to refinance through traditional means, but underwater mortgages have necessitated that homeowners seek out more affordable payment options in many cases.
While there have been homeowners who have applied money towards their mortgage principal and were able to traditionally refinance, there are few homeowners with an underwater mortgage who may be able to use a cash-in refinancing option. For this reason, there have been programs which were implemented as a way to help homeowners who have seen the value drop on their mortgage and are now left owing more than their home is worth.
Governmental efforts through plans like the Home Affordable Refinance Program have been made available to homeowners who have a home that is owned or guaranteed by Fannie Mae or Freddie Mac, but there are some homeowners across the nation who have been unable to take advantage of this particular assistance opportunity.
Yet, some financial institutions have instituted principal reduction programs for homeowners who continue to make their mortgage payment, despite being underwater, and are assisted by having a portion of their principal forgiven after a set period of time. There have also been some state-specific mortgage assistance plans which are set in place to address underwater mortgage issues. Funding for these plans was given by the Hardest Hit Fund and underwater assistance plans are being proposed for use by various state housing agencies.
Sadly, there are still homeowners who are angry over their mortgage situation and, often when met with a situation that seems dire, they will strategically default on their home loan. Cases where homeowners have an underwater mortgage and are simply unable to find the assistance they need may have alternatives to foreclosure or defaulting through short sale or deed in lieu of foreclosure plans.
It’s understandable that homeowners with negative equity are in a very frustrating situation, but advisers have been counseling homeowners to explore all of their underwater assistance options before taking drastic measures like simply walking away from their mortgage obligation, as doing so could be detrimental to a homeowner’s credit score and history.
