As homeowners continue to struggle with negative equity on their property, underwater refinancing options are being heavily researched by individuals who wish to simply make their monthly mortgage payment on their underwater home loan more affordable. Understandably, some homeowners have been quite frustrated with the devaluation of their property, but individuals who have simply walked away from their home have prompted the creation of assistance plans specifically tailored to help homeowners in an underwater mortgage situation.
While there are programs available from federal sources, there also may be state-specific assistance plans available to homeowners as a result of assistance made available through the Hardest Hit Fund. Some of the federal programs which underwater homeowners have used are the Home Affordable Refinance Program and the FHA short refinance program.
Yet, underwater homeowners often fall into different categories, which may necessitate different assistance plans to address their underwater situation. Some individuals who have seen a reduction in their property value may be able to continue making their mortgage payment successfully, but obviously want some form of assistance for their predicament.
Options like the Principal Reduction Alternative plan, which is an extension of the Making Home Affordable Program, may offer homeowners in certain situations the opportunity to reduce their mortgage principal, which would obviously help with overall costs on an underwater mortgage. Yet, principal reductions has been sparsely used by many servicers, as there are some banks who feel reducing a homeowner’s principal is not beneficial to making a home more affordable.
While homeowners in various states may find that their state housing agency has a program which could address their underwater situation, many fear that negative equity is simply something homeowners may have to contend with at the present time since, for the most part, financial institutions may not offer underwater refinancing opportunities on a wide scale. Also, since programs like the FHA short refinance program requires that a servicer reduce a homeowner’s principal before they can qualify, this again could case problems as it’s not something certain financial institutions are willing to do.
However, homeowners who are struggling with an underwater mortgage are being advised to contact their servicer to see if a refinancing opportunity may be available for their situation or consult their state housing agency to see if funding from the Hardest Hit Program may offer them underwater mortgage assistance plans in their area.