FHA Mortgage Refinancing–Will Home Loan Assistance Bring Lower Mortgage Costs To Homeowners?

In an ongoing effort to assist homeowners who have lost equity in their home, programs like the FHA underwater refinancing program has been implemented as a way to lower the costs homeowners with an underwater mortgage must meet. Numerous homeowners have searched for information on underwater refinancing plans or home loan modification options, but many assistance plans are tailored for homeowners who are behind on their mortgage payment.

However, the FHA refinancing program for underwater homeowners, also called the “Short Refinance Program” is hoped to bring assistance options to underwater homeowners who are current on their monthly mortgage payment.  Simply because a homeowner is current on their home loan doesn’t mean they are not in a difficult situation, so this particular FHA program is meant to offer struggling homeowners, who are up-to-date on their home loan payments, the chance to find more affordability in their mortgage payments.

Obviously, there are those who feel that these refinancing plans for homeowners may be only available to a minimum number of homeowners and, more specifically, critics of the FHA underwater refinancing plans have stated that servicers may prevent the program’s success.  Homeowners who are attempting to refinance their underwater mortgage through the FHA short refinance program must have a mortgage servicer willing to lower the principal on their mortgage.

This principal reduction, which is a big draw for many homeowners, may be hard to come by especially since homeowners who are current on their home loan payment are not, from a bank’s point of view, necessarily in need of underwater assistance.  Yet, homeowners who may hope to refinance with the FHA in order to bring affordability to their underwater mortgage do have alternatives, like the Home Affordable Refinance Program, and some state housing agencies can offer underwater homeowners assistance as well.

Yet, homeowners who are current on their underwater home loan may simply have to ride out a low point in their property value, as again, some servicers may be unwilling to drop a homeowner’s principal or make participating in programs like the FHA short refinancing plan an option.