Refinancing Underwater For Troubled Homeowners–Current And Delinquent Homeowner Options

Homeowners with a negative equity problem on their home loan may have the chance to refinance their underwater mortgage through certain underwater refinancing opportunities from sources like the FHA or the Home Affordable Refinance Program.  The loss in a home’s value has been a major problem for numerous individuals over the past months and has begun to strain homeowners in either their financial life or in cases where they viewed their home as an investment.

When a homeowner is delinquent on their home loan, and wants a more affordable mortgage payment as a result, refinancing plans may be offered if the mortgage is owned or guaranteed through the Home Affordable Refinance Program.  HARP has given certain underwater homeowners a more affordable monthly payment in some cases, which obviously had been beneficial when it concerns foreclosure prevention.

Yet, homeowners who may be behind on their monthly mortgage payment obligation may have to try a home loan modification plan first, as some may not meet the qualifications for an underwater refinancing plan.  Homeowners have been frustrated with their mortgage in some cases and have even walked away, but in areas where negative equity is not severe, delinquent homeowners may have to opt for a modification first.

However, plans from sources like the FHA may offer current homeowners the chance to refinance their home if they are current on their mortgage but are facing an underwater situation that may be extreme.  This plan can offer a more affordable monthly payment, but it requires that a servicer forgive a percentage of the mortgage principal on a home, which can cause trouble if the bank is unwilling to erase part of the principal amount.

While these plans are in place, it should be understood that not all homeowners may qualify for these refinancing options on underwater home loans.  Yet, there are options like short sales and deed-in-lieu of foreclosure opportunities that may also help homeowners with an underwater mortgage if refinancing is unavailable and other foreclosure prevention plans are unhelpful for a homeowner’s particular situation.